Algorithmic Audit of Italian Car Insurance: Evidence of Unfairness in Access and Pricing

TL;DR

This study audits Italian car insurance pricing algorithms, revealing discriminatory practices based on birthplace and gender, and highlighting potential unfairness and bias in the industry despite regulations.

Contribution

It provides empirical evidence of discriminatory pricing practices in Italian car insurance algorithms, especially regarding birthplace and gender, using data from comparison websites.

Findings

Birthplace and gender significantly influence insurance quotes.

Foreign-born drivers often face higher prices than native drivers.

Riskier profiles receive fewer quote options, indicating potential bias.

Abstract

We conduct an audit of pricing algorithms employed by companies in the Italian car insurance industry, primarily by gathering quotes through a popular comparison website. While acknowledging the complexity of the industry, we find evidence of several problematic practices. We show that birthplace and gender have a direct and sizeable impact on the prices quoted to drivers, despite national and international regulations against their use. Birthplace, in particular, is used quite frequently to the disadvantage of foreign-born drivers and drivers born in certain Italian cities. In extreme cases, a driver born in Laos may be charged 1,000 euros more than a driver born in Milan, all else being equal. For a subset of our sample, we collect quotes directly on a company website, where the direct influence of gender and birthplace is confirmed. Finally, we find that drivers with riskier profiles tend to see fewer quotes in the aggregator result pages, substantiating concerns of differential treatment raised in the past by Italian insurance regulators.