Unbiased gender premium rates: A study on Mortagage Reducing Term Assurance (MRTA)

Insurers priced insurance products based on the risk of the insured. As at current, gender is used as one of the main risk rating factors in premium pricing. The premium price may differ from one another as male and female tends to have different levels of risks. However, this practice has raised concerns towards the equal treatment of men and women in the insurance pricing. Moreover, since this issue had also become the heated debate in the European country it is interesting to investigate on the implication of using unbiased mortality rate in Malaysia. Therefore, this paper will be discussing on the practice of using unbiased mortality rate in insurance pricing. This paper is focused on the construction of unbiased mortality rate and profit testing for Mortgage Reducing Term Assurance (MRTA). Results have shown that the unbiased mortality rate could be implemented in Malaysia as it does not incur extra loses to the insurer.