CAS Research Council Issues Request for Proposals on Telematics and Algorithmic Bias

The CAS Research Council is issuing a Request for Proposals (RFP) to assess ways in which telematics and usage-based insurance technologies/data can either increase or decrease the potential for racial bias within 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 9,000 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

As the insurance industry has raised questions about potential racial inequities, telematics and usage-based-insurance have been postulated as a more appropriate path to fair & equitable risk-based pricing within personal auto insurance. The CAS is requesting research to both test this hypothesis and provide a balanced view into telematics and usage-based insurance. Submitted research should discuss the potential of telematics to mitigate, create, and/or amplify bias by addressing questions such as:  

• How do the results of telematics rating variables* compare to those of traditional rating variables suspected of racial inequities, such as credit-based insurance score, when tested for racial bias?
• What additional benefits does telematics/UBI bring to insurance as it relates to protected classes, such as risk mitigation, increased availability of insurance, etc.?
• Is there inherent bias within the barriers of entering a telematics/UBI program, such as the availability of compatible phones/vehicles, take rate, completion rate, etc.?
• Do telematics rating variables run the risk of serving as a proxy for other variables, such as occupation, education, age, etc.?
• While this paper focuses on racial bias, are there any other potential interactions from telematics, e.g. impact to other protected classes?

Common telematics variables include speed, acceleration, hard breaking, hard cornering, miles driven, time of day/week, phone use while driving, and driving geography. For the purpose of this research, the scope can include these variables but is not limited to them.

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.

Where actuarial/statistical methods are used, they should have sound foundations, rooted in established principles. With that understood, the techniques within a method should be intelligible to an actuary. Moreover, a method’s output should be explainable to insurance industry decision makers who may not have the experience or education of an actuary.

Methods should have sound mathematical foundations, rooted in established principles of mathematical statistics or predictive modeling. With that understood, the techniques within a method should be intelligible to an actuary working in Property & Casualty insurance pricing and should not pre-suppose extensive familiarity with advanced topics in those fields. Moreover, methods and processes should be explainable to insurance industry decision makers who may not have the experience or education of the actuary implementing the testing or integration of industry benchmarks.
The paper should not make any specific recommendations with regard to public policy.

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 is best able to perform the work as specified herein. If the group 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 so informed shortly thereafter.

Interested researchers should submit their proposals and any questions to:

Mallika Bender, DE&I Staff Actuary
Casualty Actuarial Society
mbender@casact.org
(302) 438-3465

Timeline

Proposals should be submitted by October 15th. Interested parties are welcome to submit questions about the RFP. All questions and responses will be circulated to all who submit a proposal.  CAS may engage interested parties during the review period to further discuss 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.

The CAS initiated research on several topics related to potential bias in insurance pricing as part of its Approach to Race and Insurance Pricing in 2021 and 2022. This resulted in a series of four papers, which were published in March 2022. The research requested here may be included in the second phase of that research series.