Longevity and mortality services for insurers

It goes without saying that life insurers are exposed to mortality risk, particularly in the protection business and annuity business. And given the magnitude of the sums at risk, accurate and reliable modelling to establish the right pricing and reserving is critical to offering products that are attractive to the market as well as profitable.

We offer a wide range of longevity and mortality consulting, modelling and technology solutions across five key areas:

• In-force behaviour: Understanding what drives decision making by policyholders, e.g. decisions to lapse, to exercise options or to ‘come back’ (for ‘gone-away’ policyholders), allows targeted actions to manage in-force experience; our expertise and software tools can help you to identify factors of importance, determine their joint effect on decision-making and provide useful and timely MI to key stakeholders.
• Demand modelling: Similarly, understanding the price elasticity of consumer purchasing decisions and the perceived value of your brand and product features can support more agile pricing; as well as helping you to develop and embed the models to take advantage of this, we can help you to embed good governance and controls around automated pricing decisions to prevent unintended consequences and regulatory censure.

• PulseModel: Our medical model of mortality, calibrated to primary care data and using forward looking mortality and morbidity improvements based on the views of a panel of medical experts, can provide insights into a range of mortality-related topics including socio-economic effects, the impact of underwriting and adverse selection, best-estimate mortality improvements and longevity trend risk “new information” scenarios.
• Generalised Linear Models: To allow firms to take advantage of their growing databases as well as the growing number of third-party datasets, we can support the implementation of GLMs for use in mortality, morbidity and persistency analysis and basis setting.
• Postcode Analysis: Our Postcode Mortality Tool, based on over 20 million life-years of data including 800,000 deaths, can be used to support the pricing of defined benefit pension liabilities for scheme buy-ins or buy-outs, or to validate the effects predicted by an in-house model.
• High Net Worth Individuals: Our international team is able to provide insights into the mortality experience of these individuals based.
• Pandemic Modelling: Our pandemic model can support you in evaluating the potential impacts of future pandemic events; our calibration to COVID-19 for the UK provides a great starting point to investigate future waves of infection as part of an ORSA.

• Data: The pricing of insurance products is becoming ever-more sophisticated. We provide a range of services designed to help you get the most out of the data available to you:
  • Price optimisation techniques and associated software tools
  • Advanced analytics methods to improve predictiveness beyond what a typical one-way analysis or GLM can provide
  • Reviews of methods against what we perceive to be industry ‘best-practice’
• New product risks: We also have experience of investigating the risks related to new products (e.g. for vaping-specific mortality risk) and can partner with you to develop pricing models around contemporary technologies, such as wearable devices.
• Underwriting practices: Our expertise and our models can also be put to use in the improvement of underwriting practices.

• Solvency II Internal Model Validation: We have extensive experience, having worked on formal validations and other reviews of internal model components covering longevity, mortality, morbidity, persistency and other demographic risks for almost all of the UK’s large annuity writers.
• Solvency II Internal Model Design and Calibration: We have also brought our expertise to bear in the design and calibration of parts of Internal Models from individual sub-risk models through to a full Longevity and Demographic Risk model.
• Successful model change applications: Whether constructing or validating, our detailed knowledge of what the regulator has challenged and accepted in the past can help you to focus on the bits of your model which matter the most, giving you the best change of successful model change applications.

• Radar: A suite of products all designed with the objective of better management decisions around (in particular) pricing. Many life insurers now use our Radar products for price optimisation, combining risk and behaviour models produced by Emblem. Other insurers use Radar for better MI, or for faster price delivery to the market.
• Emblem: This software package is designed to make the fitting, deployment and governance of Generalised Linear Models as simple as possible; our Postcode Mortality Tool was developed using Emblem, as were the transition models underlying our medical model: PulseModel.
• Igloo: Originally a P&C modelling platform, this powerful Monte-Carlo modelling platform is the engine behind our in-house pandemic model and, as stochastic methods are becoming increasingly popular in Internal Model design for demographic risks, the potential for Life (re)insurers to take advantage of the raw speed delivered by our latest generation Igloo software makes a compelling case for including this in our suite of Life insurance software.