It is difficult to detach ourselves from prevailing fashions and assumptions in search of a perspective that might usefully transcend todays concerns. However, it is a worthwhile challenge; if we try to do so in the actuarial world, seeking a time heliview across the centuries, some things do seem clear.
Any mortality specialist would see one very curious thing from the time helicopter: the actuarial profession arose largely as a way to deal with the uncertainty associated with mortality, came to largely forget that issue for much of the 20th century, and then returned in the last 10 years or so to devote a great deal of attention to mortality.
Another trend, although less clear-cut, has been the actuarial professions gradual move to make more use of the thinking of other professions in living memory, from statisticians to financial economists, and now increasingly from the medical profession.
A proper understanding of mortality depends on much more than just the ability to manipulate mortality data in a statistically valid way, although that is clearly a vital element. Just as the foundational mortality research of John Graunt in the 17th century considered cause of death (partly as a proxy to age, because of data problems), actuaries too have realised that intelligent mortality modelling must consider how expected medical and environmental developments are likely to affect particular causes of death, and how these may affect overall mortality rates in the future.
In this publication, produced especially for the Joining Forces on Mortality and Longevity Conference, we have compiled several of our recently published mortality articles with particular reference to the interface between actuaries and medical professionals. We have also added more recent material, in particular the fruits of our research into UK postcode mortality effects, a field that many of our clients have expressed great interest in over the last two years.
We hope that you enjoy the conference, and find this publication useful. Visit our stand to find out more!
The Insurance and Financial Services practice’s first regular client publication – the ‘IFS review’ – was launched 10 years ago, aiming to bring our thought leadership to clients in the sectors and geographical regions where we worked. As many of you will, we hope, be aware, the IFS practice has grown phenomenally since then.
Over the last 10 years we have grown from a team of less than 50 associates active almost exclusively in the UK life sector to a team of over 400 working for life and non-life insurance clients in many countries (over half of our associates are based in our 17 overseas offices), with specialist teams active in strategy and distribution consultancy, healthcare, and software development.
Our library of regular publications has grown and changed in line with this expansion, and in recent years we have launched publications aimed at clients in North America, Asia-Pacific, and India (amongst other countries), as well as specialist service line publications aimed at non-life clients, healthcare clients and strategy clients, in addition to clients with particular cross-line perspectives (modelling/software, senior management). In keeping with this tailoring of our publications to our clients’ particular contexts, we have launched ‘Life insurance matters’, a publication that will replace the former ‘IFS review’ by catering specifically for life insurance clients in the UK and continental Europe.
This first issue covers four areas where we have seen substantial scope for many life insurers to ‘improve their game’. The article on mortality shows how insurers can progress beyond simple (and simplistic) statistical extrapolations of data to consider how mortality patterns are likely to develop. ‘Bridges to Solvency II’ outlines one way to manage capital requirements via cross-border captive reinsurance. Our third article is more inward looking, considering how insurers can reap efficiency advantages through reconfigurations of the actuarial process. Finally, the article on persistency modelling shows how multifactor modelling methods can lead to greater understanding of policyholder behaviour, perhaps enabling – among other things – greater profits to be extracted from the in-force portfolio.
The introductory quotation, from Cardinal Newman, stresses the necessity to change as life’s circumstances require. We all remain some way from perfection, but we hope the latest change represented by this new publication will help us to serve our clients better. Please write and let us know what you think.
Insurance & Financial Services Review contains articles on business and technical matters affecting life insurance and general insurance companies in the UK and continental Europe.
Copyright 2010 Towers Watson. All rights reserved.
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