Old Age Mortality Experience Study Report

Link: https://www.soa.org/resources/experience-studies/2022/old-age-mortality/



The Society of Actuaries (SOA) Research Institute released a report that examines older age mortality (OAM) with a focus on attained ages 70 and above. The report helps determine whether refinements were needed in the 2015 Valuation Basic Tables. Analysis was performed by sex, issue age and attained age, issue year cohorts, smoking risk classification, benefit band, select vs ultimate period, and interactions.


Old Age Mortality Subgroup of the Individual Life Experience Committee

Publication Date: October 2022

Publication Site: Society of Actuaries

Aggregate Lapsation Risk

Link: https://www.nber.org/papers/w30187



We study aggregate lapsation risk in the life insurance sector. We construct two lapsation risk factors that explain a large fraction of the common variation in lapse rates of the 30 largest life insurance companies. The first is a cyclical factor that is positively correlated with credit spreads and unemployment, while the second factor is a trend factor that correlates with the level of interest rates. Using a novel policy-level database from a large life insurer, we examine the heterogeneity in risk factor exposures based on policy and policyholder characteristics. Young policyholders with higher health risk in low-income areas are more likely to lapse their policies during economic downturns. We explore the implications for hedging and valuation of life insurance contracts. Ignoring aggregate lapsation risk results in mispricing of life insurance policies. The calibrated model points to overpricing on average. In the cross-section, young, low-income, and high-health risk households face higher effective mark-ups than the old, high-income, and healthy.

Author(s): Ralph S. J. Koijen, Hae Kang Lee & Stijn Van Nieuwerburgh

DOI 10.3386/w30187

Publication Date: July 2022

Publication Site: NBER

USAA Customers Have a Strong Grip on Their Life Policies: Researchers

Link: https://www.thinkadvisor.com/2022/07/13/usaa-customers-have-a-strong-grip-on-their-life-policies-researchers/


USAA — a policyholder-owned insurer that has historically focused on serving military veterans and their relatives — may be the big U.S. life insurer with the lowest policy lapse rate.

A team of researchers led by Ralph S.J. Koijen has presented data supporting that conclusion in a new analysis of how economic slumps affect which insureds drop their life insurance.

To conduct that analysis, the Koijen team crunched data from the public financial reports of the 30 biggest U.S. life insurer groups, for a period from 1996 through 2020.


Overall, a severe crisis, such as the 2007-2009 Great Recession, might increase a company’s life policy lapse rate by about 1 percentage point or more, after holding other factors considered equal, the researchers concluded.

The researchers found that, after holding factors such as risk class, smoking use and type of coverage equal, being under age 35 increased the risk of letting a life policy lapse by 46%, and being ages 25 through 34 during an economic slump increase lapse risk by an additional 15%.

Author(s): Allison Bell

Publication Date: 13 July 2022

Publication Site: Think Advisor

COVID-19 Mortality Study: Analytics – 2021 Q2

Link: https://www.limra.com/en/research/benchmarks/u.s.-individual-life-insurance-covid-19-mortality-experience-study/analytics/2021-q2/



LIMRA, Reinsurance Group of America (RGA), the Society of Actuaries (SOA) Research Institute, and TAI have collaborated on an ongoing effort to analyze the impact of COVID-19 on the
individual life insurance industry’s mortality experience and share the emerging results with the insurance industry and the public. The Individual Life COVID-19 Project Work Group (Work
Group) was formed as a collaboration of LIMRA, RGA, the SOA Research Institute, and TAI to design, implement, and create the study and to produce and distribute a variety of analyses.
This report is the fifth public release from this collaboration and contains the results of the study of excess mortality for individual life insurance to include the second quarter of 2021.
Data from 31 companies representing approximately 72% of the industry face amount in force have been included in the analysis in this report. A total of 3.0 million death claims from
individual life policies from 2015 through June 30, 2021 make up the basis of the analysis.

