California Bulletin Outlines Insurer Expectations in Mitigating Racial Bias and Unfair Discrimination

California Bulletin Outlines Insurer Expectations in Mitigating Racial Bias and Unfair Discrimination

On June 30, 2022, the California Department of Insurance (CDI) issued Bulletin 2022-5 to all admitted and nonadmitted insurers, licensees, and other interested parties conducting business within the state. In response to certain allegations, the Bulletin outlines the state's goals and expectations related to mitigating racial bias and unfair discrimination in marketing, rating, underwriting, and claims practices by the insurance industry.

Among other things, the CDI emphasized its strong commitment to its Insurance Diversity Initiative and states it is aware of and is investigating several recent examples of potential bias and alleged unfair discrimination in many lines of insurance resulting from the use of technology and data. As a result, the CDI Bulletin serves to remind all insurers and licensees of their obligation to market and issue insurance, charge premiums, investigate suspected fraud, and pay insurance claims in a manner that treats all similarly-situated persons alike. It specifically states that:

"In order to ensure that all Californians are treated equally, before utilizing any data collection method, fraud algorithm, rating/underwriting or marketing tool, insurers and licensees must conduct their own due diligence to ensure full compliance with all applicable laws. These laws include, but are not limited to, laws prohibiting discrimination with regard to insurance ratemaking, laws prohibiting discrimination in claims handling practices, laws prohibiting discrimination when accepting insurance applications, and laws prohibiting discrimination when canceling or nonrenewing insurance policies. Additionally, insurers and licensees must provide transparency to Californians by informing consumers of the specific reasons for any adverse underwriting decisions."

Any insurer or licensee with questions regarding this Bulletin, please contact Gayle Freidson, Attorney IV, Corporate Affairs Bureau, California Department of Insurance,


Link to Bulletin 2022-5