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THE SOCIETY OF ACTUARIES IN IRELAND Critical Illness Working Party Neil Guinan (Chair) Gareth Colgan...
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![Page 1: THE SOCIETY OF ACTUARIES IN IRELAND Critical Illness Working Party Neil Guinan (Chair) Gareth Colgan Jeff Davies Alan Grant Tony Jeffery Steve Payne Dave.](https://reader030.fdocuments.net/reader030/viewer/2022032414/56649efa5503460f94c0bb1e/html5/thumbnails/1.jpg)
THE SOCIETY OF ACTUARIES IN IRELAND
Critical Illness Working PartyNeil Guinan (Chair)
Gareth Colgan
Jeff Davies
Alan Grant
Tony Jeffery
Steve Payne
Dave Roberts
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THE SOCIETY OF ACTUARIES IN IRELAND
Content
Introduction Approach Analysis of Data Declined Claims Study Reserving Survey What Next?
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THE SOCIETY OF ACTUARIES IN IRELAND
Introduction
Who we are What we are doing
» Terms of reference• Compare with relevant tables
• Analyse for trends
• Determine if to publish assured lives table– (If so, produce it)
• Declined claims
• Survey current reserving bases– Make recommendations
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THE SOCIETY OF ACTUARIES IN IRELAND
History Number of new critical illness policies sold in Republic of Ireland
0
10000
20000
30000
40000
50000
60000
70000
1995 1996 1997 1998 1999 2000
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THE SOCIETY OF ACTUARIES IN IRELAND
History Number of new critical illness policies sold in Republic of Ireland and UK
0
100000
200000
300000
400000
500000
600000
700000
800000
1995 1996 1997 1998 1999 2000
Republic of Ireland UK
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THE SOCIETY OF ACTUARIES IN IRELAND
History
Product history in Ireland as established as the UK» 16% of population between 20 and 50 covered
IC94 origins» introduction of guaranteed rate contracts
required a valuation basis
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THE SOCIETY OF ACTUARIES IN IRELAND
Approach
Use of CMI through Society of Actuaries Sought support of Offices and Sponsors
» Most offices not CMI members» Agreed framework
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THE SOCIETY OF ACTUARIES IN IRELAND
Participants and Sponsors
Participants» Acorn Life
» Canada Life
» Eagle Star
» Friends First
» Hibernian (Norwich)
» Irish Life (Irish Progressive)
» Lifetime
» New Ireland
» Standard Life
Sponsors» Ark Life
» Caledonian Life
» Scottish Provident
» GE Frankona
» General & Cologne Re
» Gerling Global Re
» Munich Re
» Swiss Re
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THE SOCIETY OF ACTUARIES IN IRELAND
Basis of Study
Data owned by the Society Safeguards / Confidentiality Levels of output
» Participants» Sponsors» Everyone else
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THE SOCIETY OF ACTUARIES IN IRELAND
Scope of Analysis
Years covered » 1995 to 1999 initially» Ongoing into the future
Size of this investigation versus other investigations» 235,000 lives in 1999 data» 1,750 claims during the investigation period
Subdivision of data
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THE SOCIETY OF ACTUARIES IN IRELAND
Issues / Caveats
Different benefits and changing products Treatment of TPD Treatment of rated lives Treatment of duplicate lives Dates used for claim information
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THE SOCIETY OF ACTUARIES IN IRELAND
Lives in force at 31/12/1999
Total Lives 235,000
» Male 60%» Female 40%
» Non Smoker 72%» Smoker 26%» Undifferentiated 2%
» Accelerated 48%» Stand Alone 52%
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THE SOCIETY OF ACTUARIES IN IRELAND
Distribution Channel
Direct Sales38%
IFA37%
Other4%
Unknown1%
Bancassurance20%
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THE SOCIETY OF ACTUARIES IN IRELAND
Age Distribution
21-3026%
31-4045%
41-5023%
51-605%
61-700%
16-201%
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THE SOCIETY OF ACTUARIES IN IRELAND
Split by Duration
25%
18%
14% 14%
12%
9%
5%
1% 1% 1% 1%
0%
5%
10%
15%
20%
25%
30%
0 1 2 3 4 5 6 7 8 9 10+
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THE SOCIETY OF ACTUARIES IN IRELAND
Declined Claims
Investigation in isolation Tie in with exposure Office practice - what counts in the data?
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THE SOCIETY OF ACTUARIES IN IRELAND
Reserving Survey - 2000
Method:» Discounted cash flow: 9» Net Premium: 5
Base table:» IC94: 9» Reinsurer rates: 3» Policyholder rates: 1
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THE SOCIETY OF ACTUARIES IN IRELAND
Reserving Survey - 2000
Margins for offices using IC94:» % of table ranges from 110% to 150%» Median base 135%» Deterioration ranges from 1% to 3%» Median deterioration 2% p.a.
Margins for other offices:» Typically 100% of base table with no
deterioration
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THE SOCIETY OF ACTUARIES IN IRELAND
What Next?
We would like your input Apart from the experience what is to be
done?
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THE SOCIETY OF ACTUARIES IN IRELAND
Key Issue 1: New TableReasons for an Assured Life table
Need for a benchmark Likely better shape Immature experience could be misleading Data so far grouped duration 0,1, and 2+, -
now changing. Conditions vary company to company IC94 shows that tables WILL be used!
• Is this good or bad?
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THE SOCIETY OF ACTUARIES IN IRELAND
Key Issue 1: New TableReasons to stick to population table
Unbiased by insurer Larger data base Tables could be out of date very quickly Difficult to adjust for lots of reasons
• Definition differences to data• First incidence a principle of insurance• Effect of selection (+ and -)• Socio - economic differences between
assured and population.
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THE SOCIETY OF ACTUARIES IN IRELAND
Key Issue 2: Should we recommend Valuation Basis?
Statutory Solvency» Initial Level
» Deterioration factor
» By Product Type
FCR IAS
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THE SOCIETY OF ACTUARIES IN IRELAND
What other issues can we contribute to? How can we look at data to influence future
contract design?» Should we? - balance of interests?» What trends should we look at?
• By duration• By year of issue• By illness
– Medical advances– Genetics– Behavioral changes
• Lives v amounts
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THE SOCIETY OF ACTUARIES IN IRELAND
What other issues can we contribute to?
Our three issues» Valuation Table» Reserving bases» Product Design
There must be others