Why you should care about ethics in the use of data?
As European actuaries we are committed to the principles of our Code of Professional Conduct: integrity, competence and care, compliance, impartiality and communication. As an element of this “an actuary must not provide … information … that the actuary knows … is materially false or misleading, contains statements or information furnished recklessly or omits or obscures information required to be included and as a result is materially misleading”. Further on “an actuary must perform specific professional services only if the actuary is competent and appropriately experienced to do so…”. These are very demanding requirements generally, but perhaps even more so when we talk of novel data science and predictive analytics.
The exponentially increasing amounts of digitalized data, together with increasing technological abilities to manipulate this data with increasingly more advanced analytical tools, promises huge benefits for societies and insurers. At the same time we need to be careful that the models developed are sound and that data is used in an ethical manner. Actuaries’ code of professional conduct will guide the individual actuary to make good use of his/her skills. As actuaries, we also know of enough historical cases where models have been used recklessly; with such background we can support data science in not repeating the mistakes actuaries have already done in the long history of the profession.
The European Insurance and Occupational Pensions Authority (EIOPA) established in September its Consultative Expert Group on Digital Ethics in Insurance. EIOPA has before this published its thematic review on the use of Big Data Analytics (BDA) in motor and health insurance. EIOPA established the Consultative Expert Group to assist the Authority in the development of digital responsibility principles in insurance.
This new group will address the use of new business models, technologies and data sources in insurance from the perspective of fairness; taking into account ethical considerations. Specific focus will be given to pricing and underwriting, given their specific importance in the insurance sector. However, other elements of the insurance value chain will also be addressed.
Actuaries have a strong role in the new EIOPA group. The AAE proposed two persons to the group and they, (including the author of this blog) were both approved. Furthermore, several actuarial associations proposed candidates to the group and some actuaries were recommended by their employers. The result is that, if we think of different professions represented in the group, actuaries now constitute the largest profession represented.
The role of actuaries is emphasized by the composition of the leadership roles of the different workstreams of the group. The group has identified three workstreams: fairness, transparency and explainability, and governance. The first workstream is led by Lutz Wilhelmy, the second by Esko Kivisaari, and the third by Pedro Ecija Serrano.
The actuarial profession is thus in the forefront of fostering the role of ethics in the use of data. We will certainly keep you informed – but we are also happy to hear your input on problems you envisage during the activities of the group.
This blog is written in a personal capacity.