At 14:17 10/11/2010 +0000, Paul Bivand wrote:
>To come back to the actuary thing - what they do is provide evidence for
>life assurance quotes and annuity quotes.
>This leads on to whether insurance companies simply red-line deprived
>areas or provide quotes that are unaffordable where they think the risk of
>having to pay out life assurance might be too high.
The 'actuary thing' is surely about tailoring premiums on the basis of as
good an assessment of the risk they can make, on an individual basis. If
the risk for an individual is particularly high, that might well result in
'unaffordable premiums' - but that's a fact of life/death (because of the
individual's assessed high risk), not anything underhand on the part of the
insurers.
>........As far as I recall, there has been work and controversy on
>insurance companies refusing to do business in deprived areas ....
As above, as far as the actuarial side of things are concerned, that would
make little sense. In the same way that a bookie is happy to take bets on
a favourite (at appropriately estimated low odds), a competent insurer
should be perfectly happy to take on (actuarially) high risks, at an
appropriately estimated (high) premium.
If what you suggest is true, I would therefore suspect that it would be due
to considerations other than actuarial ones. For example, they might want
to avoid the hassle associated with people becoming unable to pay premiums,
or maybe they have experienced that 'insurance fraud' (e.g. concealment of
factors very relevant to {low} life expectancy when taking out life
insurance) is more common in deprived areas..
Kind Regards,
John
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