AI can perpetuate racial bias in insurance underwriting
Nov 1, 2022
While artificial intelligence (AI) technology has made mortgage underwriting and insurance claims faster and easier, it could also unintentionally discriminate against protected classes.
The Casualty Actuarial Society (CAS) this year acknowledged “the potential impact of systemic racism on insurance underwriting, rating and claims practices" in four research papers examining the potential discriminatory effects algorithmic bias may have when used by financial institutions determining credit-scoring, insurance (auto, life, home), and mortgage lending.
“The insurance industry started a discussion after the death of George Floyd and we wanted to make sure actuaries who are responsible for insurance pricing were prepared to be an active participant in the discussion,” Mallika Bender, diversity, equity and inclusion staff actuary at the Casualty Actuarial Society (CAS), told Yahoo Money. “In our Methods for Quantifying Discriminatory Effects, we survey different statistical approaches for evaluating review models for fairness and ways to mitigate bias with the data, modeling process, and outputs.”