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Fairness and Equality in Insurance Classification*

Author

Listed:
  • Yves Thiery

    (K.U. Leuven University, Tiensestraat 41, Leuven B-3000, Belgium.)

  • Caroline Van Schoubroeck

    (K.U. Leuven University, Tiensestraat 41, Leuven B-3000, Belgium.)

Abstract

Insurance is to a large extent based on risk selection and classification. Legislators however are inclined to impose restrictions to these differentiations by banning those that are considered to be “discriminatory”. Risk selection and risk classification are not disallowed by law, but each such decision requires a well-funded, that is, fair justification. The conditions for reaching a fair insurance-differentiation scheme could be clarified by bridging the apparent conflict between an “individualistic” human rights approach and an insurance “group” approach to equality. Therefore, a number of considerations concerning the notion of subsidy-aversion should be taken into account in the legal justification of unequal treatment. These considerations concern the notion of controllability of risks, the (im)possibility of establishing a causal relation between risk variables and the risk itself, scepticism of adverse selection in case where price-inelastic markets are concerned and the influence of tracing costs on the choice of risk variables. The Geneva Papers (2006) 31, 190–211. doi:10.1057/palgrave.gpp.2510078

Suggested Citation

  • Yves Thiery & Caroline Van Schoubroeck, 2006. "Fairness and Equality in Insurance Classification*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(2), pages 190-211, April.
    • Handle: RePEc:pal:gpprii:v:31:y:2006:i:2:p:190-211
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    Citations

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    Cited by:

    1. Hugh Morris, 2012. "Financial Exclusion and Australian Domestic General Insurance: The Impact of Financial Services Reforms," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 33, July-Dece.
    2. Turo-Kimmo Lehtonen & Jyri Liukko, 2011. "The Forms and Limits of Insurance Solidarity," Journal of Business Ethics, Springer, vol. 103(1), pages 33-44, April.
    3. Javier Pla-Porcel & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2017. "How do unisex life care annuities embedded in a pay-as-you-go retirement system affect gender redistribution?," Documentos de Trabajo del ICAE 2017-11, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    4. O. C. Ferrell & Dimitri Kapelianis & Linda Ferrell & Lynzie Rowland, 2018. "Expectations and Attitudes Toward Gender-Based Price Discrimination," Journal of Business Ethics, Springer, vol. 152(4), pages 1015-1032, November.
    5. Doherty, Neil A. & Kartasheva, Anastasia V. & Phillips, Richard D., 2012. "Information effect of entry into credit ratings market: The case of insurers' ratings," Journal of Financial Economics, Elsevier, vol. 106(2), pages 308-330.
    6. Deborah Mabbett, 2011. "A Rights Revolution in Europe? Regulatory and judicial approaches to nondiscrimination in insurance," LEQS – LSE 'Europe in Question' Discussion Paper Series 38, European Institute, LSE.
    7. Chen, An & Vigna, Elena, 2017. "A unisex stochastic mortality model to comply with EU Gender Directive," Insurance: Mathematics and Economics, Elsevier, vol. 73(C), pages 124-136.
    8. An Chen & Elena Vigna, 2015. "A unisex stochastic mortality model to comply with EU Gender Directive," Carlo Alberto Notebooks 440, Collegio Carlo Alberto.
    9. Hugh Morris, 2012. "Financial Exclusion and Australian Domestic General Insurance: The Impact of Financial Services Reforms," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 3-2012.

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