This paper offers a critical and practical framework to help evaluate and implement fairness in life insurance, recognizing that fairness is contextual and not one-size-fits-all.
Measuring fairness in life insurance is inherently complex. The paper reveals that fairness criteria varies for both individuals and groups. The paper demonstrates that each approach carries ethical, operational, and financial trade-offs for insurers.
- The Fairness Metrics for Life Insurance report presents a practical framework for evaluating fairness in life insurance practices without advocating for or against either any particular definition or metric of fairness.
- The report distinguishes individual fairness, which aligns with actuarial principles by matching premiums to risk, from group fairness, which promotes parity across demographic or other cohorts.
- The report explains that these two concepts often conflict—achieving both simultaneously is usually impossible.
Written by Eric Krafcheck, FCAS, MAAA, Igor Balnozan, Ph.D., and Fei Huang, Ph.D. for the Society of Actuaries (SOA) Research Institute.