Innovation and the Protection Gap

The life insurance protection gap remains an issue in the United States. Swiss Re research estimates the gap between the life coverage families should have for income protection, versus what they actually have, at $20 trillion in aggregate in 2010. This is up from $18 trillion in 2001 after adjusting for inflation. The average family has a gap of $378,000, up from $347,000.

Predictive Analytics Articles (SOA)

The Society of Actuaries is providing a selection of articles on the use of predictive modeling. Articles included in the PDF package:

  • Risk Segmentation: Application of Predictive Modeling in Life Underwriting
  • Predictive Modeling Techniques Applied to Quantifying Mortality Risk
  • Utilizing Frequent Itemsets to Model Highly Sparse Underwriting Data
  • Producing Actionable Insights from Predictive Models Built Upon Condensed Medical Records
  • Predicting Emergency Room Frequent Flyers

Genomes, Nanobots and Wearable tech: What’s Next Will Change Insurance Forever

It used to be impossible to price insurance based on your particular lifestyle, health or habits — but technology has given us the solution, at least for car insurance. How long before health and life insurance follow? The day is coming when the guesswork involved in evaluating factors regarding a consumer’s specific health risk is virtually eliminated.

Predictive Modeling for Life and P&C Insurance: Two Actuaries, Two Perspectives

David Wang is a life actuary with Milliman. He works extensively in the variable annuity area and has explored the application of predictive
modeling to life and annuity insurance. Peggy Brinkmann is a Property & Casualty (“P&C”) actuary with Milliman and has 20 years of experience in predictive modeling. David talked to Peggy recently about how predictive modeling is used in P&C insurance pricing to see what life actuaries can learn from our peers.

Evolving Strategies to Improve Inforce Post-Level Term Profitability (Scor Global Life)

A popular topic at industry meetings is how companies can best manage the post-level term (PLT) for level premium term life. Many of us started this discussion in our own companies a few years ago as the first wave of 10-year level term life policies were about to enter the PLT.

Dying on Time: Elderly Mortality and Pricing Implications (Slides)

This presentation by Vadim Marchenko, Chief Pricing Officer at Aurigen Re, was delivered at the Actuaries' Club of the Southwest Spring 2014 meeting. The slides have been posted at the ACSW website.

Living Benefit Riders (Slides)

This presentation by Stephen Rowley of Aurigen Re was delivered at the Actuaries' Club of the Southwest Spring 2014 meeting.

Did Xs Future Lifetime Just Get a Little Less Random?

If you could find out when you were going to die, would you want to know? A groundbreaking research aims to tell patients exactly that, with a test to determine how long you have left to live poised to hit markets in Britain.

Modeling of Policyholder Behavior for Life Insurance and Annuity Products A Survey and Literature Review

The Financial Reporting Section and Committee on Life Insurance Research announce the release of a new report examining current practice around the development of policyholder behavior assumptions for life insurance and annuity products.

Operational Considerations in Predictive Modeling

This article appears in the latest issue of SOA's Health Watch Newsletter on page 31.

Select Period Mortality Survey

The Product Development Section and Committee on Life Insurance Research announce the release of a new report that examines the results of a company survey on select period mortality assumptions used in the pricing of individual life insurance. Performed by Al Klein and Michelle Krysiak of Milliman Inc., the study illustrates a variety of assumptions utilized in the marketplace and provides insights into practices for setting the assumptions.

Risk Management and The Power of Simplicity

The problem with this narrative—and the focus of this article—is the very real risk management costs associated with the increased complexity, efficiency and overconfidence in the predictive power of models.

The UK Insurance Market and How It Is Changing

Commercial, consumer and regulatory environments are combining to form a fertile breeding ground for much needed innovation in the U.K. insurance market.

2005-2009 Guaranteed Issue and Simplified Issue Life Persistency Study

The Society of Actuaries and LIMRA have sponsored a U.S. Individual Life Guaranteed andSimplified Issue Persistency Study. The report, authored by Cathy Ho and Nancy Muise, represents the results of individual life insurance lapse experience for guaranteed issue and simplified issue life in the United States.

Mortality Experience - The Funnel Effect

In analyzing client mortality studies over the years, I noticed that companies with very similar underwriting practices, guidelines, preferred criteria, and marketing strategies often have very different experience.

Logistic Regression for Insured Mortality Experience Studies

Findings of industry mortality experience studies are used by (re)insurers and regulators as the basis for developing liability expectations, reserve guidelines, and solvency capital requirements. In this paper, we introduce a logistic regression based modeling approach for analyzing the US insured mortality experience, including at advanced ages where less credible experience data are available.

Me and My MD (and My Pricing Actuary): Building an Effective Partnership

Developing an effective partnership between underwriting, medical directors, and pricing actuaries is essential. While they are three different disciplines, they come together in the most critical sense. With claim costs taking the majority of every premium dollar, even small discrepancies can lead to significant changes to profitability. Discover what works as our three presenters share their experiences.

Life Insurance Distribution and the Middle Market

Over the last two years the Marketing and Distribution (MaD) council has made it a priority to address the ongoing issue of the underinsured middle market by supporting research to explore the problem in depth. This article will briefly summarize the research undertaken and then explore its benefits for current distribution strategies with an industry expert, Ken Zimmer.

Gen Re Research – New Zealand Mortality Investigation

Gen Re’s Life/Health Research and Development has recently completed a mortality investigation of New Zealand assured lives in conjunction with the New Zealand Society of Actuaries and our Life colleagues in Australia.

Report on the Survey of Older Age Mortality And Other Assumptions

The Product Development Section is pleased to make available a new research report into the mortality and other actuarial assumptions for life and long term care insurance products sold at older ages.

Older Age Mortality

Mortality at older ages has been an important issue to address for new products and profitability of current products. These assumptions are increasingly more important as people are living longer and more life insurance is being sold to older age individuals. Experience at these ages is starting to develop, but is not yet fully credible. Companies competing for older age business need to be careful of how the older age mortality is developing versus what they are assuming in their models.

A Proposal for Better Life Insurance

What if there were a consumer-driven, shaped product that could promise specific payments for specified financial losses and costs, both from dying too soon and from living too long, coupled with the opportunity to accumulate tax-free savings values?

10 Barriers to Successful Innovation in Life Insurance

Judging by the topics at industry conferences and in the trade press today, it is clear that innovation is all the rage. Another sign of this is the increasing number of individuals in companies with titles such as “Chief Innovation Officer” or “Head of Innovation,” on their business cards. Despite all the interest in this topic, however, innovation remains an elusive goal in many companies today.

The Changing Face of Distribution

While more long-standing issues including the recruitment of new sales talent and the aging of the existing field force create a background against which today’s industry operates, recent research conducted by LIMRA and McKinsey and Company examines additional issues that have emerged and merit attention. Ultimately, these new developments present opportunities for organizations that, if leveraged appropriately, can set them apart from the competition.

2008-09 Individual Life Experience Report (SOA)

The Individual Life Experience Committee has completed their latest report on intercompany mortality experience by amount of insurance under standard individually underwritten issues. This includes study years 2008-09. The Excel files contain the appendices and pivot tables that provide more detail of the data summarized in the report.

The Impact of Life: How Mortality Improvement Affects the Life Insurance Industry Today

Actuaries view the term “mortality improvement” in a special way. In fact, the term sometimes takes on a life of its own as opposed to understanding exactly how it should be viewed in the setting of the overall mortality assumption.

The Next Great Thing in Predictive Modeling

The integration of predictive models across departments and lines is transforming the insurance industry.

