Post on 30-Dec-2015
Interest Rates
Mortality (esp. improvement, older ages)
Reinsurer Participation
2
Principle-based approaches
Demographic trends
Sales compensation
Technology
3
Risk Free Rates Steer Return Potential
Investment Earnings Rates on Assets
Funding Costs for Capital Solutions
Competitiveness of Alternative Products
Steadily Increasing Interest Rates will Provide Some
Pricing Relief
General view is that term life will benefit from PBR
4
PBR
MCEV Rating Agency expectations 20-30 year term bigger
beneficiaries Need for high ART period?
Related Issues
Competing products may be disadvantaged
5
ImprovementCommon today in pricing, but tempered in future, particularly at very young, very old ages
Stabilization of risk class numbers allows for more robust, consistent data
Dichotomy in views surrounding slope of older age mortality
Mortality jump may be tempered by lower premium spike
Refinement
Older Ages
End of LPP
6
Emerging “sweet spot” not traditional
term zone
Longer working lives extends need for life
coverage
Less time than money?
Reaching ethnic, female,
unemployed, rich
Less likely to be source for capital relief (coinsurance)
More likely to be partner providing underwriting and mortality guidance and earnings smoothness
May provide avenues to keep ROP in the game, riders
Trend of increasing retention limits will slow/stop
Profits beyond the level premium period, survivorship term
7
Levelizing compensation less likely to impact prices much on base term
Compensation on policy fees, favorable experience, post LPP re-underwritten
Greater compensation for term conversions in preferred windows
Agent-owned reinsurance rebirth
8
• Speed-medical records• Drug databases• Lifestyle databases• Smart algorithms
9
UnderwritingUp-Selling
Policy Issuance
Conversion Programs
Internet-Friendliness