Actuarial Equity

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DEFINITION of 'Actuarial Equity'

The calculation of an insurance premium based on crucial factors such as the applicant's age, gender, health, family history and the type of insurance coverage applied for. This allows insurers to treat applicants fairly according to their estimated risk levels.

BREAKING DOWN 'Actuarial Equity'

In automobile insurance, insurers use age as a rating factor in determining individual premiums. Thus, because young people tend to have less favorable driving records as a group, these individuals are required to pay out more in premiums, which normally include the expected value of losses.

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RELATED FAQS
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    In the United States, and most developed nations, regulators impose required statutory capital reserve ratios on insurance ... Read Full Answer >>
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    Like all equity investments, insurance companies present investors with market risk. Insurance companies, like banks, also ... Read Full Answer >>
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    Insurance policies have deductibles for behavioral and financial reasons. Moral Hazards Deductibles mitigate the behavioral ... Read Full Answer >>
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    Partnership insurance is actually quite common. Most of the time, partners buy insurance to safeguard against the possibility ... Read Full Answer >>
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