Living to 100: Insights on the Challenges and Opportunities of Longevity (SOA)

The Society of Actuaries’ Committee on Life Insurance Research, the Committee on Knowledge Extension Research, and the Product Development Section announce the release of a new report that provides an overview and analysis of the mortality models, theories and trends contained in the papers presented at the past four international Living to 100 symposia. Authored by Jennifer Haid, Michael Chan and Christopher Raham of Ernst & Young, this paper offers an overview of the technical materials related to data sources, validation techniques, and methodologies used by practitioners to develop mortality estimates for present and future periods. A summary of discussions regarding business, policy and social implications of increased longevity is also included.

Risk-Based Modeling Comes of Age

After decades of work by Academy volunteers, it looks like the era of principle-based reserving for life insurance products is finally upon us.

A Survey of Actuarial Modeling Controls in the Context of a Model-Based Valuation Framework (SOA)

As the life insurance and annuity industries move toward model-based approaches to reserve and capital valuation (MBV), actuarial models are increasing in complexity and sophistication while the imperative to avoid modeling errors is also increasing. In the new environment, the high reliance that companies and regulatory agencies will place on model results will require a well developed and maintained control system to assure the quality of all models and supporting processes.

Better Understanding the Middle Market – Phase 1:Young Families (SOA)

Ownership of life insurance in the middle market is low compared to other markets. It has been suggested that one of the reasons for this is that many insurers think about the middle market as an undifferentiated whole. The Marketing and Distribution Section initiated a multi-phase research effort to better understand the middle market for life insurance and to identify segments that would allow the industry to better target customer needs.

Panel Discussion: Hot Topics in Long-Term Care Insurance (SOA Annual Meeting)

How can stochastic modeling be used to better understand the risks in long-term care insurance (LTCI)? How can predictive modeling be used to better understand the latest trends in, and to better manage, claims? How are long-term care (LTC) companies managing their investment risk in the current historically low-interest-rate environment? These are some of the topics that will be discussed in this session. This session will focus on the current hot topics in LTCI and how they may affect the product development.

High Face Amount Mortality Study

The SOA’s Reinsurance and Product Development Sections, along with the Committee on Life Insurance Research, are pleased to make available a new report on fully underwritten standard ordinary business high face amount mortality experience. The report was authored by Al Klein and Michelle Krysiak of Milliman.

Simplified Issue Products In Today's Market (slides)

A presentation by Jason Rickard (Vice President, Hannover Life Re) and Llord Spencer (Vice President, Hannover Life Re) to the Actuaries' Club of the Southwest Spring 2012 Meeting (Dallas, TX, June 29, 2012)

World of Mortality Issues and Insights Presentations (SOA):

The Society of Actuaries has posted most of the presentations from the May 23, 2012 "A World of Mortality Issues and Insights" event. Some of the presentations include:

Impact of Obesity on Mortality
Mortality by Income Level
Mortality Improvement
Mortality of Disabled Lives
Mortality by Geographic Location & Socio-demographic Classification

Did (X)'s Future Lifetime Just Get a Little Less Random?

If you could find out when you were going to die, would you want to know? Groundbreaking research done within the last year aims to tell patients exactly that, with a test to determine how long you have left to live poised to hit markets in Britain.

Knowing Me, Knowing You: Why Cognitive Science Matters to Actuarial Science

Discoveries in the past 30 years have profoundly altered our understanding of human cognition. The implications for actuarial science and risk management are only beginning to be understood.

How Insurers Are Modernizing the Actuarial Environment

What are the requirements of a modern actuarial environment, and what technologies can help insurers meet current and future modeling needs?

Life: The Future of Underwriting - Catching Waves

In the past two decades, the life insurance industry has undergone multiple waves of change, each with their own influence on distribution and underwriting.

Techniques to Enhance Views of Future Mortality Trends

Estimating future trends in mortality plays a significant part in life
(re)insurers’ product development and portfolio valuation. Like other business metrics, there are many ways to study and view mortality trends.

Building A Better Mortality Model

Holding longevity risk continues to be a major challenge for pension funds, insurers, and governments. By combining resources, can we do better?

Mortality Comparison and Risk Exposures in the Older Age US Financial Services Market

The Society of Actuaries (SOA) has undertaken research to uncover the differences in mortality expectations between life insurance, annuity and pension products at older issue ages, and to increase awareness of potential impacts that these differences may have on managing the risk assumed for various financial services products in the United States.

The Link Between Education and Longevity

Can taking educational levels into account give us a clearer picture as to why there's a persistent socioeconomic gap in U.S. mortality rates?

Life Insurance and the Actuarial Profession in India - A Decade After Liberalization

The actuarial Profession in india has witnessed a sea change in the decade after insurance liberalization. it has gone from being described as a “moribund profession” to being a “dynamic and lucrative” one.

Streamlined Underwriting For The Middle Market & Its Impact on Product Pricing

Greg Brandner (Munich Re) presented on this topic at the Actuaries Club of the Southwest Spring Meeting in Corpus Christi, TX - June 23 & 24, 2011.

Presentations From The SOA 2011 Annual Meeting & Exhibit

Presentations for the SOA 2011 Annual Meeting & Exhibit, held October 16-19, 2011 in Chicago, IL. have been made available at the SOA website.

A Window Into The Future: Understanding and Predicting Longevity

Unprecedented increases in life expectancy experienced in recent decades have been consistently underestimated, causing funding difficulties for employers, insurers and governments. Forward-looking models provide better estimates of future longevity and will play a vital role in the overall solution, which should be driven by public and private bodies working together.

Benefit Designs for High-Cost Medical Conditions

This Milliman Insight paper provides an actuarial view of high cost patients and how their incurred medical costs are allocated between the health plan and the member. We present the cost burden high cost patients incur under less generous coverage as well as actuarially equivalent benefit design changes that can protect high cost patients. The authors chose to define high cost or catastrophic patients as those who incur over $100,000 in allowed medical claim costs in a year. This paper was commissioned by Genentech, Inc.

2011 Living to 100 Symposium—A Product Development Attendee’s Notes

Report on the most recent Living to 100 Symposium from Douglas Doll, FSA, MAAA, consulting actuary with Towers Watson.

Variable Annuity Dynamic Lapse Study: A Data Mining Approach

Dynamic lapse behavior is an important factor in variable annuity (VA) pricing and valuation. A company can regularly collect lapse data to form the basis for data mining, which can lead to fundamental insights on policy lapse behavior.

This paper describes the principles of data mining, using a realistic illustrative example, and explores the issues of data credibility, relevance, and formula fitting.

Pricing for Joint Life Second Death Assurance

While relative small in terms of policy numbers, such contracts tend to have relatively high sums assured.

AAA Panel Supports Life Expectancy Projections Standards Project

Members of an American Academy of Actuaries (AAA) work group say any new life expectancy projection guidelines should go through a formal Actuarial Standards Board development process.

Life Insurance CFOs Question New U.S. Statutory Regs

Most North American life insurance chief financial officers are concerned about new principle-based statutory regulations, both in terms of their readiness and the impact on the regulations on the competitive landscape.

Towers Watson (NYSE, NASDAQ: TW), New York, published this finding in a summary of results from a survey of 25 CFOs The respondents are primarily CFOs from large and midsize life insurance companies in North America; 46% of the companies have assets of $5 billion or more, and 20% are multinationals.

Presentations from the SOA 2011 Health Meeting, held on June 13-15, in Boston, MA

Topics include:

  • What Does the Future Hold for Underwriting?
  • USA Health Reform: What USA Actuaries Can Learn from Experiences in Other Countries
  • Enterprise Risk Management for a Health Insurer: Like Life, Like Casualty, or Something Completely Different? A Cross-Pollination of Thought
  • Avoiding Statistical Pitfalls in Actuarial Work
  • Actuarially Sound Rates vs State Budget Reality: What's an Actuary to do?
  • The Economics of Obesity
  • Mortality Issues for Group Life Insurance
  • Disability Experience Studies

...and more.

