Actuarial fairness
The principle that a policyholder's premium should reflect the risk they actually represent, without penalizing them beyond their own exposure.
CJEU, March 1, 2011, Test-Achats (C-236/09): gender may no longer result in differences in premiums, and unisex rates apply from December 21, 2012. The ruling shows where actuarial fairness runs into a wall, fairness meaning that each policyholder pays a premium proportionate to the risk they bring to the pool, neither more nor less. The principle underpins rate segmentation, since treating different risks alike would be inequitable toward good risks. It collides with non-discrimination, which prohibits basing price on certain protected characteristics. AI pricing models revive the debate: very fine segmentation can track risk closely while reproducing biases or indirect discrimination. Regulation (EU) 2024/1689 of June 13, 2024 (the AI Act) classifies life and health pricing as high-risk and puts this trade-off under supervision.
Surcharging a policyholder solely because a group they belong to reports more claims may be defensible actuarially but open to challenge under non-discrimination law.
actuarial fairness, risk-based pricing fairness
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