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An ASU economics expert discusses whether it's fair for insurance companies to set higher premiums based on demographics.

In this story published April 30, 2024, on WalletHub:

An insurance company must charge a premium that covers expected future claims and allows for a decent profit. Because they do not have a crystal ball, they have to rely on demographics to determine whether an applicant has above-average or below-average expected future claims. If you are in the "wrong demographic," your premiums will be higher than the average. Similarly, your premiums will be lower than average if you are in the "right demographic." Although it may not seem fair if you have safe driving habits but are in the "wrong demographic" (e.g., you are 18 years old and a very safe driver), if we reverse the scenario, you see the same fairness issue arise.

Daniel Marburger, clinical professor of economics

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