Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy

by Cathy O'Neil

It gets worse. In a filing to the Wisconsin Department of Insurance, the CFA listed one hundred thousand microsegments in Allstate’s pricing schemes. These pricing tiers are based on how much each group can be expected to pay. Consequently, some receive discounts of up to 90 percent off the average rate, while others face an increase of 800 percent. “Allstate’s insurance pricing has become untethered from the rules of risk-based premiums and from the rule of law,” said J. Robert Hunter, CFA’s director of insurance and the former Texas insurance commissioner. Allstate responded that the CFA’s charges were inaccurate. The company did concede, however, that “marketplace considerations, consistent with industry practices, have been appropriate in developing insurance prices.” In other words, its models study a host of proxies to calculate how much to charge customers. And the rest of the industry does, too.