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IAI Actuarial Core Principles · Business Management · Issues and challenges in each main practice area

A Chennai health insurer's actuary is asked to help design a wellness programme in which policyholders who share wearable-device data receive premium discounts. A colleague worries that the scheme could disadvantage people with disabilities or those who decline to share data. Which is the most appropriate professional response?

The actuary should assess the scheme for fairness and privacy risks, consider effects on vulnerable groups, and advise management on these along with commercial benefits. Professional duty extends beyond profit to treating customers fairly and protecting the public interest.

  1. AAssess the scheme for fairness and data-privacy risks, consider impacts on vulnerable groups, and advise management of these issues alongside the commercial benefitCorrect
  2. BApprove it immediately, since commercial benefit is the only concern of an actuary
  3. CRefuse any involvement because wearable data can never be used in insurance
  4. DRemove all discounts so that no customer is treated differently
  5. Leave fairness concerns entirely to the marketing department

Explanation

Actuaries are expected to consider wider public interest and treat customers fairly, not just commercial results. A balanced assessment of privacy and fairness is appropriate; blanket refusal or ignoring the concern are both unjustified. Removing discounts does not address the question of advising on the design.

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