Society of Actuaries Mortality and Other Rate Tables

The Mortality and Other Rate Tables application was developed by the SOA to provide its members with easy electronic access to a variety of rate tables of interest to actuaries. The current inventory of rate tables available via this webpage numbers over 900 and includes SOA experience mortality and lapse tables, regulatory valuation tables, population tables and various international tables.

The Mortality and Other Rate Tables application contains features to assist the user in locating individual tables of interest. There is functionality to filter and sort tables based on type, usage and nation. Search capabilities have also been provided.

Variation in adherence with Global Initiative for Chronic Obstructive Lung Disease (GOLD) drug therapy guidelines: a retrospective actuarial claims data analysis

Chronic obstructive pulmonary disease (COPD) is a disease that requires lifelong adherence to complicated drug therapy regimens. This claims-based analysis of COPD patients, published in Current Medical Research and Opinion, suggests less than optimal compliance with recommended drug therapy treatment for COPD patients based on Chronic Obstructive Lung Disease (GOLD) guidelines. This study further suggests that claims-data analyses provide reasonable aggregate distributions of COPD severity, which can be used by health plans and disease management programs to improve drug therapy management. Link to abstract of article from Informa Health Care.

Preparing for Change Under PBA: Life Company Reserves and Capital Seminar Presentations (SOA)

Presentations for the Preparing for Change Under PBA: Life Company Reserves and Capital Seminar, held May 18, 2011 in New Orleans, LA.

SOA: Living to 100 Presentations

Presentations for the 2011 Living to 100 Symposium, held January 5–7, in Orlando, FL.

SOA Life & Annuity Symposium Presentations

Presentations from various sessions at the SOA Life & Annuity Symposium held in May 2011 in New Orleans, LA.

LEPr Develops Life Expectancy Estimation Standards

Life Expectancy Providers, a group for companies in the longevity forecasting field, has released the first version of a best practices document.

The document provides definitions, formats and procedural guidelines concerning matters such as privacy, fraud, confidentiality, client reports and reports comparing actual to expected performance.

The document also provides guidelines for estimating incurred but not reported life claims.

Top 10 actuarial issues for a health exchange (Milliman)

In order to create a financially self-supporting healthcare exchange, a state needs to make a number of critical decisions, such as whether to make the exchange mandatory or voluntary and whether to merge the individual and small group markets. Each state will need to address its own priorities based on its own specific situation and healthcare environment. This article discusses the top 10 actuarial concerns surrounding the formation of a healthcare exchange.

Top 10 actuarial issues for a health exchange

In order to create a financially self-supporting healthcare exchange, a state needs to make a number of critical decisions, such as whether to make the exchange mandatory or voluntary and whether to merge the individual and small group markets. Each state will need to address its own priorities based on its own specific situation and healthcare environment. This article discusses the top 10 actuarial concerns surrounding the formation of a healthcare exchange.

Understanding Mortality Improvement

At the NASI annual meeting on January 27, some comments were made about mortality improvement. They require further elaboration and correction. The Society of Actuaries studies mortality to construct mortality tables for a variety of purposes, and to understand what is happening to high age mortality. It has had a special multi-disciplinary project on high age mortality and how it is improving for about the past ten years. The Living to 100 and beyond project papers and presentations can be found at

Here are some key points about mortality improvement in the United States.

Estimating the Impact of Disease and Treatment on Life Expectancy

Health status and life expectancy reflect a nation’s demographic, socioeconomic and public health conditions. One of the
ultimate goals of economic and social development is to achieve better health outcomes and improve overall population welfare. Equipped with proper tools and measures, a forward-thinking government may identify populations at risk, allocate resources appropriately, and design health and wellness intervention programs to achieve better outcomes.
(See Page 22 of the PDF below for the article)

Boom, Baby, Boom

This edition of Gen Re's LTC Quarterly considers whether the generation known as the Baby Boomers is likely to enter later life with better or worse age-specific rates of morbidity and disability than earlier cohorts.

U.S. Long-Term Care Insurance Persistency

Report on a joint study sponsored by LIMRA and The Society of Actuaries.

Predicting How Long You'll Live

To price insurance policies and calculate retirement benefits more accurately, a new breed of life-span modelers is turning to personal data about who you are and how you live your life.

Obesity and its Relation to Mortality and Morbidity Costs

500 research articles on obesity and its relation to mortality and morbidity were reviewed, focusing primarily on papers published from January 1980 to June 2009. There is substantial evidence that obesity is a worldwide epidemic and that it has a significant negative impact on health, mortality and related costs. Overweight and obesity are associated with increased prevalence of diabetes, cardiovascular disease, hypertension and some cancers. There also is evidence that increased weight is associated with kidney disease, stroke, osteoarthritis and sleep apnea. Moreover, empirical studies report that obesity significantly increases the risk of death.

The results were used to estimate costs due to overweight and obesity in the United States and Canada. We estimate that total annual economic cost of overweight and obesity in the United States and Canada caused by medical costs, excess mortality and disability is approximately $300 billion in 2009.

Reflecting Risk in Pricing Survey Report

The Casualty Actuarial Society, Canadian Institute of Actuaries, and the Society of Actuaries' Joint Risk Management Section is pleased to make available a research report that describes the results of a survey on reflecting risk in pricing. The survey expands upon a survey originally issued in 2003. The survey, conducted by a team from Milliman, Inc. lead by Donna Megregian, was expanded to include life, health, and property and casualty practices, as well as non-North American insurance companies.

2009 Credit Life Mortality Study

The SOA Credit Insurance Experience Committee has completed their work on the 2009 Credit Life Mortality Study. This study covers a four-calendar year period, years 2003-2006. Death claims incurred during this four-year period and paid by the data collection date were included. The data was primarily collected during the summer and fall of 2008, which would allow a minimum of 18 months following date of death for a claim to be paid. The study was limited to single premium credit life insurance.

Barriers to Financial Advice For Non-Affluent Consumers

Millions of Americans are at risk of entering retirement without the resources necessary to maintain their standard of living and provide the financial security they need for their retirement years. Data from both the Health and Retirement Study and the Retirement Confidence Survey demonstrate that many workers approach retirement with very low amounts of wealth. For the middle class, recent economic trends of rising debt, personal bankruptcies and foreclosures tell a clear story of families struggling just to make ends meet.

Milliman Adds PBR Tool

An actuarial firm has come out with software that insurers can use to help the National Association of Insurance Commissioners (NAIC) analyze a possible overhaul of reserve-setting methods.

A look at older age mortality improvement

It's becoming more common for life actuaries to make assumptions about future mortality improvement in their pricing and earnings forecasts, and many insurance products are extremely sensitive to the issue. This article provides a summary of historical and projected future rates of mortality improvement, as well as a discussion of some of today's key issues surrounding estimates of future mortality improvement.

Implications of Actuarial Guideline 43 for variable annuity product design and risk management

Companies have now had several financial reporting cycles since the establishment of Actuarial Guideline XLIII (AG 43) in December 2009. Milliman's survey of the AG 43 implementation process for U.S. variable annuity companies shows a range of different implementation practices under the new statutory reserving requirement. This paper focuses largely on the product design and risk management implications of AG 43.

Contingencies: Mortality Makeover

Mortality models, with some tweaking, have worked well over time. Are current advances in medicine going to change that?

Weighing the Benefits: The Economics of Obesity Surgery

Can offering morbidly obese patients bariatric surgery as a covered procedure reduce their future health costs?

Actuaries and Life Settlements

The life settlement market is poised for growth. Is the actuarial profession prepared to gear up?

