2011 boston health 68
TRANSCRIPT
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2011 Health Meeting
June 13-15, 2011
Session #68 PD: Mortality Issues for
Group Life Insurance
William P. Sakel, ASA, MAAADavid Waddington, PMP
Moderator
Robert B. Hardin, FSA, MAAA, FCA
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Group Life Mortality
June 14th -- 4:00 to 5:15
Session 68
A Panel Discussion
Speakers
Bob Hardin FSA
Bill Sakel ASA
Dave Waddington PMP
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Agenda
Update from SOA Group Life
Experience Committee
One approach to creating a set
of Group Life Manual Rates
How to use census data to
answer questions important to
Group Life actuaries.
Experience Committee
Two products were produced in 2005/6
2005 Group Term Life Waiver of Premium
Table
2006 Group Term Life Experience Report
Committee was led by Sue Sames assisted
by John Bettano and Marty Loughlin plusanother almost 12 actuaries
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Krieger Table
The Krieger Table was the defacto WOP
table
Based on data from 12 companies
135,000 life years of experience
Published in the 1968 SOA Reports
Never presented to or adopted by NAIC
Used by most Group Life Insurers
The Historical Steps
In 2002 the need for two studies was
recognized:
Replace the Krieger Table
Update the last Group Life Experience Study
which was issued in 1994 base on 85-89 date
Data call were issued in 2002
Data submissions were in 2003 and 2004
Final reports were issued in 2006
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2005 Waiver Table
Data from 17 companies
750,000 life years (6 x Krieger)
Covered period form 1993 to 2002
Develops reserves of about 62% of Krieger
AAA formed a Group Term Life Waiver ofPremium working group
NAIC adopted guidelines in 2008Applies to individuals who becomedisabled on or after January 1, 2009
2006 Experience Table
Covered period 1999 to 2001
18,580,000 life years
Only raw data was reported with no
smoothing or other adjustments
Waiver Rate is incidence rate only
Primary source of information is in one oftwo Pivot Tables
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Pivot Table
Provides data by:
Individual Exposure vs. Self-Administered
Death, WOP, and AD&D
Gender
Central Age (17 and up)
SIC (two digit)
Lives Band (# of lives in group) Coverage type (basic, optional, and
supplemental) for AD&D only
Current Status
Starting to update the 2006 Experience
Table
Have decided not to update the 2005
Waiver Table at this time
Draft of data request completed
Vendor has been selected: Towers Watson
Data request will go out in early June
Hope to be done by end of 2012
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M or t a li ty Issues for Gro up Li feInsurance
Jun e 14 , 2011
4 :00 5 :15 pm
W ill iam P. Sakel, A.S.A., M .A.A.A.
Nat ion w ide Li fe Insurance Com pany
Overv iew of Agenda Review of 2006 Group Li fe Stu dy
In terpo late , Sm oot h and Com pare to Current
M odel ing resu l ts
Add it ion al Pr icing Considerat ions
Considerat ions of Implementat ion
Presentat ion Sum m ary
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Review of 200 6 Grou p Life St ud y
12 Com panies data f rom 1999 2001 covered per iod
Data included al l typ es: single em ployer, union, associat ionand M ET
Active Em ployee l ives by Age and Gend er
Key included Indiv idual ly b i l led data
Raw d ata, not smoo th ed, 5 year age brackets
Excluded Group s
Ret iree lives
Dependent coverage
Conversions Experience under Cont inuat ion of Coverage or port abi l i ty
M ass m arketed business
In t erpo late , Sm oo t h and Com pare In terpolate th e Group L ife factor IE and SA combined
Excel: 2nd Degree Polynom ials and 2 nd Differences
Excel 7 Inser t , Scat ter t ab le w i th only M arkers
Layout, Trendline, Trendline Opt ions
Polynom ial, display equ ation and R-squared values(Coef f ic ient of Determ inat ion)
ht tp: / /mathbi ts .com/mathbi ts / t isect ion/stat is t ics2/corre l
at ion.htm Sm oot h using First and Second Differences
Constru ct t he Comp leted Table
http://mathbits.com/mathbits/tisection/statistics2/correlhttp://mathbits.com/mathbits/tisection/statistics2/correl -
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In terpo la t ion
