Protected Class
A group sharing a legally protected trait such as race, color, national origin, sex, religion, age, or disability. AI testing screens for proxy effects.
A protected class is a group of people defined by a characteristic that the law protects from discrimination. In insurance, the protected classes vary by state. Colorado’s SB 21-169, for example, lists these characteristics in its ban on unfair discrimination: race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, and gender expression. One provision of the NAIC Unfair Trade Practices Act (#880), a model text that states may adopt and change, applies to refusing to insure a person, refusing to continue insuring them, or limiting the amount of coverage available to them, not to rates. That provision names sex, marital status, race, religion, and national origin.
AI governance focuses on whether a model or data variable produces outcomes that differ by protected class, either directly or through proxies. The NYDFS proxy test starts by identifying whether a variable is correlated with a protected class. If it is, the insurer should consider whether using it is required by a legitimate business necessity. The test covers only external consumer data.
Protected class is the anchor concept behind fair-lending and fair-insurance testing. Without naming the classes, a carrier cannot build a defensible bias-testing program. See our guide to the proxy test.