Lapse and Mortality Experience of Post-Level Premium Period Term Plans

The Product Development Section Council and the Committee on Life Insurance Research of the Society of Actuaries engaged RGA Reinsurance Company to undertake a research project on level premium term life insurance products with a particular focus on the magnitude and impact of the "shock lapse" at the end of the level premium period.

The project was completed in two phases:

Phase 1 included a survey of the mortality and lapse assumptions used by actuaries for pricing and modeling level premium term products at the end of 2008. A copy of this report can be found here.

Phase 2 includes a study of the mortality and lapse experience of level premium term policies as they transition out of the level premium period. Participating companies were asked to supply policy level inforce and termination records so that experience results could be analyzed at a granular level including, but not limited to, age, gender, risk class, premium jump, and policy size.

This report, authored by Tim Rozar, Scott Rushing and Susan Willeat, presents the results of the Phase 2 study.

2010 Valuation Actuary Symposium

Handouts for various sessions from the SOA 2010 Valuation Actuary Symposium, held on September 20-21, in Chicago, IL. Please note that some sessions have multiple handouts from different authors/presenters and that some handouts are not available for certain sessions.

Implications of Actuarial Guideline 43 for variable annuity product design and risk management

Companies have now had several financial reporting cycles since the establishment of Actuarial Guideline XLIII (AG 43) in December 2009. Milliman's survey of the AG 43 implementation process for U.S. variable annuity companies shows a range of different implementation practices under the new statutory reserving requirement. This paper focuses largely on the product design and risk management implications of AG 43.

Medical Loss Ratios and 2011 Rate Setting: What health plans should be thinking about today

The Patient Protection and Affordable Care Act requires health plans to report their medical loss ratios (MLRs) and meet minimum MLR requirements. Some of these changes may take a few years to materialize, but health plans in the group markets have an immediate challenge - setting their rates for 2011 - even as the specific regulatory requirements and technical definition of MLR remain unclear. Learn more about the MLR regulatory change and what health plans should be thinking about today as they move into the 2011 rate-setting process.

SOA Releases Report–Automated Life Underwriting: Phase 2

Is your company considering implementing an automated system for underwriting life insurance? Don't miss the recently completed study sponsored by the Marketing and Distribution, Product Development and Reinsurance Sections, along with the Committee on Life Insurance Research, examining the role of automated underwriting systems in a number of companies.

The report, authored by Deloitte Consulting, addresses: How and why companies are using automation to make underwriting decisions; the impact of utilizing these systems on operational efficiency, sales and retention; the quality of risk selection produced by automated systems; cultural acceptance of increased automation in systems; and challenges insurers overcome to implement and maintain these systems.

If you do not have time to read the report, you can sign-up for the Nov. 3 webcast,in which research results will be presented.

Send Your Proposal: New Medical Markers in Life Insurance Underwriting

The Society of Actuaries' Reinsurance Section Council is seeking proposals to identify laboratory tests not currently widely used in the life insurance industry, but that could have a potential use in the underwriting process. Intents are due Oct. 8 and proposals are due Oct. 15.

Presentations from the ReFocus 2010 Conference

Presentations from various sessions at ReFocus 2010, held on February 28-March 3, 2010, in Lake Las Vegas, NV.

SOA Reinsurance News - Summer, 2010

Topics covered include:

  • life settlement underwriting
  • financial underwriting
  • ReFocus
  • Individual Life Experience Committee 2005-2007 Mortality Study

...and more.

SOA Long Term Care Newsletter - September 2010

Topics include:

  • Managing Restoration of Benefits Provisions in LTCI Policies
  • What are the Primary Risks that Face LTC Insurers When Issuing a Policy?
  • Handling LTC Misestimation Risk

    ...and more.

SOA Health Watch Newsletter - September 2010

This issue looks at parity, bundled reimbursement, PPACA and more.

A Short Guide to Longer Lives

Swiss Re on longevity funding issues and potential solutions.

NAIC to Hire Principles-Based Valuation Evaluator

The National Association of Insurance Commissioners (NAIC) wants an actuarial consulting firm to help it study the effects of a proposed shift to a principles-based approach to valuations.

The shift would lead to use of principles-based analysis of the reserves for life insurance products.

Making the Most of the Actuarial/Underwriting Team

Presentation from the SOA '10 Health Meeting, held on June 28–30, in Orlando, FL.

Group & Individual Life Accidental Death Carve-Out Program

While traditional risk management coverages on group and individual life portfolios can be structured to make them affordable, in many instances to do so will mean the coverage will have conditions and limitations
which will make it an ineffective risk management tool. Because of this, today more and more companies are turning to AD Carve-Out reinsurance as a viable risk management solution.

The Use of Electronic Health Information in Actuarial Practice

Presentation from the SOA '10 Health Meeting, held on June 28–30, in Orlando, FL.

Claim Reserve Run-Out Studies: The Method and Its Application to Long-Term Accident and Health Product Reserve Adequacy Test

When talking about valuation in the United States, people have a feeling that it is all about government prescription.

How Will PBA Rock Your World?

Links to presentations for the SOA's How Will PBA Rock Your World? Seminar, held May 19, 2010 in Tampa, FL.

Predicting the Future Role of Actuaries in Insurance

Several shifts are underway that will result in significant changes in the way that insurance companies use actuarial resources. An increase in qualified actuarial resources, and a need to move company actuaries into more strategic activities will offer opportunities that have previously been unavailable. The exact timing and pace of this change is uncertain, but the economics are so compelling that the author thinks it is not a question of if, but when, a new model will prevail.

Implementation and Challenges of the New PRC GAAP for Life Insurance Industry in China Seminar

The Society of Actuaries has posted presentations from Implementation and Challenges of the New PRC GAAP for Life Insurance Industry in China Seminar held on May 28, 2010 in Beijing.

Report on the possible impact of the likely Solvency II QIS5 Standard Formula on the European life market

The European Commission's draft technical specification for the fifth Solvency II Quantitative Impact Study (QIS5) indicates how the standard formula is likely to be set for QIS5. In order to determine how the new rules will affect solvency positions under the standard formula for Europe's life insurance market, Milliman analyzed the potential impact of QIS5 in several European markets: France, Ireland, Italy, the United Kingdom, Poland, Romania, and Slovakia.

NAIC Panel Prepares To Test PBR Manual

The National Association of Insurance Commissioners is getting ready to alpha test a new, possibly more flexible approach to setting and assessing life insurance company reserves.

The Life and Health Actuarial Task Force at the NAIC, Kansas City, Mo., has prepared for the arrival of the NAIC Valuation Manual, which will reflect a principles-based reserving philosophy, by creating a PBR Testing Subgroup.

Full Disclosure Whole Life Report

Each year Full Disclosure surveys leading companies active in the whole life insurance marketplace. All data is current as of February 1, 2010, a period by which most insurers have declared their current dividend scales for the year.

This report features 29 policies, two more than last year. All of them are participating (dividend-paying), with the exception of a few guaranteed policies (see footnotes for details). Sections of this excerpt from our study cover current and guaranteed illustrated values, the industry’s only actual historical performance analysis, policy retirement income illustrations, and a narrative detailing what each policy’s fundamental design objectives are.

Cost of Implementing a Principle-Based Framework for Determining Reserves and Capital Survey Results

The SOA Smaller Insurance Company, Product Development, Reinsurance and Financial Reporting Sections, along with the Committee on Life Insurance Research, are pleased to make available the following report. Authored by a Towers Watson research team of Jason Kehrberg, Greg Roemelt and Chuck Souza, this report summarizes the results of a survey on life insurer perspectives and preparedness levels for implementing a principle-based framework for determining reserves and capital. Forty-eight companies participated in the study and offered insight into the stages of their planning, expected cost levels and concerns for implementing the new approach. The report also details additional observations Towers Watson obtained through follow-up interviews with some of the study participants.