Smooth ing
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M or t a li ty Table Com par ison
200 5 Gro u p Term Life W aiver Reser ve
Table Repo rt 03/ 2006 The Com m it tee rev iew ed raw exper ience
rates and sm oot hed th em to developgradu ated exper ience values, using 2nddegree po lynom ial t rend l ines and ot herspread sheet app l icatio n to ols in Excel, as w ellas som e m anual adjustm ents. In som e cases,
w e used t he s lop e of th e 1970 Table. Used current t ab le or o t her p ubl ished tab le
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Result s aft er Sm o o t hin g
Result s o f First Differ ences
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Result s o f t he Secon d Diff erences
M od el ing Resul t s Com pare to you r current t able to d eterm ine level
o f m or ta l it y im provement by age and gender M odeled b y Case level : High/ low ages, High/ low
fem ale content
Com pare the m ort ali ty d iscoun ts to you r currentund erw ri t ing discount s: market adjustm ent vs.r isk adjustm ent
Com pare resul ts using the new table to actu alsold cases to det erm ine levels for newunderw r i t ing d iscount s
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Add it ion al Pric ing Co nsiderat ion s Determine i f sta te f i l ing is required, develop actuar ia l memorandum and ra te manual W ill the table be used for Basic Group Term Life and/ or Volunt ary Group Term Life? Should Area factors be considered from cur rent experience? Shou ld SIC fact ors be revised? (Reinsur ers) AD&D factors were used d i rect ly f rom the 2006 Group L ife Study Retiree and early r etiree by age: Separate t able or load % Lives Band or SIC are used for case specific pr icing Dependent coverage (basic and voluntary)
Price spouse coverage using emp loyee rat es and ages Develop a separate table fo r spouse and use spouse age Use emp loyee age setback for females (3 or 5 years) (no t used for dom estic partn ers)
Waiver o f premium charges w ere added to the basic (no waiver) ra tes. Charges w eredeveloped from f i rst pr incip les: incidence x PV(claims) where incidence and t erminat ionfactors were taken from the 2005 SOA Waiver study.
Adjust the tab le to current t ime annual mor ta l i ty improvement(x)
Over 1% per year improvem ent varying by age and gender 2006 Table (2000) * (1- x)^ (2000 to m id year o f the guaranteed per iod)
Conversion costs to be in cluded Add a flat load o f x% to t he basic table (al l ages) or Add a conversion charge to t he claim experience at the t ime of r enew al , 4 age brackets
Con siderat ions o f Im plem entat ion Table(s) develo pm ent
DOI approval
Rater(s) chan ges
Algor i thm , Factors or b ot h
W eb, Intercom pany LAN, and/ or Spreadsheet
Input screens, edi ts and factor page
Billings Syste m (s) and Rate Renew al Syste m (s)
Testin g to insure results are corre ct and co nsisten t
across al l raters and system s
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Present at ion Sum m ary
Care shou ld be exercised in applyi ng th e results.
Stat e fi l ings, as require d
In te rpo la t ion and Sm ooth ing o f the m or ta l i ty factors to genera tegraduated exper ience values
Addit ional tables or factors
Retiree and Dependen t factors
Waiv er and Conversions costs
Standard Industry Code
Risk and M arket Adjustm ents (Underw ri t ing Discounts)
Testing and M ode ling Results in Rater(s) and System (s) Develop a M anagement Repor t tha t ident i f ies an t icipa ted mor t a l ity
im provem ents by age brackets and genders
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Mortality Data from the
U.S. Census Bureaus PopulationEstimates and Projections Programs
David Waddington
Chief, Population Projections Branch
Population Division, U.S. Census Bureau
Presentat ion Prepared for the Society of Actua r ies 2011 Heal th M eet ingBoston, M assachu setts, Jun e 13-15, 2011
This presentat ion is re leased to in for m interested part ies of ongoing w ork and to encourage d iscuss ion of w ork in progr ess.Any v iews expressed on s tat is t ica l , meth odological , technical , or operat ion al issues are those of t he author and no t necessari ly t hose of t he U.S. Census Bureau.
