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IAI Actuarial Core Principles · Actuarial Statistics · Purpose and function of data analysis

An actuary at an Indian insurer wants to use a customer data set containing names, phone numbers and health conditions to build a pricing model. Which action best reflects sound ethical and legal practice on data use?

Use only the data needed for the stated purpose, minimise identifiable fields and keep it secure. This follows purpose limitation, data minimisation and security principles. Indefinite retention, unrestricted sharing or partial anonymisation that leaves phone numbers all conflict with proper data protection practice.

  1. AUse only the data needed for the stated purpose, minimise identifiable fields and keep it secureCorrect
  2. BShare the full data set with an outside vendor since the model is internal work
  3. CRetain all data indefinitely in case future models need it
  4. DDrop the health data only if it lowers the model fit
  5. Anonymise by deleting names only, since phone numbers are not personal data

Explanation

Data should be used for a lawful, specified purpose, limited to what is necessary, and protected. Deleting only names leaves phone numbers and health details that can identify people. Choosing variables by model fit does not address privacy or fairness.

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