Helping To Take The “Ill” Out Of Illustration Certifications — Using The Update To The Illustration Practice Notes

This article is intended to give a high level overview of the recent release of the update to the illustration practice notes. Guidance for illustration testing should be sought from the Illustration Model Regulations and Actuarial Standard of Practice (ASOP) 24, as well as review of the practice notes. (Begins on p. 22 of the February 2010 issue of Product Matters, the newsletter of the SOA's Product Development Section.

Current Issues Complying with Illustration Regulations and ASOP 24

Presentation from the SOA 2010 Life & Annuity Symposium, May 17-18, 2010

Enterprise Risk Management (ERM) Practice as Applied to Health Insurers, Self-Insured Plans, and Health Finance Professionals

The SOA Health Section is pleased to make available a research report that describes the current state of Enterprise Risk Management practices for health organizations. The report was prepared by Max Rudolph of Rudolph Financial Consulting, LLC.

Enterprise Risk Management (ERM) for Small Insurers—An Evolving Concept

Article from the November 2009 issue of Small Talk, the newsletter of the SOA's Smaller Insurance Company Section.

Actuaries Back Systemic Risk Oversight

As an overhaul of financial services regulation is debated in Washington, the American Academy of Actuaries is throwing its support behind creation of a federal systemic risk regulator for the entire financial services sector.

Data Resources for Predictive Analytics

Presentation from the SOA Predictive Modeling for Life Insurance Seminar May 19, 2010.

Implications of Principle Based Approach

Presentation from the SOA 2010 Life & Annuity Symposium, May 17-18, 2010.

The Economics of Life Insurance Distribution

Presentation from the SOA 2010 Life & Annuity Symposium, May 17-18, 2010.

Will Sanity Return To Large Case Group Life Pricing And Underwriting?

We’ve all seen it—basic group life rates that look more like AD&D rates; rate guarantees periods that resemble a mortgage contract; liberal guarantee issue maximums; and plan maximums that are so high that no person in the group even comes close to qualifying for, and on and on.

What's in a Name? The Flat Price Conundrum

Like any other human endeavor, the financial industry is laden with jargon that is constantly evolving. While there’s always the danger of confusion and embarrassment with the use of outdated jargon, errors quickly may become costly when a financial industry term evolves to a point at which it completely contradicts its original meaning.

Modeling Anti-selective Lapse and Optimal Pricing in Individual and Small Group Health Insurance

Article in the Society of Actuaries Health Watch Newsletter - February 2010, starting on p. 28.

The Longevity Bubble

The Internal Revenue Service thinks there’s only one way for mortality rates to go: down. The American Academy of Actuaries seems to agree, breaking a decades-long self-imposed rule to issue a policy statement urging Congress to raise the Social Security retirement age to reflect increased longevity. The Society of Actuaries has sponsored a number of symposiums on living to 100 and beyond. Most actuaries believe that the unbroken trend of declines in death rates will continue, fueled by advances in medicine.

Keeping It Simple

The behavior-based approaches that aim to model the features of business portfolios more realistically also tend to increase modeling complexity and calculation time. A solution may lie in agent-based models, which can model complex behaviors by using very simple rules.

SOA Investment Symposium 2010 Presentations

Presentations from various sessions at the Investment Symposium held on March 22–23, 2010 in New York.

Actuaries Plan Ahead to Health Reform Legislation

With the enactment of health care reform legislation yesterday, the American Academy of Actuaries said the successful implementation of this and forthcoming reconciliation legislation will require coordinated efforts to ensure that the regulatory development process accomplishes the intended goals of reform. The actuaries plan to work with regulatory authorities as they begin implementing reform legislation to meet its goals of increasing the availability and affordability of coverage, enhancing the quality of care, and addressing health spending growth. (American Academy of Actuaries)

Preparing for the Unexpected

Life insurers routinely model the sensitivities of risk factors to the external environment. Extreme events represent an important new dimension that must also be factored-in. Partner Re on some extreme events and ask what the life sector can do to prepare for the unexpected.

A Stochastic Model for Longevity Risk

A practical model to assess mortality deviation and thus ensure adequate risk capital in line with solvency requirements.

Visions for the Future of the Life Insurance Sector

The economic crisis that dominated the news during 2008 and 2009, the expansion of technology, changing accounting standards, access to capital, and changing demographics are some of the challenges facing the life insurance sector. To provide a catalyst for discussion and to showcase the thought leadership of actuaries, the Financial Reporting, Product Development and Reinsurance Sections of the SOA sponsored "Life Insurance 2020 Foresight–A Call for Essays." Members of the SOA responded by authoring short essays with their unique and thoughtful vision of the future. We are proud to be able to present this collection of essays selected from among those submitted.

Briefing Note: With-Profits Policies

This paper has been prepared by The Actuarial Profession to explain how with-profits policies work. It considers traditional non-pensions endowment policies in some detail and examines the main differences between these and other types of policy.

Making the Most of a Principle-Based System

Is growing international acceptance of the principle-based measurement of risk the neatest thing since sliced bread? Maybe. But not in its current iterations.

Fatal Factors -- Managing Mortality Risk

What impact will volatility in future mortality assumptions have on the valuation of life contingent liabilities?

Health Microinsurance: Healthcare And Incidence Rate Questionnaire

In order to launch new health microinsurance products, actuaries and other healthcare professionals will be involved at the pricing stage as technical advisors. This Milliman paper provides technical advisors with some guidelines and a tool for collecting healthcare pricing data where none exists or where what exists is unreliable. These tools are provided to the reader as a set of appendices.

2005-07 Individual Life Experience Report

The Individual Life Experience Committee has completed their latest report on intercompany mortality experience by amount of insurance under standard individually underwritten issues. This study includes policy years 2005-07. Read the report and associated documents.

Impact of an Aging Population on Medical and Pharmaceuticals Spending

Statistics show an encouraging pattern of increased life expectancy that will trigger increased consumption patterns in the population for medical services and pharmaceuticals, says this Milliman Pharmaco-Actuarial Advisor article.

Life & Longevity Markets Association

The LLMA has been established as a not-for-profit venture in order to promote a liquid traded market in longevity and mortality-related risk.

The LLMA’s founder members are: AXA, Deutsche Bank,
J.P. Morgan, Legal & General, Pension Corporation,
Prudential, RBS and Swiss Re.

Dynamic Policyholder Behaviour Survey

This 2009 Milliman survey examines European life insurance companies’ modeling of dynamic policyholder behaviour, which is the influence that external factors can have over policyholders’ propensity to exercise the options available in a life insurance policy.

2008 Long-Term Disability Experience Study & Tables

The Society of Actuaries' Group Disability Insurance Experience Committee has completed their study of termination experience for the period 1997-2006.

Automated Life Underwriting

The Marketing and Distribution and Product Development Sections along with the Committee on Life Insurance Research, are pleased to make the following report available. Authored by a Mike Batty and Alice Kroll of Deloitte Consulting, the report summarizes the results of a company survey on the utilization of life insurance automated underwriting systems.

Are Actuaries the New Hot Ticket?

Did you ever, in your wildest dreams, expect to spend your career in the insurance industry? That familiar question, posed to many attendees at various insurance conferences, often draws chuckles from respondents, as they scan the room looking for the few individuals who have sheepishly raised their hands.

