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9 - Judging Insurance Antidiscrimination Law

Published online by Cambridge University Press:  04 December 2019

By
Ronen Avraham ,
Alma Cohen  and
Ity Shurtz
Edited by
Yun-chien Chang
Yun-chien Chang
Affiliation:
Academia Sinica, Taipei, Taiwan
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Summary

Insurance companies use credit score to predict auto insurance risk. The theory being that people who are irresponsible in handling their finance, might also be irresponsible drivers. As a result, in states which ban discrimination based on credit score one would expect to see more fatal car accidents. In this study we seek to estimate the effect of introducing laws that prohibit credit score discrimination on the number of traffic fatalities, taking a standard differences-in-differences approach and using data on traffic fatalities from the Fatality Analysis Reporting System (FARS). We find that prohibiting credit score discrimination is likely to not have an impact on insureds' primary behavior. Specifically, we find that in the first few years after the introduction of a law prohibiting credit score discrimination, there is a statistically insignificant increase in the number of traffic fatalities. Because the increase is not statistically significant we interpret the results as suggestive only.

Keywords

discriminationcredit scoreinsurancefatal accidents
Type
Chapter
Information
Selection and Decision in Judicial Process around the World
Empirical Inquires
 , pp. 223 - 241
Publisher: Cambridge University Press
Print publication year: 2019

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