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LOS ANGELES, Sept. 21, 2022 /PRNewswire/ -- The insurance industry's use of algorithms and Artificial Intelligence to set premiums and determine who can get insurance coverage is a serious threat to Californians and a violation of California law, Consumer Watchdog will tell the Insurance Commissioner at a public meeting today called to examine high-tech bias and discrimination by insurance companies.
Read Consumer Watchdog's comments to the Commissioner: https://consumerwatchdog.org/sites/default/files/2022-09/Statement%20of%20Consumer%20Watchdog%20-%20Bias%20Workshop%209-21-22.pdf
Under current consumer protection rules put in place by Proposition 103, insurance rates and premiums are set through a public process that requires insurance companies to use objective, verifiable data to justify their pricing projections based on future claims, company expenses and profits. But insurance companies are pressing the Commissioner to abandon this approach in favor of using secret algorithms, models and Artificial Intelligence, which will lead to discrimination and higher prices. Indeed, as Consumer Watchdog points out, some insurance companies are already engaged in unlawful and discriminatory practices in California.
Consumer Watchdog highlighted four critical consumer concerns.
Algorithms, models, Artificial Intelligence and machine learning all shift the insurance rate-making process from one that can be analyzed and verified to an arbitrary "smart black box" system in which the legitimacy of prices and underwriting practices can never be confirmed, enabling unlawful discrimination and excessive rates.
Consumer Watchdog urged the Commissioner to "reject the glittery hype and facile promises proffered by the insurance companies and Big Data firms seeking a regulatory windfall at the expense of California consumers. California law is clear: insurance rates and practices that unfairly discriminate are illegal. What is needed now in California is enforcement of the law."
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SOURCE Consumer Watchdog