QuickStats: Age-Adjusted Death Rates for the 10 Leading Causes of Death -- National Vital Statistics System, US, 2006 & 2007

The 10 leading causes of death were the same in 2006 and 2007. The rankings also remained the same, with one exception. In 2007, Alzheimer's disease was the sixth leading cause of death, and diabetes the seventh; the ranks were reversed in 2006. Age-adjusted death rates for six of the 10 leading causes of death declined from 2006 to 2007 (from a decline of 1.8% for malignant neoplasms to a decline of 8.4% for influenza and pneumonia). Only the rate for chronic lower respiratory diseases increased (up by 1.7%). No changes were observed in the rates for Alzheimer's disease; nephritis, nephrotic syndrome, and nephrosis; and septicemia.

Milliman: Interstate Compact Survey Report

(Updated) Milliman’s 2011 Interstate Compact Survey Report is a follow-up to its survey and report issued in October 2009. Both surveys examined company decisions to file—or not to file— through the Interstate Insurance Product Regulation Compact, which allows for approval of new product submissions in 60 days or less. The 2011 report details company filing decisions to date, as well as the experiences of companies that have filed submissions.

A field test of the principle-based approach to life insurance reserves and capital

The NAIC's recent revisions to the Standard Valuation Law mark a move toward principle-based accounting. This summary discusses the results of Milliman’s collaborative field test to evaluate the implications of the law’s final principal-based framework.

Consistent Performance Measurement: Aligning Risk, Value and Capital Management

Insurers know well that using a consistent approach to managing and measuring diverse risk portfolios is an ERM essential that can help them make informed decisions about pricing, product strategy, capital budgeting and linking pay to performance. And yet most insurers use any number of measurements to gauge financial results across varied businesses.As part of Towers Perrin's ongoing series on embedding ERM in insurance, this new article sheds light on a consistent analytical framework that can be applied to an insurer's internal measurement and management system to align value assessment, risk and capital management.

New York To Insurers: Tell Us How You Really Did - Regulatory, Legislative and Tax Issues

The New York State Insurance Department is ordering life insurers in the state to adjust assumptions about investment portfolio calls, prepayments and defaults to reflect the true state of the economy.

Stochastic Modeling Part Of VA Reserving Debate - Regulatory, Legislative and Tax Issues - Life and Health Insurance News

A discussion among regulators of how a new guideline for reserving for variable annuities should be crafted included talk about how reliable stochastic scenarios are in assessing reserving needs of companies.

The Financial Crisis and Lessons for Insurers

The CAS, CIA, and the SOA's Joint Risk Management Section Research Team and the SOA's Committee on Finance Research are pleased to make available a research report that examines the subprime mortgage crises and related financial consequences from the perspective of the insurance industry. The report was authored by a team led by Shaun Wang of Georgia State University.

Getting Up To Speed: ERM In The Life Insurance Industry

Article in the October/November issues of The Actuary magazine.

Actuary Reviews Illustration Proposal

Insurers that try to illustrate annuity performance graphically should provide at least 2 standard illustrations, veteran actuary Steven Ostlund of the Alabama DOI has recommended in a comment letter submitted to the NAIC's Annuity Disclosures Working Group.

Update on the SOA International Experience Study

The Society of Actuaries International Experience Study (IES) initiative is in its seventh year. During that period, considerable progress has been made expanding experience studies into less developed parts of the world. This article (from the SOA International Section's August newsletter) presents the most recent preliminary results from Argentina, the Caribbean, the Philippines, Poland and Vietnam.

SOA Reinsurance Section Newsletter - September 2009

The September 2009 issue looks at:

  • Life Reinsurance Data from The Munich American Survey By David M. Bruggeman
  • What Reinsurers and Cedants Can Learn from Uncle Rex and the Bulls By Rick Flaspöhler
  • Reinsurance Modernization – A New World ViewBy Daniel W. Krane and Elizabeth A. Diffley
  • Life Reinsurance: Capacity and Concentration of Risk Survey Analysis By William J. Briggs, Gaetano Geretto and Robert B. Lau
  • Enhancing the Benefit: How quality successful limited-benefit health plans answered the demand for a more robust product By Curt A. Wieden
  • American Academy of Actuaries Stop Loss Risk-Based Capital Work Group is Reviewing the Potential Need for Changes in the RBC FactorsBy Michael L. Frank

SOA - Reinsurance Treaty Discussion Documents for Medical Business

Insurance policy or reinsurance treaty discussion documents for various catastrophic medical excess lines of business made available by the SOA Reinsurance Section Council.

SOA - Longevity Risk Quantification and Management: A Review of Relevant literature

The Committee on Life Insurance Research, Product Development Section, and Reinsurance Section are pleased to make this report available. Performed by the Ernst & Young team of Thomas Crawford, Richard de Haan and Chad Runchey, this research reviewed literature on longevity risk. The paper summarizes results and addresses topics including the emergence and quantification of longevity risk; current and future risk management techniques; and products currently in the market that are exposed to longevity risk. The appendices include a summary of each paper reviewed for the study.

2006 Individual Life and Annuity Expense Study

This report presents the results of a survey conducted by the Society of Actuaries Mortality and Underwriting Survey Committee in July of 2008.

2004–05 U.S. Individual Life Persistency Update

This report presents the results of the most recent study of individual life insurance lapse experience in the United States conducted jointly by LIMRA International and the Society of Actuaries (SOA). The observation period for the study is calendar years 2004–05. The study is based on data provided by 34 individual life insurance writers and it presents lapse experience for whole life, term life, universal life and variable universal life plans issued between 1901 and 2005. This report includes results for most key policy and product factors.

QuickStats: Motor-Vehicle Traffic and Poisoning Death Rates, by Age -- US, 2005-2006

From the CDC's MMWR.

Will Fuzzy Accounting Changes Have Big Impact On Insurance IT?

In case you haven’t heard, there’s a big change in accounting standards getting ready to take place. Around about 2014, there will be “a single set of high-quality, understandable and International Financial Reporting Standards (IFRS) for general purpose financial statements.”

Insurance-Linked Securities Reaching Critical Mass

Despite the financial crisis, the ILS market has more than held its own and appears poised for further growth, says Towers-Perrin.

AG CCC Causes Rethink on ROP Term

Like so many aspects of the life insurance business, manufacturing return of premium (ROP) term just became more complicated. Actuarial Guideline CCC (AG CCC) is already effective for new policy forms and starting in 2010 affects all contracts. The guideline treats ROP by rider the same as ROP as an integrated benefit and provides guidance for the calculation of cash values (CVs). These changes, among others, will impact the design, pricing, ROP pattern and administration of ROP products going forward.

SOA - 2008 Enterprise Risk Management Symposium

This monograph contains papers submitted and presented at the 2008 Enterprise Risk Management Symposium held April 14-16, 2008 in Chicago. It also includes additional research papers that were submitted and accepted for the 2008 ERM Symposium Call for Papers, but not presented. This was the third year in which a call for papers was issued in conjunction with the Symposium. The call for papers continues to showcase the latest in ERM thinking as well as present advances made in this arena.

SOA - 2008 Valuation Basic Table (VBT) Report & Tables

The VBT Team has completed their work on the 2008 VBT. The report below details this work and the values can be found in the accompanying appendices.

SOA - Preneed Insurance Mortality Study Report

The SOA's Preneed Experience Team is pleased to make available the following report by the Deloitte–UConn Actuarial Center examining preneed life insurance mortality experience. The report has been revised since its initial release to correct an error discovered in the Preneed Insurance Male Mortality Table per 1000. An Excel Spreadsheet of the Mortality Table shown in the report is also provided.

Solvency II: A competitive advantage for European insurers?

Despite the fact Solvency II in its current form will apply only to the European Union, North American insurers are encouraged to pay attention to the factors underlying its development. If, as anticipated, Solvency II leads to markedly lower capital charges for EU-based companies, then the Europeans will have a significant competitive advantage over North American companies.

