1. Review of ProPublica Study on Auto Prices
Webinar
June 8, 2017
Roosevelt Mosley, Principal and Consulting Actuary, FCAS MAAA, Pinnacle Actuarial Resources
Linda Brobeck, Senior Consulting Actuary, FCAS MAAA, Pinnacle Actuarial Resources
James Lynch, FCAS MAAA, Chief Actuary, Insurance Information Institute
Insurance Information Institute  110 William Street  New York, NY Tel:  

2. Overview of ProPublica Allegations and I.I.I. Response
Background
Overview of ProPublica Allegations and I.I.I. Response

3. ProPublica Article December 2016
I.I.I. becomes aware that ProPublica is working on an article alleging discrimination in CA, IL, MO and TX
February 2017
ProPublica shares its research data with I.I.I.
March 2017
I.I.I. engages Pinnacle Actuarial Services to review work
April 5, 2017
ProPublica (with Consumer Reports) publishes allegations

4. I.I.I. Response April 5 (day of publication): April–June
Issues written response
Convened media teleconference
Insurance Journal op-ed
April–June
Monitor and respond
Additional research (PCI)
June 8 (today)
Releases Pinnacle report to members
Conducts Webinar
TBA: Will brief reporter, selected media on Pinnacle report

5. Conclusions Pinnacle Peer Review PCI Research
Most ZIP codes lack enough data to be credible
Premium-loss mismatch
Potential data/calculation error in Illinois
Flaws in structure and output of mathematical model
PCI Research
Loss ratios in 3 states show there’s no bias

6. An Alternative Look: CA Minority ZIPs
1.23 (Overall Average State Risk)
To test ProPublica’s conclusions, Pinnacle used ProPublica’s data to calculate the average state risk for minority and non‐minority areas.
Company average premiums were estimated using the rate for the single risk profile by ZIP code and weighted based on the industry distribution by ZIP code.
For each company, they then compared the premium relativity by area to the risk measure by area.

7. An Apples-to-Apples Comparison
PCI Analysis
An Apples-to-Apples Comparison

8. Apples-to-Apples Comparisons
In 3 states, regulators collect premium by ZIP code.
Missouri
Chicago
Texas
Rest of Illinois
SOURCE: Property Casualty Insurers Association of America.

9. Thank you for your time! Questions?