Are insurance company underwriters allowed to discriminate?

The correct choice indicates that insurance company underwriters can discriminate, but this discrimination must not be unfair. Underwriters evaluate risks based on various factors that can include age, health, lifestyle, and market conditions to determine how likely an individual or entity is to file a claim. This risk assessment leads to differentiated pricing and policy terms.

However, while underwriters are allowed some degree of discretion in their evaluations, there are regulations in place to prevent unfair discrimination. For instance, insurance practices must comply with laws that prohibit discriminating based on race, religion, gender (in many contexts), or other non-risk-related factors. This ensures that while risk-based discrimination is acceptable within certain limits, it must always adhere to ethical practices and legal guidelines aimed at promoting fairness and equity in the insurance market.

Overall, underwriters utilize a combination of objective risk factors and established underwriting guidelines, but they must always navigate these responsibilities without crossing the line into unfair treatment of individuals based on arbitrary or non-essential criteria.