-
In the state of Modern York, which has unique laws in befitting with its stature as a global line centre, ancient New York Attorney Commonplace Eliot Spitzer was in a unique setting to grapple with major national insurance brokerages
- Spitzer stated that Marsh & McLennan steered career to provision carriers based on the mint of contingent commissions that could be extracted from carriers, rather than basing decisions on whether carriers had the best deals for clients
- Diverse of the largest commercial insurance brokerages have since stopped accepting contingent commissions and have adopted new biz models.
|
An insurance underwriter's job is to evaluate a given risk as to the likelihood that a cataclysm will occur |
|---|
| Any factor that causes a greater likelihood of loss should theoretically be charged a beyond rate |
| This basic principle of insurance must be followed if insurance companies are to remain solvent |
| Thus, "discrimination" against (i.e., differential treatment of) potential insureds in the risk evaluation and premium-setting process is a imperative by-product of the fundamentals of insurance underwriting |
| For instance, insurers charge older people significantly higher premiums than they imputation younger people for style life insurance |
| Older people are thus treated differently than younger people (i.e., a distinction is made, discrimination occurs) |
| The rationale for the differential treatment goes to the heart of the risk a life insurer takes: Old people are likely to die sooner than young people, so the risk of depletion (the insured's death) is greater in any given period of time and therefore the risk carrot must be college to binding the greater risk |
| However, treating insureds differently when there is no actuarially firm discernment for doing so is unlawful discrimination. |