Challenges and Opportunities with Rethinking Fairness Metrics for Life Insurance Processes: An Actuarial Perspective
November 2023
Author
Lisa A Schilling, FSA, EA, FCA, MAAA
Senior Research Actuary
Society of Actuaries Research Institute
Advisory Panel
Dorothy L. Andrews, ASA, MAAA
Brian Bayerle, FSA, MAAA
Matthew S. Easley, FSA, MAAA
Bruce A. Friedland, FSA, MAAA
Hezhong (Mark) Ma, FSA, MAAA
Tony R. Phipps, FSA, MAAA
Thomas P. Hinrichs, FSA, MAAA
Shisheng (Rose) Qian, FSA, CERA
David K. Sandberg, FSA, CERA, FCA, MAAA
Mark A. Sayre, FSA, CERA
Description
Within the actuarial and insurance industries, there has been much discussion and effort aimed toward rethinking whether processes involved in the development and management of life and other insurance products are fair. Regulators, actuaries, other insurance industry professionals, academics, consumers, advocates, and others have varying perspectives on concepts of fairness in this context—sometimes widely varying perspectives. One thing is clear: defining fairness for life insurance processes is complex and challenging as well as subjective.
This report discusses issues with respect to fairness in the context of processes involved in developing and managing life insurance, especially risk classification, without offering specific solutions or engaging in legal or political debate. Understanding these challenges and complexities is a prerequisite for defining fairness in a life insurance context, which is necessary prior to defining adequate fairness metrics. It also presents opportunities for rethinking fairness in life insurance processes.
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