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Speaker: Paul Murray
Recent population data in some developed countries has shown a meaningful decline in mortality improvement rates. We will consider the possible causes for the decline in improvement observed, looking at the sources for the shift by key risk factor, and looking at cause based data that will give some clues to identifying the long term impacts. We will also look at possible hypotheses for the change that cannot be derived from the data, assessing which ones are most likely to be driving the change, and assessing if they are short term or long term impacts, considering lifestyle changes, medical trends, and other factors.
Alongside this we will reflect on other major considerations in setting improvement rates going forward, looking at factors we believe are relevant in developing a longer term view on mortality risk. This will include modelling the long tail expected impact of lapses on residual mortality, as well as the expected impact of technology on the buying and lapse behaviour of policyholders. We also consider threats and opportunities on the horizon that are likely to have an impact on mortality improvements, identifying which ones we consider are likely to be material factors.
There is a strong intrinsic bias towards longer life implied by our self preservation instinct, which has driven incredible levels of mortality improvements for decades. While this bias should lead to continued improvements, there is cause for concern and reflection on how this will develop given recent data, and long term insurers should consider developing prospective models for risk assessment that take these into account and establish a clear view on how they will develop. We will make suggestions on how this can be done.