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Life Insurance Price Discrimination on Indigenous Australians

In: Social Issues

Submitted By claireyue
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Life Insurance Price Discrimination on Indigenous Australians
The ethical conflict
For many years, the average life expectancy for Indigenous Australians has been lower than the non-indigenous population. Although the life expectancy gap has been gradually decreasing from 2005 to 2012, the remaining differences of 10.6 for males and 9.5 for females are still problematic for the future welfare of the Aboriginal community (Australian Institute of Health and Welfare 2014). Also, it persists a big challenge to the society as a whole.
From the life insurance company’s perspective, the existence of statistical evidence means that insured who belongs to Indigenous population is highly likely to bring more risk to the pool. Correspondingly, a higher premium should be charged to cover the higher death risk this particular group is entitled to.
However, discriminating based on Aboriginal status has been increasingly questioned and many people believe that such practice violates the social equality and is simply unfair to the Aboriginal community.
The ethical dilemma faced by insurance companies is whether they should sacrifice the benefit of the minority in order to achieve the best possible outcome for the majority. The moral principle of utilitarianism may provide justification for why insurer chooses to charge different premiums for Aboriginal people. However, those who believe more in deontology will argue that the maximum benefit achieved for everyone under the utilitarianism ethical theory is produced at an unjust cost (Santa Clara University 2014).
Reasons and benefits of discrimination based on Aboriginal status
While the general public views premium discrimination is an inequitable practice conducted by the insurance company, actuaries often see the meaning of equality in a different way.
Actuarial equality is established on the basis of risk and fairness. The main…...

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