Complainant

Respondent

Parties

Jaime  Alonso Vallin

123 Money Ltd t/a  123.ie

Representatives

  Self

 James Murray, Company Secretary

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 21 Equal Status Act, 2000

CA-00039186-001

14/08/2020

The complainant is a Spanish national living in Ireland for the past 20 years.  He is the holder of an EU driving licence.  On renewing his motor insurance in June 2020, he discovered that there was a cost loading based on the fact that he held such a licence.  He is alleging that he has been discriminated against by the respondent on the basis of his race. The respondent is an insurance company and denies that it discriminated against the complainant.   An individual’s race is not a factor that is asked for at any point in relation to the provision of motor insurance.  An insurance quote is based on the level of risk and an internationally recognised system of Generalised Linear Modelling is used in the insurance industry to analyse insurance data.

The complainant is a Spanish national who is resident in Ireland for the past 20 years.  During this time, he has held a valid Spanish Driving licence and has a claim free history.  When renewing his insurance in June 2020 he noticed that the quote was more expensive because he held a Spanish driving licence. 

He submits that he has been discriminated against by the respondent because of the origin of his driver’s licence and the failure of the respondent to:

(a) recognise this as a valid licence,

(b) that this discrimination would continue for as long as he held such a licence and

(c) the respondent failed to advice his that he would be entitled to a reduced insurance premium if he undertook the administrative procedure of exchanging his drivers licence for an Irish licence. 

The complainant submits that the approach by the respondent amounts to discrimination on the grounds of race and the approach is also contrary to the basic principles of the EU.  The complainant submits that by not informing customers of the position in relation to the loading attributable to the holding of an EU licence it is taking advantage of the lack of this awareness.  The complainant believed that in this case the difference in premium was in the region of 64%.

The complainant also submits that the data used by the respondent is not independent as it is compiled by the respondent and can be used to suit their narrative.

The respondent is a multinational insurance group with major operations in Ireland, UK and Canada.  The respondent exclusively offers motor insurance products which are underwritten by its parent entity.  The respondent is regulated by the Central Bank of Ireland.

The respondent recognises an EU Drivers licence as a valid licence.  The origin of the EU licence does not influence the premium or acceptance criteria.  The respondent does not collect data on the race/nationality of applicants for insurance.  The origin of any licence is not taken into account.  The respondent submits that the underwriters use statistical information on EU driving licence holders driving in Ireland to determine the price of the policy.  When applying for insurance there are a number of factors taken into account and each factor is reviewed separately in order to determine the factors that are significant in their prediction of claims cost.  The type of licence is a rating factor and motor insurance premiums are influenced by a number of complex factors such as previous claims, location of the car, type of car, vehicle history, licence types and penalty points.

The respondent refutes that the complainant was quoted a 64% differential in June 2020.  The respondent confirms that a 25% differential was quoted for the complainant in June 2020 between a full Irish driving licence and an EU licence.  The difference in the quote is driven by the claims experience on the respondent’s motor book.  This shows that EU licence holders were riskier.

The respondent provided evidence that that calculation of pricing for the various segments which make up their book of business is absolutely central to the business of insurance and to ensuring the sustainability of that business.  The respondent explained that in order to provide a quotation the customer is asked a detailed set of questions in order to correctly assess the level of risk for the insurance company in writing that individual risk.  The rationale for asking these questions is that, based on the insurer’s data, these issues are highly indicative of whether that individual will, during the term of the policy of insurance, have a claim which needs to be paid out, leading to costs for the insurer.

The insurer used their data to assess the individual risk by using what are referred to as “rating factors” which attribute individual elements of risk to a policy and will add cost depending on the status of the customer.  The respondent has a team of actuaries whose job it is to assess and manage risk by analysing the data available to them.  The respondent uses a recognised software package to analyse its insurance data.  This is a Generalised Linear Modelling tool which is recognised internationally and is widely used in the insurance industry.

The respondent’s chief underwriting officer, Mr A, gave evidence in relation to the source of their data.  Mr A confirmed that he only data which is collected in relation to any of the ten grounds outlined in the Equal Status Act is in relation to age. This clearly is a significant risk factor in the motor insurance rating process.  Mr A outlined how their data is updated on a cyclical basis and that they have a model validation exercise process in place.  The respondent provided the hearing with a number of examples to illustrate how this will influence the premiums charged. Under cross examination Mr A was asked why customers were not informed of the differential between having an EU and Irish driving licence and he confirmed that there was no obligation to disclose the risk ratings to customers.  Mr A also confirmed that the type of licence is just one factor which is taken into account when determining a quote for a particular policy.  There are a number of other factors involved.