The Older Age Insurance Market: Cognitive Function Mortality Results

Presentation by Transamerica Reinsurance's David Wylde at the 2009 MUD Group meeting.

Get The Mortality Accurate

The insurance industry is in the business of controlling threats to life. It has invented new mortality gadgets, and now it needs to control them properly despite today’s tough times.

Insurance-Linked Securities Reaching Critical Mass

Despite the financial crisis, the ILS market has more than held its own and appears poised for further growth. This Towers-Perrin article appears in the 2009/1 issue of Emphasis.

Life insurers' £137bn debt pile revealed

The full extent of the exposure of British life assurers to the plummeting corporate bond market was revealed last night when industry expert Ned Cazalet said the sector had invested around £137bn in such debt, with roughly two-thirds of it in banks and financial companies.

Insurance Banana Skins 2009

PricewaterhouseCoopers shares research conducted by the Centre for the Study of Financial Innovation (CSFI). It questions insurers on three areas: current risks, future trends, and their preparedness to respond to the risk environment. With 403 insurers and industry observers responding from 39 countries at a difficult time for financial services, they see significant change in how risks are perceived and prioritised.

ReFocus: Enterprise Risk Management for Life Insurers and Reinsurers

Presentation at ReFocus 2009.

Better, Stronger, Faster—Life Insurers Confront Product Development

Elaine Tumicki writes in Product Matters, the newsletter of the Society of Actuaries' Product Development section: With new life insurance products and features coming out at a break-neck pace over the last several years, life insurers may have felt like they were on a treadmill, with the speed slowly but steadily increasing. The growing reliance on independent distribution requires companies to stay ahead of —or at least keep up with—their competitors if they want to stay on the shelf. Improving speed-to-market has become a key component of life company strategy. What have companies been doing to address this ever-increasing challenge?

Capturing opportunities in a period of transition: How multinational insurers can compete in China

After rapid growth in recent years, the insurance industry in China is pausing to catch its breath. Mei Dong, Wendy Lai, and Xiaokai Shi describe the changes in the industry, at regulators, and in the Chinese workforce, and suggest how foreign insurers can meet the challenges and take advantage of the opportunities in this time of transition.

Universal life/Indexed universal life issues

Universal life and indexed universal life continue to be key areas of interest in the life insurance market today. Milliman, Inc. conducted its second annual comprehensive survey aimed at addressing UL/IUL issues. Survey topics were determined based on input from Milliman consultants, as well as participants in the 2007 UL/IUL survey.

2008 Ordinary life overhead expense study

The object of these annual Milliman studies is to estimate overhead expense for the ordinary life line of business. Using information available from statutory annual statements (insurance issued and in force) as well as unit expense factors developed for these studies, variable expense for policy issue and maintenance was imputed for each company. Overhead expense was defined as the excess of general insurance expense over the imputed variable expense. Commission and agency-related expenses were excluded from the studies, while marketing and developmental expenses incurred in the home office were included.

Improving Prescription Drug Risk Assessment Tools

Assessment tools that assign risk scores to insureds—or potential insureds—based on their prescription histories are increasingly used by actuaries and others within health insurance organizations to assess future health risk.

Scenario Analysis In Insurance: Swiss Re Sigma

Insurers are increasingly using scenario analysis to evaluate multiple risks, but the industry could do more to fully exploit state-of-the-art approaches, according to Swiss Re’s new sigma study.

Longer Life Expectancy Projections Shaking Up Settlement Business

Changes to estimates could be more than 20% in some cases: As if facing a worldwide economic crisis weren’t enough, life settlement investors have found out in recent months that insureds are going to live longer than was previously thought.

Hedging programs save insurers $40 billion during economic crisis

During the volatile months of September and October, the hedging programs developed to protect variable annuities (VAs) with guarantees were, based on an internal study, 93% effective, saving an estimated $40 billion in industry-wide assets for the insurance companies that write these products.

This report offers findings from this internal study, samples results for the industry at large, and considers what we might expect from hedging programs. The success of these programs during these difficult times is likely to result in increased use of hedging, and has broad implications both for insurers and for other companies that provide retirement security products.

Valuation methods for life insurers: Conversion or chaos?

Milliman experts reveal the status of newly developed valuation bases applicable to IFRS 4 phase II, MCEV principles, and Solvency II, and help insurers maintain consistency among these various methods of risk reporting.

Pandemic: Managing Mortality Risk

Could tapping into capital markets in the form of extreme-mortality bonds help to immunize the insurance industry against catastrophic risk?

The Longevity Revolution: The Benefits and Challenges of Living a Long Life

Review of Robert N. Butler, M.D.'s book by Heather Jerbi in Contingencies.

Building Smart Internal Models

A U.K. life insurer improved its risk and financial management capabilities with the help of more sophisticated models based on a replicating portfolio of its liabilities.

Growing Challenge of Obesity in the Insurance Industry

This paper highlights the menace of overweight and obesity which are on the rise. Health care systems and insurance industries are directly affected. Liability claims are on waiting. The food related damage claims are costly. Insurers are therefore driven to find a solution: classify overweight and obesity as a group, adjust their premium to reflect the cost, and justify the classification and the adjustments.

Underwriting Cycle and Ruin Probability

This paper presents a model for analyzing the impact of underwriting cycles on an insurer’s surplus. The model allows the insurer to vary its security loading in response to the cycles, with a strategy parameter that indicates the extent to which the insurer follows the loading which prevails in the market. The insurer’s claim rate is also allowed to vary to reflect exposure changes that result from the insurer’s strategy.

The Post-Millennial Metamorphosis in Life Underwriting

Major changes in screening protocols are necessary if life insurance is going to remain a player in the financial services revolution, say Hank George and Tia Sawhney in this Contingencies piece.

The Fundamentals and Practical Considerations of Life Insurance Company Expenses–A Teaching Session

Presentation at the SOA Annual Meeting & Exhibit, October 2008.

Future Threats to Mortality Improvement: Opposing Views

Presentation from SOA Annual Meeting in Orlando, October 2008.

Individual Life Experience Study Results

Presentation at the SOA Annual Meeting & Exhibit, October 2008.

Securitizations and Reinsurance–How They Apply to LTC

Presentation from SOA Annual Meeting in Orlando, October 2008.

LTC Claims Management of the Future

Presentation at the SOA Annual Meeting & Exhibit, October 2008.

Pricing Health Coverage

Presentation at the SOA Annual Meeting & Exhibit, October 2008.

Aging Population: Opportunities and Risks

Presentation from SOA Annual Meeting in Orlando, October 2008.

Group Life–Underwriting and Experience Rating Considerations Workshop

Presentation from SOA Annual Meeting in Orlando, October 2008.

Catastrophic Mortality Risk and the Smaller Insurance Company

Article in Small Talk, the newsletter of the SOA's Smaller Insurance Company Section.

Follow-up: Comfort Food for an Actuary: Cognitive Testing in Underwriting the Elderly

A follow-up to the article originally published in the May 2006 edition of Product Matters!, the newsletter of the SOA Product Development Section.

Pricing and Underwriting of New Combination Products—Will We Get It Right?

The Pension Protection Act of 2006 includes some important tax rules affecting combination plans that feature life or annuity plans coupled with long-term care insurance (LTCI). Many of these rules will become effective Jan. 1, 2010. In some cases, the rules will be applicable to policies on the books prior to that time. Among the benefits resulting from these new rules, the most notable would seem to be the clarification of tax treatment of annuity/LTCI combination products.

