The impact of proportional mortality profit distribution on solidarity

Document description

For a given period, a portfolio of individual life contracts to which the same amount at risk applies, will be considered. The portfolio consists of two homogeneous subgroups mutually different with respect to the mortality rate. At the end of the period, a fixed proportion of the mortality result realized by the insurer will be shared equally among the survivors. At the beginning of the period considered, all individuals pay the same average risk premium, while the insurers aim is to achieve equivalence on the level of the entire portfolio. In this paper it will be investigated how the mentioned proportion affects the absolute and relative subsidizing solidarity.