Rate Making and Society's Sense of Fairness

Actuaries have always been m search of ways to determine premiums which match the risks insured as closely as possible. They do this by differentiating between them on the basis of observable risk factors. In practice, many examples of such risk factors are being used. age and sex for life insurance; location, type of building etc. for fire insurance. Motor insurance is perhaps the most characteristic branch with respect to this phenomenon: in tariffs we find factors like weight, price or cylinder capacity of the car, age of the driver, area of residence, past claims experience (Bonus/Malus), annual mileage etc.