Around the same time as Citizens Advice published its report on the ethnicity penalty, the Equalities and Human Rights Commission published its strategy for 2022-2025. It’s worthwhile taking a look at, for it will shape the EHRC’s response to this whole issue of discriminatory pricing.
The Equality and Human Rights Commission has set the following as one of its six priority areas : “addressing the equality and human rights impact of digital services and artificial intelligence.”
And it wants to orientate this in four ways:
- improvements in policy and practice reduce barriers to accessing digital services for people with protected characteristics.
- people understand how the Equality Act 2010 applies to the design and use of automated decision-making, and how discrimination that might arise through algorithmic biases can be identified and challenged.
- there is improved understanding of how the Human Rights Act applies to the use of new technology in terms of privacy, surveillance and the use of data.
- the law is updated in line with the development of new technologies to protect people from discrimination and breaches of their rights.
It wants to deliver this by…
- supporting service providers to understand how digital exclusion affects people, and how to use technology to make services more inclusive.
- working with expert organisations and regulators to identify and challenge discrimination in relation to artificial intelligence and emerging technology, and to embed fairness and equal treatment in the design and operation of systems and services.
- providing guidance on how the Equality Act applies to the use of new technologies in automated decision-making. Working with employers to make sure that using artificial intelligence in recruitment does not embed biased decision-making in practice.
- making rights and freedoms in the digital age clearer, including how the Human Rights Act applies to privacy, surveillance and the use of data.
- identifying gaps in the law created by the development and use of new technologies. Advising on how the law can be updated to provide protection from discrimination and breaches of rights.
A Question of Resource
So what does this mean for insurers? What we can say is that it has clearly pointed its strategic compass in the direction of the types of issues raised in the CA report. What is unclear is just how well resourced it is to make significant progress and impact on those issues.
The EHRC is a small organisation, employing around 200 people and with a budget of around £17m. Compare that to the FCA, who employs around 4,200 people and with a budget of around £632m. They are very different regulatory beasts.
It was noticeable in the CA report that all of its recommendations were aimed at the FCA. What this points to is that while the EHRC are in charge of equalities legislation, the scale and complexity of what was happening in insurance pricing is, to be honest, beyond the EHRC’s capabilities, at least for the present. The challenge that CA face therefore is to push the FCA to become the lead regulator on this issue.
As I’ve mentioned before, the FCA seem to not like dealing with what it sees as social issues. So what happens then? One clue lies in the Digital Regulation Cooperation Forum’s (DRCF) plan of work for 2021/22.
A Joined Up Waiting Game
The second of the DRCF's three priorities involves” joined-up regulatory approaches”. And the third priority involves developing “practical ways of sharing knowledge, expertise, capabilities and resources, for example in AI and data analysis”. In other words, we should expect the FCA and EHRC to join together in their response to the CA report. A third organisation that I would expect to be working behind the scenes on this is the Alan Turing Institute, who have a 5+ years relationship with the FCA on digital projects.
Will we see this partnership erupt into life in the next month or so? I don’t think so. Instead, I think it will do two things. Firstly, the three organisations will work on building ways to work together as effectively as possible. And secondly, they will wait and see what progress consumer groups and the insurance sector make around exploring what exactly are the main drivers for this ethnicity penalty.
How long will they wait for signs of that progress? I would think around six months. One thing will bring that forward or push it back: the likelihood of the FCA or EHRC having to go before the Treasury Committee to explain what they’re doing to address the issues raised by CA. Neither organisation performed brilliantly last time they were before the committee. It will be important for them to do better next time.
New Law on its Way?
I’ll end by drawing your attention to the last bullet point in each of the above two lists. This tells us that the EHRC is thinking about the extent to which equalities legislation will remain fit for purpose in a digital world. What that will signal to organisations like the ABI is the need to prepare for engaging with the EHRC on the exemptions the sector currently enjoys in the legislation. What the CA report does is potentially become a thorn in the side of that lobbying.
As I explain in this analysis piece, what’s happening in insurance is triggering all sorts of questions about how well equalities legislation is working. What this points to then is discriminatory pricing as an issue that could discussed in public policy forums for some time to come. If I was a sector strategist, this would lean me very much towards engaging with the issue in order to resolve it, rather than to make it go away.