CAS Research Council Issues Request for Proposals on Potential Impacts of Bias Mitigation

The CAS Research Council is issuing a Request for Proposals (RFP) to generate a brief which discusses potential unintended impacts on protected classes other than race or ethnicity when mitigating racial bias in insurance rating.

Casualty Actuarial Society (CAS)

The CAS was organized in 1914 as a professional society for the promotion of actuarial and statistical science as applied to insurance other than life insurance, such as automobile, liability other than automobile, workers compensation, fire, homeowners, commercial multiple peril, and others. Such promotion is accomplished by communication with those affected by insurance, presentation and discussion of papers, attendance at seminars and workshops, collection of a library, research, and other means. The membership of the CAS includes over 8,600 actuaries worldwide, employed by insurance companies, industry advisory organizations, national brokers, accounting firms, educational institutions, state insurance departments, the federal government, and independent consultants.

The CAS Research Council

The CAS Research Council was formed in 2021 to prioritize the research needs of the general insurance actuarial community. This work will augment the existing work of standing research working groups which focus on specific practice areas like ratemaking, reserving, reinsurance, and risk analysis. The operational oversight of projects will be designated to a project oversight group (POG) made up of CAS staff and volunteers.

Research Problem Description

The insurance industry has raised questions about potential racial inequities, and many states have looked to create regulations limiting attributes insurance carriers may include within their rating algorithms. Rating attributes that have been under scrutiny recently include, but are not limited to, credit-based insurance scores, age, gender, geography, home ownership, motor vehicle records, and marital status due to their direct or perceived correlation with a protected class. While the intent of these measures is to minimize unfair impacts on certain protected classes, the true implications of removing variables to minimize potential bias in a rating algorithm remain unclear. Moreover, what are the implications of acting based upon a single protected class only? Could bias-mitigation along a given protected class leave some intersections unfairly impacted? A tangible example could be the removal of credit rating from an insurance rating algorithm that benefits a certain class, but adversely impacts older individuals who have built up better credit scores on average.

The CAS is looking for a document that discusses the potential unintended impacts on protected classes when mitigating bias in rating plans such as private passenger auto and homeowners insurance. Specifically, we are looking at the impact of prohibition of specific insurance rating variables. In particular, the goal of this document will be to show the potential impacts on various classes (e.g., age, race, gender, etc., intersections of those classes, etc.) and not focus on the impact to any single class. Ideally this paper will utilize actual data to show real world examples that would more likely be seen when implementing bias reduction techniques. Where such data is not available, theoretical or simulated data may be used if it can be demonstrated that the simulations are a reasonable facsimile of real-world conditions.

Project Requirements

The end product of the research should be a paper, saved as (or converted to) a Microsoft Word file. The length should be sufficient to give meaningful, practical guidance to practitioners in a way that is concise yet complete. This typically means a paper of 15-50 pages. Those page counts should be regarded as rough guidelines only.

Actuarial/statistical methods used, such as GLMs, should have sound foundations rooted in established principles. A method’s output should be explainable to insurance industry decision makers who may not have the experience or education of an actuary. Given the subject matter of this paper, the results could be shared beyond the insurance industry and, therefore, should be communicated in a clear and concise manner that is accessible to the general public.

Any accompanying code examples will be shared on the CAS GitHub site (https://github.com/casact). All material on GitHub is released under the Mozilla Public License, version 2.0 (https://www.mozilla.org/en-US/MPL/2.0/).

Proposal Requirements

Proposals should include a clear outline of the work that will be performed and the time frame in which it will be performed (including key dates). The proposal should be accompanied by the resumes of the researcher(s), indicating how their background, education, and experience bear on their qualifications to undertake the research.

The CAS contract will be awarded to the respondent who - in the judgment of the Research Council and entirely based on their written proposal - is best able to perform the work as specified herein. If the committee determines that no proposal meets the requirements of the RFP, then no contract will be awarded.

Receipt of proposals will be acknowledged in a timely manner. Respondents who are not awarded the contract will be informed shortly thereafter.

Interested researchers should submit their proposals and any questions to:

Mallika Bender, DEI Staff Actuary
Casualty Actuarial Society
mbender@casact.org

Timeline

Interested parties are welcome to submit questions about the RFP. All questions and responses will be circulated to all who submit a proposal.

Compensation

Compensation to researchers will be commensurate with the time required to carry out the work. Respondents should include an estimate of cost in their proposals. Total cost should not exceed $45,000.

Presentation, Ownership and Publication of Report

As a condition of selection, the CAS requires that all right, title, and interest, including copyright and patent, in and to the report be owned by the CAS. The selected researcher/research team must sign a formal research agreement that assigns all such rights to the CAS. In any publication of the report, the researcher(s) will receive appropriate credit with regard to authorship. The CAS may publish the report in its entirety, or any sections thereof, in any format and medium as it finds fit, including but not limited to CAS publications, and electronic versions such as on its Web site or physical storage media.

The researcher(s) should make every effort to be available to present the report at a CAS meeting or seminar.