Highlights for the 2nd Quarter

  • The second quarter of 2021 showed a significant realignment of the actual to expected relative mortality ratios, across many different cuts of the data.
  • It is worth noting that the third quarter 2021 results will likely not be as favorable due to the impact of the COVID-19 Delta variant whose impact first started in July 2021 and peaked
    around mid- September
  • All age groups improved in the second quarter compared to the first quarter of 2021, but the improvement was more dramatic in the older ages. While the three age groups shown under
    age 65 were still significantly over the trend established by 2015-2019, the age 65-84 group was within the 95% confidence bands and the age 85+ group was significantly better than the
    2015-2019 trend (p < 0.05).
  • Whereas the pandemic experience so far had showed substantial variations across different regions, this appears to have moderated during the 2nd quarter of 2022.

Author(s): Individual Life COVID-19 Project Work Group, SOA

Publication Date: May 2022, accessed 21 May 2022

Publication Site: LIMRA

U.S. Individual Life COVID-19 Reported Claims Analysis, Fourth Quarter, 2021 Update

Link: https://www.soa.org/resources/experience-studies/2022/us-ind-life-covid-q4/

PDF: https://www.soa.org/49ab0d/globalassets/assets/files/resources/research-report/2022/us-ind-life-covid-q4.pdf



LIMRA, Reinsurance Group of America (RGA), the Society of Actuaries Research Institute (SOA), and TAI have collaborated on an ongoing effort to analyze the impact of COVID-19 on the individual life insurance industry’s mortality experience and share the emerging results with the insurance industry and the public. This report documents a high-level analysis of the claims that have been reported through December 31, 2021. The results presented here are based on data from 32 companies representing approximately 72% of the individual life insurance in force for the experience period of the study.

Author(s): Individual Life COVID-19 Project Work Group

Publication Date: May 2022, accessed 21 May 2022

Publication Site: Society of Actuaries

U.S. Life Insurance Sales Rise on Covid-19 Fears

Link: https://www.wsj.com/articles/u-s-life-insurance-sales-spike-on-covid-19-fears-11647347494



Americans went on a buying spree for life insurance in 2021, driven by concerns of death from the coronavirus pandemic.

Premium volume for new individual life-insurance policies surged 20% from 2020, while the number of policies issued rose 5%, the biggest year-over-year percentage gains since the 1980s, according to industry-funded research firm Limra.

“As we zero in on one million Americans who tragically lost their lives, it’s not a surprise that people are thinking about their own mortality and the impact on loved ones if anything were to happen to them,” said David Levenson, Limra’s chief executive.

The exact number of policies sold is still being calculated, but it is expected to top 10 million, Limra said. That milestone was last crossed in 2016. In 2020, an estimated 9.83 million policies were sold, up 1.7% from 2019.

Author(s): Leslie Scism

Publication Date: 15 March 2022

Publication Site: WSJ

COVID-19 Deaths Cause More Than $700M in Q1 Claims

Link: https://www.thinkadvisor.com/2022/05/09/covid-19-deaths-continue-to-hit-life-insurers-hard/


COVID-19 returned to killing older Americans at a much higher rate than younger Americans in the first quarter, and that helped to hold down life insurers’ death claims.

The pandemic killed about 155,000 U.S. residents in the latest quarter. That was up from 127,000 in the fourth quarter of 2021, but down from 191,000 in the first quarter of 2021, according to statistics from the U.S. Centers for Disease Control and Prevention and other public and private sources.

Some life insurers and reinsurers that posted earnings last week skipped COVID-19 mortality details.


MetLife: $230 million in world group life claims this quarter, down from $280 million a year earlier.

Hartford Financial: $96 million before taxes this quarter, down from $185 million a year earlier.

Unum: 1,400 deaths at an average of $55,000, or $77 million, down from 1,725 deaths at an average of $65,000, or $112 million, a year earlier.

Lincoln Financial: $53 million in group life claim claims and $18 million in group disability claims this quarter, down from $83 million in group life claims and $7 million in group disability claims a year earlier.