Ms A is an actuary with the respondent.  She provided the hearing with an overview of her role and clarified that the data set is usually comprised of five years data and this is an acceptable data size and is an industry standard.   Ms A also clarified that the software used is a predictive model which can rapidly access large complex data to reveal the underlying patterns of claims experience.

It was submitted on behalf of the respondent that it can also rely on Section 5(2) of the Equal Status Act, 2000 (“The Act”) to justify its use of licence type as a factor in determining the appropriate insurance premium to be offered to customers for insurance.  The respondent submits that the Act recognises the practical and commercial realities faced by insurers whose products relate to the assessment of risk and the Act sets out a number of grounds upon which differences in the treatment of persons may occur in relation to insurance policies.

The respondent also submitted a number of cases which held that it was reasonable for an insurance company to rely on actuarial or statistical date, and in the case of O’Donoghue v Hibernian General Insurance, DEC-S2004-201, for the insurer to rely on its own claims history instead of the MIAB industry wide report.  In that case the Equality Officer noted, “it is reasonable that an insurer should draw on actuarial data from a source that allows it to align its claims risk to its actual record and taking reasonable commercial factors into consideration, then to set the premium”.  In that case the Equality Officer also noted that “the data from its own client base offers the appropriate method for achieving this.  Utilising data from a source that incorporates data provided by other insurers operating in the marker who for their own commercial reasons, may accept different levels of claims exposure may not be an acceptable source for one individual company to base its premiums on”.

The Equality Officer in that case was also satisfied that the statistical method applied by the insurer (Generalised Linear Modelling) was a “widely used and reasonable statistical method to apply” and went further to state that this represented “ a means to accurately identify the weighting to be associated with individual risk variables”.

The respondent also submitted that there were a number of WRC cases in 2016 which were brought by EU licence holders against various insurance companies and are relevant as they address the basis for the differential between the premium for full Irish and full EU licences.  These cases were Adam Herzyk v KennCo Underwriting, DEC-SD2016-035, Prekun v Liberty Insurance, DEC-S2016-015, WIlcocki v Allianz, DEC-S2016-032, ADJ-00000040, ADJ-00001752 and ADJ-00000096.

It is the respondent’s position that the complainant has failed to establish a prima facie case that it unlawfully discriminated against him on any of the grounds for discrimination as set out in the Equal Status Act.

I find that the complainant has complied with the notification requirements and it is therefore appropriate for me to adjudicate on this complaint. The complaint in this case is based on the allegation that the complainant was discriminated against contrary to Section 3(1)(A) and 3(2)(h) of the Acts.  In this complaint there is a reasonable connection with the complainant’s nationality and I find that this complaint is on the ground of race. 

Discrimination on the “race ground” occurs where there is less favourable treatment of one person compared to another person because one person is of different race, colour, nationality or ethnic or national origin than the other person.  Section 3(2) of the Act provides that “as between any two persons, the discriminatory grounds … are … (h) that they are of different race, colour, nationality or ethnic or national origins (the “ground of race”)”.

The burden of proof is set out in Section 38A of the Act which provides that: “Where in any proceedings facts are established by or on behalf of a person from which it may be presumed that prohibited conduct has occurred in relation to him or her, it is for the respondent to prove the contrary”.

It is accepted that the complainant obtained an insurance quote based on the fact that he had an EU licence rather than an Irish one.  This quote was more expensive because he was an EU licence holder.

I note that the respondent has submitted and given evidence that their insurance quotes are based on the Generalised Linear Model which utilises the information provided by a customer. One such risk is the type of licence held by the customer.  The respondent confirms that the modelling process identifies that EU driving licence holders are a greater risk than those who have a full Irish driving license.  In that context the insurance quotation is not linked to the specific race or nationality of the licence holder.  It is clearly addressing the risk profile identified in the overall profile which is provided by the licence holder.  The respondent, in this case, provided an insurance quote based on the risk factors identified and for which they are prepared to accept those risks.    If discrimination was alleged, then the complainant needs to look beyond the premium quoted and prove that the sole reason for the quote was based on his nationality.  In this case the complainant’s nationality was never identified as part of the quotation process and he was only identified as an EU licence holder.  In these circumstances I find that the quote provided to the complainant was not based on his nationality.

I also find that the differential is objectively justified by a legitimate aim.  It is legitimate for the respondent, based on commercial considerations, to determine its motor insurance premiums based on the risk characteristics which are objectively based and justified by actuarial and statistical data.

I have taken into consideration the submissions, evidence and oral submissions provided to me.  I find that the complainant has not established a prima facie case of discrimination on the grounds of race.

Race discrimination.  EU Driving licence