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Path: utzoo!watmath!csc
From: csc@watmath.UUCP (Computer Sci Club)
Newsgroups: net.women
Subject: Re: Sexism in insurance prices
Message-ID: <7877@watmath.UUCP>
Date: Tue, 29-May-84 13:26:18 EDT
Article-I.D.: watmath.7877
Posted: Tue May 29 13:26:18 1984
Date-Received: Fri, 1-Jun-84 03:38:38 EDT
References: <2602@watcgl.UUCP>, <456@ccieng5.UUCP>
Organization: U of Waterloo, Ontario
Lines: 31

[die bug]

  >Given a choice between an insurance company that discriminates between
  >sexes in setting rates, and one that does not so discriminate, I would
  >choose the company with the rates that favored(or at least did not dis-
  >favor) me.

It should be noted that this attitude leads to a discriminatory rate structure.
Assume companies F and G are selling insurance, and further that the people
to whom they are selling insurance are easily broken down into two groups, A and
B, such that the cost of providing insurance (including reasonable profit) is
$10 per person for group A, and $20 per person for group B.  Company F charges
$10 for people in group A, and $20 for people in group B.  Company G charges
everyone $15.  Naturally everyone in group A buys their insurance from company
F and everyone in group B buys their insurance from company G.  Therefore
company G must either go bankrupt, charge only one rate but make it $20, or
us the same rate structure as F.  If G charges everyone $20 it will attract
only customers from group B, halving its market.  Thus G must charge
the same rate structure as F.

This is not to say discriminating between sexes in setting rates is good or bad.
It does show that if one company does it, all will be forced to do it.  Ending
the practice would almost certainly involve legislation.

                                                          William Hughes

P.S. Note that the above argument also applies to the selling of annuities
(that is the company that discriminates will do better than the company
that doesn't)