Welfare implications of fair and accountable insurance pricing

This paper introduces an empirical framework to evaluate the welfare implications of fair and accountable insurance pricing by modeling the complete pricing process, including demand and price optimization. Moving beyond traditional cost modeling, we analyze both discrimination-related fairness criteria and broader regulatory constraints, such as price optimization bans, that constrain insurers' pricing behavior. Using two French auto insurance datasets with gender as the protected attribute, we provide the first systematic empirical evaluation of the welfare effects of these pricing constraints from the perspectives of both consumers and firms. Our findings reveal: (1) a fundamental tension between fairness in prices and markups; (2) price equalization policies eliminate price gaps but amplify markup disparities; (3) accountability constraints reduce markup gaps while imposing profit losses; and (4) price optimization bans exhibit market-contingent welfare effects that depend critically on underlying market characteristics.