What is considered an unfair discrimination in insurance practices?

Unfair discrimination in insurance practices occurs when an insurer treats individuals or groups differently based on factors that are not related to the risk being insured. Using unequal underwriting standards exemplifies this type of unfair practice. It implies that different criteria are being applied to similar risks, leading to unfair treatment of certain applicants based on characteristics such as race, gender, or socioeconomic status rather than on legitimate risk factors.

In contrast, offering discounts to all policyholders is a standard practice that promotes equity among customers, as it rewards loyalty or encourages new business without discrimination. Providing the same coverage for all individuals is also a fair practice because it ensures that everyone has equal access to the same level of protection regardless of their personal circumstances. Adjusting premiums based on region may be justified due to varying levels of risk associated with different areas, such as higher crime rates or prevalent natural disasters, thus adhering to the principle of reflecting the actual risk in pricing without discrimination. Therefore, unequal underwriting standards stand out as a clear example of unfair discrimination within insurance practices.