Fair insurance pricing is a necessary goal of the private insurance industry. However, in a society in which the psychology of entitlement competes with the psychology of competition, "fair" has two very different meanings.

Market pressures, the elements that motivate people to spend money define "competitively fair" as the lowest price. In the competitive, private system, it also means paying one's own way, but no one else's.

Social pressure to provide insurance at an equal price to everyone because it is viewed as "social fairness," when applied to the business of insurance, is both constructive and laudable, but its effect on the private insurance system is destructive and implausible.

Insurance requires the spreading or sharing of risk. Basically, money is contributed by many to an insurance company's common fund so that the unfortunate few who suffer a loss can be compensated. In our private insurance system, premiums must be kept low and "competitively fair" so that people will purchase insurance and contribute to this common fund.

Requiring those at higher risk to enter the common fund at the same price as those at lower risk would cause a chain of events that would be detrimental to low-risk individuals who want insurance.

At first, premiums would have to increase to accomodate the higher risks. Consequently, low-risk individuals would refuse to buy insurance or drop insurance they already have rather than pay more than their competitively fair share. As more low-risk policyholders dropped out, premiums would continue to rise so that only the high-cost risks remained in the common fund. As a result, competitively priced coverage would no longer be available to those who pose the lowest risk--that is, the majority of Americans.

Over the years, insurance companies have increasingly used a larger number of risk characteristics to determine the lowest and fairest prices, and to increase the availability of insurance. These characteristics include: sex, occupation, avocation, family history, smoking status and health status (including the presence or non-presence of life threatening diseases such as AIDS, cancer or heart disease).

When, in the name of social fairness, legislative or regulatory efforts are made to mandate unisex pricing of life and health insurance, and prohibit the use of testing for the AIDS virus in insurance underwriting, the competitive fairness system under which the insurance industry operates simply breaks down and allows the above chain of events to begin.

Enforcing the concept of social fairness only works in a social system in which everyone is required to participate and prices are equal for all. However, under the competitively fair system--a system that has worked so well for so many--people do not and will not voluntarily pay for more than their fair share.

As a friend of mine once said, "I don't mind sharing--as long as the other guy shares more than I do."