Insurance Matters
Social justice for the insurance industry – Now is the time!
BY ANDREW STEWART
Hello and thank you for reading this article, whether you read my articles regularly or it’s your first time. I want to prelude so you have the proper context for this article. At the time of this writing, I like so many people across the world waited with sweaty palms, a pounding heart, shaky legs, and legit nervousness watching and waiting for a verdict. A verdict that in my opinion, would either propel humanity forward into the inclusiveness we want or backward into chaos. On March 20th, 2021, Derek Chauvin was found guilty of second-degree murder, third-degree murder, and manslaughter in the death of George Floyd. I don’t need to recap what happens because we either saw the video, read, or heard how Derek Chauvin knelt on George Floyd’s neck for more than nine minutes during an arrest on May 25th, 2020.
The verdict was covered across almost all communication spectrums. From sports, news, entertainment, music, law and business channels, etc. It didn’t matter what profession, race, gender, religious belief, or economic station you are a part of, this was about the justice system doing the right thing and an individual being held accountable for his actions.
I’ve asked this question to myself and I’ll ask you. Did this verdict give you any sense of closure or relief? The mere fact that with all the evidence and testifying from his peers and experts, I still had doubt justice would be served. We are at war and fighting for social justice. Everyone deserves equal economic, political, social rights and opportunities. But the reality is that this world is not designed to work that way.
Access to insurance in our society raises significant issues about distributive justice and fairness in the public. Every person has the right to be free from discrimination in insurance in the areas of services, contracts, and employment. In 1992, the Supreme Court of Canada in Bates v. Zurich Insurance encouraged the industry to begin looking more closely at non-discriminatory alternatives in rate setting in the auto industry. It ruled that the insurance industry could continue to use discriminatory criteria such as age and marital status, but that the industry could not do so indefinitely.
Several insurance practices routinely distinguish between people based on, among other things, gender, age, marital status, and disability. For example, an underwriter’s assessment of whether a pre-existing condition substantially increases risk is often based on generalized assumptions about how a group behaves and the risk to the insured may be inaccurate in that it relies on stereotypes rather than the actual circumstances of the case.
When the insurance industry identified workplace stress as a major risk insurers began to limit long-term disability benefits, often to only twenty-four months unless the employee was hospitalized for people with disabilities caused by nervous and mental conditions. That means people with mental disabilities are being treated differently than people with physical disabilities. It’s very common for employees who are suffering from a mental illness to be denied benefits after twenty-four months but if they had been hospitalized would have been entitled to benefits.
Insurance companies use actuarial data analysis to set premiums and disallowing coverage to individuals considered to be too high risk. The irony is that those same individuals are the ones who need insurance coverage the most. Insurance companies tend to use general medical information concerning a particular condition without considering an individual’s specific circumstances. They overlook both individual behaviour, social programs, financial and family support to persons with disabilities.
This practice of making broad generalizations when assessing an individual’s degree of risk does not achieve the level of social justice and charging of premiums that coincide with the risk. The industry has the technology and the willingness from the public to infuse new approaches for actuarial and cost analyses. Re-evaluate rates, discriminatory classifications.