What does unfair discrimination in insurance entail?

Unfair discrimination in insurance refers to treating individuals or groups differently in ways that are not based on relevant risk factors. In the context of the insurance industry, this means that a company cannot refuse coverage or charge higher premiums based on protected characteristics, such as race or ethnicity. Such practices are considered unethical and often violate state and federal laws designed to promote fairness and equality in access to insurance.

When it comes to the options provided, refusing coverage based on race or ethnicity is a clear example of unfair discrimination because it targets individuals based on an inherent trait that does not reflect their risk profile. Insurers are expected to assess risks based on factors like health history, driving record, or claim history, rather than on someone’s race or ethnicity.

In contrast, the other choices involve factors that might be more closely related to risk assessment or the economic viability of insurance policies. For instance, charging higher premiums for experienced clients is not discriminatory if it's based on objective criteria related to risk. Limiting coverage based on financial status may relate to the insurer’s guidelines for underwriting but doesn't constitute discrimination in the same way as the refusal based on race. Lastly, offering packages based on age can be common practice in insurance due to the correlation between age and risk factors; therefore, it's