Citation:

Nihar Malali, Sita rama Praveen Madugula, 2025. "Ethical Frameworks and Value Alignment for AI in Actuarial Decision-Making", ESP Journal of Engineering & Technology Advancements  5(2): 9-16.

Abstract:

Risk assessment, price of insurance, and financial forecasting have been impacted by the growing integration of Artificial Intelligence (AI) in actuarial decision-making. The accuracy of the models is enhanced using AI, the complex calculations are automated, and real-time decision-making via AI models is possible. Nevertheless, these new advances highlight ethical issues related to bias, lack of transparency, accountability, along data privacy risk. Responsible use of AI requires a solid set of rigorous ethical principles to prevent it from reinforcing systemic biases and producing unjust consequences. This paper discusses aspects of the virtue of applying ethical considerations for AI science in the field of actuarial science, including fairness, explainability, and regulatory compliance. It talks about the role of transparency in the AI model, some of the techniques for bias mitigation, and the importance of accountability in the automated decision-making system. Additionally, value alignment is also considered to prohibit AI systems from acting outside the boundaries of ethical and societal limits, in accordance with actuarial best practice and industry standard. It is important to address these challenges to enable trust in the actuarial processes that use AI. Using ethically governed AI governance models and technical safeguards, actuaries can bring about the best of the possible of AI for financial risk management while preserving fairness, integrity and reliability.

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Keywords:

Artificial Intelligence, Actuarial Science, Ethical AI, Value Alignment, Transparency.