Principles of Ethical Insurance Processes and Products
Background
The Society of Actuaries Research Institute (the “Institute”) is the research arm of the Society of Actuaries (“SOA”), providing objective, data-driven research that brings together tried and true practices and future-focused approaches to address societal challenges and business needs. The Institute provides trusted knowledge, extensive experience and new technologies to help effectively identify, predict and manage risks. Through its Diversity Equity and Inclusion strategic research program, the Institute dedicates part of its efforts to objectively exploring issues within the insurance, retirement and financial industries that affect people of color or other dimensions of diversity in the United States.
In recent years, the insurance industry has devoted considerable time and effort to study and identify principles or frameworks for helping to evaluate and ensure ethical applications of artificial intelligence (AI) within the industry. The Institute’s Diversity Equity and Inclusion strategic research program is asking related questions about insurance processes and products, or the elements of processes and products, that do not involve AI. Can a set of principles be identified or designed to help evaluate and ensure such insurance processes and products are ethical?
Purpose and Research Objective
The Institute’s Diversity Equity and Inclusion strategic research program is seeking researchers to identify or develop a framework or a set of principles or considerations for helping to evaluate and ensure ethical insurance processes and products that do not directly involve artificial intelligence. An important part of understanding the project’s intent is understanding what this project is not about. This project is not to try to define what is or is not ethical, but to define considerations to be contemplated at various stages of a process. It will be left to the user to determine the degree to which responses are ethical. Considerations might include questions to be asked and/or points, issues or sensitivities to be explored. Nor is this project about discussing laws, Actuarial Standards of Practice (ASOPs), or other forms of regulation. Assume that all relevant processes and product are intended to meet the requirements of all applicable laws, ASOPs, regulations, etc., and the actuary intends to follow the Code of Professional Conduct that apply to actuaries with credentials from any of the five actuarial organizations in the U.S. What are the considerations to use in evaluating whether a process or product is ethical?
Some of the potential topics for consideration in this research may include:
- How to ethically use protected class data
- Potential impact of language and terminology, including historical meaning of terms
- Responsibility to relevant stakeholders regarding process outcomes (stock holders, customers, agents, etc.) in the face of different and sometimes opposing objectives.
- Potential consequences of imbalances in knowledge between a product developer/insurance company and customers, potentially including any responsibility of insurers to provide transparency.
- Potential for products that benefit some consumers at the expense of society as a whole
- Balancing practical business issues with perfection of ethical processes and products
- Ethical considerations when using third-party data
- How ethical considerations may differ for new or developing processes versus long-standing processes
Proposal Requirements
To facilitate the evaluation of proposals, please submit the following information:
- Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, please designate a single individual as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
- An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
- A description of the expected deliverables and any supporting data, tools or other resources.
- Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates may be in the form of hourly rates, but in such cases, please include time estimates and any guarantees as to total cost, which will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix) - A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
- Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion.
Selection Process
The Institute will appoint a Project Oversight Group (POG) to oversee the project. The POG will review proposals and may seek input from other knowledgeable individuals, but the Institute will make the final decision. An Institute staff research actuary will provide staff actuarial support throughout the project.
Questions
Please direct any questions regarding this RFP to Lisa Schilling, Senior Research Actuary, at lschilling@soa.org or 847-273-8837.
Notification of Intent to Submit Proposal
If you intend to submit a proposal, please email a written notification by April 15, 2023, to Lisa Schilling at lschilling@soa.org.
Submission of Proposal
Please email your proposal to Lisa Schilling, at lschilling@soa.org; proposals must be received no later than April 30, 2023. It is anticipated that all proposers will be informed of the status of their proposal by the end of June 2023.
Conditions
The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Institute and the researcher.
The Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Institute also reserves the right to redirect the project as is deemed advisable.
The Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).
The Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the Institute in publicizing or promoting the research and responding to media requests.
The Institute may also choose to market and promote the research to SOA members, candidates and other interested parties. You agree to perform promotional communication requested by the Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.
Conflict of Interest
You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Institute.
Appendix
The cost ranges below are intended as a guide for budgeting project costs for proposals in response to Society of Actuaries Research Institute Requests for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.
All Contracted Projects
This category includes all contracted projects that the Institute has undertaken within the last several years.
The 33rd–66th percentile project costs range is $25,000–$50,000.
Literature Reviews
This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.
The 33rd–66th percentile project costs range is $15,000–$20,000.
Surveys
This category includes all projects that had a survey as their primary component.
The 33rd–66th percentile project costs range is $28,000–$55,000.