Race and Insurance

Last Updated: 10/18/2023
Issue: In the early part of 2020, several incidents of police violence against Black people led to a fresh wave of discussions and protests about racial justice and equality in the United States. The insurance industry and regulatory community also placed a new focus on issues like diversity and inclusion in the workforce, unfair discrimination in underwriting, and equitable access to insurance products. 

Background: The issue of unfair discrimination in insurance has been a topic of discussion among state insurance regulators many times over the NAIC’s 150-year history. In 1912, regulators conducted a study of fraternal benefit societies that targeted Black people with high-premium, low-value policies. In 1940s, the NAIC first adopted the Unfair Trade Practices Act which prohibits unfair discrimination by insurers. In the 1960s and 70s, NAIC members took up redlining and insurance availability and race-based premiums in life insurance. More recently, the NAIC has studied credit-based insurance scores and investigated racial premium differences in life insurance. Although these are all important issues, NAIC members and the insurance industry recognize that there is more to be done in this area. Beginning in 2020, the NAIC is taking steps toward a more holistic approach to addressing racial disparities and promoting diversity in the insurance industry. 

In July of 2020 at the direction of then-president Ray Farmer, the NAIC established a special committee to address issues of race and insurance. The committee was initially charged with analyzing the level of diversity and inclusion in the insurance sector and determining what barriers exist in the industry that potentially disadvantage people of color and historically underrepresented groups. The committee created five workstreams to make recommendations on action steps in various areas: diversity in the insurance industry workforce, diversity in the NAIC and regulatory community, property & casualty, life & annuities, and health. 

In 2023, the committee has focused their efforts into three workstreams: property & casualty, life & annuities, and health. The group is also charged to be the NAIC’s coordinating body on issues related to race, diversity, and inclusion issues and practices in the insurance sector and works with other NAIC groups on areas of shared interest like predictive modeling, price algorithms, and artificial intelligence.