How do insurers use data, and when can it be unfair?
This page gives general information. It is not legal advice and does not take your circumstances into account.
Short answer
Insurers use information from customers and data about each property and its location to price risk. Federal law allows insurers to treat people differently because of age, disability or sex in some circumstances, broadly when it is reasonable and based on actuarial or statistical data. No such exemption applies to race.
What insurers use
Information from customers. When buying consumer insurance, a customer has a duty to take reasonable care not to make a misrepresentation to the insurer before the contract is entered into (Commonwealth of Australia 1984a).
Property and location data. The ACCC found that better access to data, and more sophisticated analysis of it, has enabled insurers to price risk at an individual address level, not at a postcode or regional level (ACCC 2020, ix). Insurers model each natural peril separately, supplementing external models with their own claims data (ACCC 2020, 62).
Public data. Most insurers model flood costs using the National Flood Information Database, an industry-funded database that combines government flood mapping into estimates of flood depth at each address (ACCC 2020, 68).
Third-party data. Insurers also use data and models from outside providers. Natural hazard models are often built by specialists or reinsurers (ACCC 2020, 62). Some insurers use a third-party provider’s information to estimate a home’s rebuilding cost, or base increases in the sum insured on a third-party provider’s building cost indices (ACCC 2020, 32).
The ACCC’s 2024 report on data brokers notes that insurers use a wide range of data, including customer data, property data and statistics, to make decisions about premiums and coverage (ACCC 2024, 43). Data firms sell insurers products that check applications against claims history, help assess risk and identify fraudulent claims (ACCC 2024, 64). They also sell property valuation products that help set the level of cover (ACCC 2024, 69). CoreLogic, a large property data firm, counts insurance providers among its customers (ACCC 2024, 78).
Customer behaviour. Pricing that takes account of how likely a customer is to shop around, known as price optimisation, is legal in Australia (Huang 2024).
What anti-discrimination law allows
Federal anti-discrimination law covers insurance. The Age, Disability and Sex Discrimination Acts each include an exemption for insurance:
- Age (section 37) and disability (section 46). Discrimination in the terms of a policy, or in refusing to offer one, is not unlawful if it is based on actuarial or statistical data on which it is reasonable to rely, and is reasonable having regard to the data and other relevant factors. Where no such data is available and cannot reasonably be obtained, the discrimination must be reasonable having regard to other relevant factors (Commonwealth of Australia 2004, 1992).
- Sex (section 41). Discrimination in the terms on which a policy is offered is not unlawful if it is based on actuarial or statistical data from a source on which it is reasonable to rely, and is reasonable having regard to the data. A customer can ask the insurer in writing for access to the data (Commonwealth of Australia 1984b).
The Guidance Resource: AI and Discrimination in Insurance, published in 2022 by the Australian Human Rights Commission and the Actuaries Institute, says insurers should make an objective judgment about the nature and quality of the data. It may not be reasonable to rely on data that is out of date, qualified, incomplete, discredited, based on too small a sample, or not directly applicable to the situation. Data that may be reasonable to rely on includes complete and up-to-date underwriting manuals, local data such as government studies, census statistics and insurance studies from a reliable source, and international studies where local data is insufficient or the international data still applies in Australia. Insurers should keep records of the data they rely on, and may have to disclose its source if a discrimination complaint is made (Australian Human Rights Commission and Actuaries Institute 2022).
The Racial Discrimination Act has no such exemption (Australian Human Rights Commission and Actuaries Institute 2022). Insurers also have obligations under state and territory anti-discrimination laws (Australian Human Rights Commission and Actuaries Institute 2022).
When data-driven pricing can be unfair
Discrimination can be direct or indirect. Indirect discrimination occurs when a requirement that applies to everyone disadvantages people with a protected attribute, and the requirement is not reasonable in the circumstances (Australian Human Rights Commission and Actuaries Institute 2022).
Removing a protected attribute, such as race, from the data may not be enough. In a rich or detailed dataset, other information can act as a proxy for that attribute. The guidance resource advises insurers to test their models to check whether they actually avoid discriminatory outcomes (Australian Human Rights Commission and Actuaries Institute 2022).
Transparency
The ACCC found that consumers are unlikely to have meaningful control over their data when they have to provide personal information to get insurance quotes (ACCC 2024, 3).
ASIC found that no insurer in its review of car insurance explained the key factors behind a premium in quote and renewal documents (ASIC 2026). In the 2026–27 Budget, the Government funded Treasury to develop and consult on options to make the basis of home and contents premiums clearer (Commonwealth of Australia 2026).
Further reading
- Fei Huang, Insurers have a lot of data about us. Where do they get it, and how do they use it?, The Conversation, 24 August 2026.
- Australian Human Rights Commission and Actuaries Institute, Guidance resource: AI and discrimination in insurance, December 2022.
Last reviewed 5 November 2026.