Voya: $35 million in group life claims this quarter, up from $29 million a year earlier.

Author(s): Allison Bell

Publication Date: 9 May 2022

Publication Site: Think Advisor

The 2022 Policygenius Life Insurance Trend Report

Link: https://www.policygenius.com/life-insurance/life-insurance-trend-report-2022/



The marketplace has experienced a surge in insurance companies offering no-medical-exam life insurance — and accelerated underwriting options in particular — that satisfy the growing demand for quick, contactless coverage. 

“We went from having three [AU options] in early 2020 to seven in 2021, with more on the horizon for 2022,” says Eloise Spinello, associate director of account management at Policygenius. “More insurers are adjusting to demand by offering no-med options that account for all health classes as well, rather than reserving these options for only the healthiest applicants.” 

In addition to their convenience, accelerated underwriting policies are frequently one of the most affordable options for shoppers. Policygenius Life Insurance Price Index data from the last year shows that no-medical-exam term insurance policies are competitively priced compared to term policies requiring a full medical exam — and some applicants even paid less for no-medical-exam term coverage. For example, 25-year-old females buying $250,000 in coverage paid 1.6% less in 2021 for a no-medical-exam term policy than they did for a traditional policy. 

Author(s): Nupur Gambhir & Amanda Shih

Publication Date: 2 February 2022

Publication Site: Policygenius

Trends in Life Insurance 2022: How the Industry Has Changed

Link: https://www.soa.org/sections/reinsurance/reinsurance-newsletter/2022/april/rsn-2022-04-gambhir/



Growing popularity in no-medical-exam life insurance products has had one expected outcome: More life insurance policies with accelerated underwriting options available in the marketplace. For example, Policygenius offered just three accelerated underwriting options in 2020. In 2021, that number more than doubled to seven, and more options will likely be available in 2022.

Additionally, while such policies had historically only been available to applicants who were young and in good health, the competitive market has prompted more widespread availability. Now, applicants across all health classes can get no-medical-exam policies.

While no-medical-exam policies tend to be about the same cost as fully underwritten policies, applicants tend to favor them even when they are more expensive due to the convenience and expedited turnaround time.

Author(s): Nupur Gambhir

Publication Date: April 2022

Publication Site: Reinsurance News, SOA

COVID-19 Is Increasing Individual Life Claims, Too: Analysis




The increase in the number of individual life claims was lower than for group life claims in some quarters but higher in others.

The analysts emphasize that the numbers are incomplete and subject to change.

Early results show that the number of claims was higher in the fall than in the summer both for individual life and group life.

Author(s): Allison Bell

Publication Date: 14 Feb 2022

Publication Site: Think Advisor

Is life insurance a human capital derivatives business?

Link: https://math.illinoisstate.edu/Krzysio/KO-JII-Invited.pdf



Life and disability insurance, as well as annuities, traditionally have been analyzed as products providing protection against random losses. This article proposed that these products can be viewed as derivative instruments created to address the uncertainties and inadequacies of an individual’s human capital, if human capital is viewed as a financial instrument. In short, life insurance (including disability insurance and annuities) is the business of human capital securitization.

Author(s): Krzysztof M. Ostaszewski, PhD, MAAA, FSA, CFA

Publication Date: 2003 — vol 26, pp. 1-14

Publication Site: Journal of Insurance Issues

First COVID-19 Wave Hit Preferred Insureds Hard: Work Group

Link: https://www.thinkadvisor.com/2021/03/12/first-covid-19-wave-hit-preferred-insureds-hard-work-group/


The team found that deaths attributed to COVID-19 accounted for 5.1% of the individual life insurance death claims participating insurers received in the first half of 2020.

About 2% of all of claims for all causes were for people younger than 45. That was about the same percentage as in 2019.

About 1% of the COVID-19-related claims submitted in the first half of 2020 were for people under 45.

The overall increase in the odds of dying from any cause was highest for insureds in their 70s.

Author(s): Allison Bell

Publication Date: 12 March 2021

Publication Site: Think Advisor