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are added, at a tolerable cost, as long as they result in
improved overall accuracy. There are several other
practical considerations in selecting rating variables. The
variables should be intuitively related to costs. Age, in
life insurance, is intuitively related to costs, whereas age
in automobile insurance is less so.

When caught up with cost verifiability issue, it is better
to use measures that are available for another purpose.
E.g, payroll and sales records are kept for other purposes,
such as taxation. These may be manipulated for those
purposes, but are discouraged by the risk of criminal
penalties or adverse relations with suppliers or bankers.

c) Social Criteria - There are certain limitations on
actuarial goals, apart from operational difficulties. A
number of key issues such as 'causality' , 'controllability',
and 'affordability' have been the subject of public
concerns.

Privacy is an important concern, as people are often
reluctant to disclose personal information. This affects

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