Insurance is, essentially, an instrument which discriminates. It differentiates between the risk it will insure and those it won’t, between the kinds of damage it will cover and those it shall not, between lines of business and companies it will allow a convenient risk transfer and those to whom it makes risk transfer a lot more difficult, if not impossible. Finally, let us make no mistake, it also uses discriminating reasoning to categorise individuals. It tells between those human beings with whom it will negotiate a policy and those it considers best left to the competition (or the government, or any other third party). And it does so when it decides to ask some for a low, affordable premium, and others a higher, maybe even untenable amount.

Discriminating is however not essentially harmful or avoidable. To all intents and purposes, discriminating means preferring some people over others and this dovetails with the working of private relationships (be they financial or not) in the context of a market economy. Every time we select a partner, a collaborator, a vendor, an employee, or a client willing to secure our services, we put that person ahead of everyone else. This selection, save a few outliers, is not random but always grounded on a motive: the financial circumstances of applicants, their professional skill, their physical aptitude, their apparent emotional stability, their affability or congeniality, and many other factors.

The problem, of course, is to balance this elementary freedom of choice with the fundamental right to not be discriminated against, which is itself ineluctable in a democracy. In other words — where do we draw the line when it comes to an insurer’s freedom to choose whom it does business with, or to decide on a convenient premium amount?

It’s not easy to come up with a heuristic to determine when discrimination is lawful and when it constitutes a violation of personal and equal rights. If one wishes to know the general inclination on this matter, at least where European law is concerned, the best way to tell a legitimate instance of individual liberties from a violation of the right to not be discriminated against, one should focus on the cause or grounds for discrimination. There is a group of causes where the protections afforded by law are much more robust. These are the causes related to what one might term traits of personal identity: race, sex, ethnic origin, minority status, gender, genetic traits, sexual preference, ideology, or religion. When you prefer or refuse someone based on one of the above, it is extraordinarily complicated to justify it based on the liberty to choose. One might avow that any discrimination against human beings grounded on one of these is considered unlawful in principle. However, when the cause for discrimination does not relate to an individual’s “identity,” but their financial status, physical status, health, education, or — concerning insurance — the risk they generate, it’s much easier to find valid grounds for differentiation among people presenting different characteristics.

Now, back to insurance. Lately, in Spain, we often hear of court verdicts on cases of discrimination where insurers play a part. Many such cases have to to with the status of full legal capacity accorded to every disabled individual in Spain after the legal reform of the Civil Code worked through Law 8/2021. In such cases of discrimination involving insurers, the fact pattern is as follows: an insurer has denied coverage to a disabled individual, or has asked for a premium amount largely exceeding the usual. It follows that the disabled person files a claim against the company for violating their right to not be discriminated against. The question one must ask then is self-evident. Is it always unlawful discrimination when a disabled person is denied insurance coverage?

Applying what we stated above, the answer cannot automatically be “yes.” To reach any kind of conclusion, one needs to assess the concrete facts in each case, attempting to determine the motive or cause of refusal. If the surrounding circumstances suggest that the decision was founded on the disability itself (say, for example, that the company has an automatic refusal policy against disabled clients because it deems that they complexify management), then we must deem that refusal discriminatory in nature. The insurer would be using one of that person’s identity traits (disability status) to deny an insurance policy or make it impossible to negotiate.

On the other hand, one might maintain that unlawful discrimination has not taken place when a given company has denied coverage to a disabled person or demanded a higher premium because it has objectively assessed the risk that person presents based on their concrete, individual circumstances, and the risk was demonstrably high enough to justify the insurer’s decision. In this case, we could argue that the insurer has only objectively followed company principles of good management and, by extension, protected the interests of all its customers.

We won’t try and obfuscate the difficulties of determining whether a case of discrimination is grounded on disability status or not. Among other causes, because the strategy any lawyer wanting to successfully represent an insurer will be to paint the discrimination as an objective, clinical risk assessment. Most of the matters that a judge must decide on entail facing levels of difficulty and similar strategies from jurists. Be that as it may, in my opinion there should remain no doubt that the burden of demonstrating that denial of coverage, or increase in premium amount, are perfectly and objectively justified from the standpoint of actuarial science must fall entirely to the insurer. In the absence of sufficient, persuasive, objective and scientific evidence that the above was the case, then the right thing to assume is that we are before a case of unlawful discrimination on grounds of disability.

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