SOA Reinsurance Section August '08 Newsletter

  • Life Reinsurance Data From The Munich American Survey
  • Longevity: Mortality Improvement
  • Solvency II—What It Means For Reinsurers
  • Limited Medical Benefit Plans—What Insurance Companies, Employers And Reinsurers Need To Know
  • Update In The Employer Stop Loss Medical Insurance Market
  • Reinsurance Execs Predict Capital Channels Will Blur
  • STOLI Poses Danger To Industry, Reinsurers Warned

...and more.

A Healthy Future? Risks and Opportunities Facing the Health Discipline

A discussion of the risks and opportunities that face the health discipline.

Highlights from the 2008 Living to 100 Symposium

Changes in longevity, biological perspectives, mortality trends and more.

Reaching Out for Change

An actuary uses his skills and develops some new tones to put a face on racial disparities in his hometown.

Life, Liberty, Longevity

The 20th century saw unprecedented advances in longevity, but alarms are sounding with regard to health care costs.

Pulling Together on PBA

Here's the latest information on principle–based approach from those in the know.

Experts Ponder Implications of Longer Life Spans

Ronora Stryker writing in "The Actuary" Magazine.

A Layman's Guide to Corporate-Owned Life Insurance

Paper by Rick Schurr, ASA, MAAA at the SOA Actuarial Practice Forum.

Life Reinsurance Pricing

PartnerRe on Longevity Risk, The Longevity Bond.

Emphasis: Price Optimization for Innovative Insurers - Thought Leadership - Towers Perrin

In today's marketplace, product pricing and responding to competitive forces are widely recognized as the most important challenges facing personal lines insurers. Price optimization approaches, which balance profit and sales volume while applying customer behavior and competitive analysis, are now being used by the financial services industry for long-term value creation — and becoming increasingly relevant to personal lines insurance.

Emphasis: A Principles-Based Reserves and Capital Standard II - Thought Leadership - Towers Perrin

The move toward a principles-based approach (PBA) for determining reserves and regulatory minimum capital for life and variable annuity business continues in the U.S. The PBA framework being developed by the National Association of Insurance Commissioners (NAIC) will replace the existing formula-based approach with a stochastic model-based methodology (see Emphasis 2006/3, 'A Principles-Based Reserve and Capital Standard').

Emphasis: Measuring Insurer Exposure to the Credit Crisis - Thought Leadership - Towers Perrin

Efforts to estimate year-end insurer liabilities reveal a lot about exposure to the current credit crisis and the steps needed to fully address emerging exposures.

An Actuary Weighs the Candidates’ Health Reform Proposals

The latest issue of Contingencies presents a look at the healthcare proposals of Barack Obama and John McCain. This piece focuses on a few aspects of the candidates' plans.

Could Expanding Longevity Delay Disease?

Some researchers now believe that certain diseases can be postponed simply by slowing down the aging process, says this piece in Contingencies.

Develop Claimant-Specific Disabled Life Reserves with Predictive Modeling

Think back – do you remember at least one quarter where your company’s financial results were well below plan as a result of far more than expected new LTD claims? Do you also remember when, a couple of quarters later, the financial results were excellent, as many of these new claims terminated when they had proved to be not very severe?

SOA - 2008 Valuation Basic Table (VBT) Report & Tables

The VBT Team has completed their work on the 2008 VBT. The report below details this work and the values can be found in the accompanying appendices.

New Persistency Study Shows Lapse Rates Have Generally Declined

Overall lapse rates for whole life plans were down in 2003 and 2004, according to a joint study sponsored by LIMRA International, Windsor, Conn., and the Society of Actuaries, Schaumburg, Ill. (link updated)

Living to 100: Survival to Advanced Ages International Symposium

Handouts from the Living to 100: Survival to Advanced Ages International Symposium for sessions such as:

  • Distinguishing Health Status For Advanced Ages - Faye S. Albert, John M. Bragg, James C. Brooks, Dr. Bob Gleeson, Steven K. Holland, Ashely Thomas
  • Demographic Implications of Aging Populations Internationally - Robert L. Brown, Roberto Ham–Chande, Steven G. Prus, N. V. Subramanyan
  • Quality of Life of Elderly - Beverly J. Orth, Anna M. Rappaport,Eric Stallard

2008 Life Spring Meeting Presentation Handouts

Handouts from various sessions at the SOA Life 2008 Spring Meeting and joint day with the CIA, CAS, and IAA Life Section, held in June 2008 in Quebec, Canada.

A.M. Best U.S. Life Reinsurance – Market Review: Consolidation Brings Rational Pricing but Greater Competition

There has been a period of major change in the reinsurance landscape including the demise of Annuity and Life Re and the elimination of a number of companies with weaker franchises or lack of commitment to the market. As recently as 2000, the life reinsurance market included Lincoln National, American United Life, ING Re, Allianz and Employers Re—all of which either have exited the life reinsurance market, says Stephen Irwin writing in the SOA's Reinsurance News.

An Introduction to the Financial Reinsurance Marketplace

Non-traditional reinsurance, financial reinsurance (or whatever you want to call it

Is There Life in Longevity Insurance?

Making the case for what is currently referred to as longevity insurance. In its purest form, such insurance would be purchased with a single premium payment at the time of retirement.

Borrowing Trouble - Are Those Who Don't Study the Future Condemned to Falter in It?

Actuaries are among the few people in this confusing world who actually relish confusion. They want to make sense of trends, reversals, discontinuities, and the like. But will the mother of all discontinuities, looming in a recess just over the horizon, cause past trends to be irrelevant, the reversals to be minor blips, and the discontinuities to become the new norm?

Financial Disasters and the Creation of Risk Pools

Risk pools contribute to the stability of modern society by providing ways for individuals to deal with many types of financial disaster. The numbers and statistical distributions that actuaries work with represent real people. Participants in the public and private risk pools that we help to design and manage are often unaware of our presence behind the scenes. (In fact, their eyes glaze over when we try to tell them what we do.) But whether they know it or not, they depend on us.

Can Exceptional Longevity Be Predicted?

This Contingencies article says that from an actuarial point of view, it might be interesting to know whether it’s possible to predict the likelihood of a person living to 100 and beyond based on general personal data taken at some point in young adulthood.

Push Pandemic Out of Insurance - Capital Markets Provide Necessary Depth (Guy Carpenter Securities Briefing)

Life carriers struggle with the notion of hedging pandemic risk. If an outbreak does occur, the process for estimating losses and determining reserves is unclear. Capital approaches do not consider probabilistic tail scenario risks. Quite simply, managing pandemic risk is an effort mired in doubt, though the potential for a devastating, multibillion dollar, worldwide outbreak is real. Traditional risk transfer tools have only limited utility in covering pandemic exposure. However, the depth and flexibility of capital markets may provide a robust alternative to traditional reinsurance.

Effective Data Governance Strategies for Actuaries$FILE/Actuarial_Transformation_Roundtable_Report.pdf

PricewaterhouseCoopers ERM in the insurance industry: Global study

Enterprise risk management has reached a critical juncture as the demands of regulators, rating agencies and a more volatile market environment heighten the pressure on insurers to put risk considerations at the heart of their strategy and operations. Ever focused on risk and supporting insurers, PricewaterhouseCoopers has once more committed to a detailed exploration of risk in relation to insurers."

Issues and measures for predictive modeling of medical cost

A Milliman actuary, along with two colleagues, developed a predictive model using 2007 medical costs and independent variables in addition to age and gender. Drawing on their experience, this paper discusses some new approaches to addressing the issues that researchers face when trying to model medical costs using regression analysis.

Milliman - Will Guaranteed Life Remain As Is? That’s Not Guaranteed

Guaranteed life products have been driving the industry for several years; however, mounting industry pressures may lead to a reversal of prior trends.

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