Living in a more deprived, more ethnically diverse location increases your chance of receiving a higher quote, a new survey on the Irish insurance industry has found.
A new report jointly produced by CeADAR, Ireland’s centre for artificial intelligence, and Idiro Analytics used AI methods to analyse almost 40,000 quotes from 10 car insurance companies across 20 locations in Ireland.
Researchers found that driving experience and the length of time a driver has had a policy are key factors that are modified by home address when a quote is being calculated.
This can lead to extreme cases in which 25-year-olds in areas of south Dublin are receiving lower quotes than 60-year-olds with fewer penalty points living in poorer locations.
The report also found that the extent to which your premium increases if you receive penalty points varies depending on your location. For example, drivers in Dublin 17 who receive penalty points can expect an average increase in their premium of 107 per cent, from €792 to €1,642, compared to 68 per cent for drivers in Mallow, Co Cork, from €560 to €941.
Meanwhile, a driver’s occupation increases their quote even if they do not use their car for business purposes. This is then compounded by where they live.
Retail workers are most affected by this, with drivers who work in retail and live in Balbriggan, Co Dublin, seeing their premiums increase by 35 per cent, from €555 to €747, compared to 5 per cent, from €512 to €540, for a retail worker living in Glenageary, Co Dublin.
The year-long research analysed almost 40,000 quotes from 20 locations around Ireland, including counties Dublin, Cork, Longford, Roscommon, Wicklow and Donegal.
Multiple samples of quotes were collected to isolate single changes to accurately measure the effect of each change – for example, a driver’s name, home address or gender – on the quoted figure.
The research did find significant differences across the 10 insurers whose quotes were analysed.
Researchers also found that residents of Longford town are quoted the highest premiums. Those in Crookstown, Co Cork, receive the lowest quotes.
There was no difference in quotes between those with traditionally Irish names and those with non-Irish-sounding names. There was also no significant difference between males and females, the analysis found.
Drivers who make claims, even when they are not at fault, receive higher quotes.
The aim of the study was to understand how insurance companies’ algorithms work and the extent to which unconscious bias is embedded in them, said Dr Adrian Byrne, a fellow at CeADAR and lead researcher at the AI Ethics Centre in Idiro Analytics.
"Living in a more deprived, more ethnically diverse location not only increases the chances of receiving a higher quote but if you add penalty points, claims and zero NCB into the mix, then we have seen unequal treatment between different locations," Dr Byrne said.
European legislation due to be introduced later this year will see essential service providers like car insurance companies penalised for failing to guard against bias in their AI systems.
Companies found to have broken the rules of the EU AI Act will find themselves liable for administrative fines of up to €30 million or a sum equal to 6 per cent of their annual turnover.
Dr Byrne said insurance companies need to guard against bias that may lead them to be in breach of the new EU AI Act.
