Joetta Forsyth Analyzes Fairness of Car Insurance Rates in California in WalletHub

In a recent article by WalletHub on the cheapest car insurance options in California, Pepperdine Graziadio faculty member Joetta Forsyth provided insights on the fairness of insurance rates. Forsyth discussed the rationale behind considering factors such as age, gender, and occupation when setting car insurance premiums.

Forsyth explained that while it might seem unfair to charge higher rates based on characteristics like age or gender, these factors statistically correlate with higher risks. For instance, younger drivers, who are more prone to accidents, often face higher premiums. Forsyth emphasized that this practice encourages safer driving behaviors and ultimately reduces accidents, lowering the lifetime cost of insurance for all drivers, and benefiting society as a whole.

Forsyth also highlighted the complexity of determining fairness in insurance pricing, particularly when it comes to factors within an individual's control, such as their occupation. She pointed out that while certain jobs might indicate a higher risk tolerance, the market generally adjusts wages to account for these added risks, including higher insurance costs.

The insights underscore the importance of maintaining a balance between statistical data and fairness in insurance practices, advocating for a free-market approach to ensure both efficiency and safety in the industry.

Read the full article here.