Outline Overview of the Population Estimates and
Projections Programs
Population Projections
Methodology and Assumptions
Historical and Projected Mortality Trends
Accessing and Using the Data
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Population Estimates(what we publish)
Population National, state, and county by age, sex, race, and
Hispanic origin
Incorporated place and minor civil division totals
Puerto Rico Commonwealth and municipios by ageand sex
Components of Change (births, deaths, migration) National by race and Hispanic origin
State, county, and Puerto Rico Commonwealth totals
Releases Annually
The Population Estimates are Produced Under a
Federal Mandate
U.S.C. Title 13, Section 181:
During the intervals between each census of
populationthe Secretary, to the extent feasible, should
annually produce and publish for each State, county,
and local unit of general purpose government which has
a population of fifty thousand or more, current data on
total population and population characteristics and, to
the extent feasible, shall biennially produce and publish
for other local units of general purpose governmentcurrent data on total population.
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Population ProjectionsPopulation
National by age, sex, race, and Hispanic origin
Components of Change Net international migration by age, sex, race and
Hispanic origin
Deaths by age, sex, race and Hispanic origin
Births by sex, race and Hispanic origin
Releases 2008 National Projections, using Census 2000
2009 4 national level analytic series, usingCensus 2000
2012 (planned) national, using Census 2010 base
0
500
2010 2015 2020 2025 2030 2035 2040 2045 2050
2008 Nationa l Projections High NIM Series Low NIM Series Cons tant N IM Series Zero NIM Series
Projections of Net International M igration for the United States: 2010 to 2050(In thousands)
NIM = Net International Migration
Source: U.S. Census Bureau, 2008 and 2009.
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0
50
100
150
200
250
300
350
400
450
500
2010 2015 2020 2025 2030 2035 2040 2045 2050
2008 N ational Projections High NIM Series Low NIM Ser ies Constant NIM Ser ies Zero NIM Series
Projected Population for the United States: 2010 to 2050(In millions)
NIM = Net International Migration
Source: U.S. Census Bureau, 2008 and 2009.
75
88
102
114
129
150
8184
98
40
72
89
2010 2030 2050
0 to 17 years 18 to 44 years 45 to 64 years 65 years and over
Projected Population by Age for the United States: 2010 to 2050(In millions)
Source: U.S. Census Bureau, 2008.
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Net International Migration
Assumptions (projections)
Projected primarily using historical time series of data
on immigration of the foreign born (1972-2002)
Supplemented with cross-sectional data from Census
2000 (primarily for race/ethnicity assignments)
Projected for four groups based country-of-birth
Age and sex based on administrative records
Fertility Assumptions Time series analysis of vital statistics data from 1980-2003
Projected in two tiers Three large race/ethnic groups
Hispanic
Non-Hispanic Black alone
All other non-Hispanic
Detailed race within the big three groups(did not differentiate assumptions below the big three groups)
Fertility is projected to converge in 2100 nearreplacement level (2.1) for all groups
Assignment of race to births Race of potential mothers (women age 15-49)
Racial composition of men in the projected population Observed racial/ethnic makeup of families from Census 2000
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Mortality Assumptions
Time series analysis of vital statistics data from1984-2003
Projected in two tiers Three large race/ethnic groups
Hispanic
Non-Hispanic Black alone All other non-Hispanic
Detailed race within the big three groups
(did not differentiate assumptions below the big threegroups)
Mortality projected to converge for all race/ethnicgroups in 2075 (Male e0 = 83.8, Female e0= 87.8)
0
5
10
70
75
30
35
80
85
90
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Male
Female
Li fe Expectancy at Bir th f or th e Uni ted Stat es: 1984 t o 2003
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Projections Mortality Assumptions
(projected life expectancy at birth)
YearHispanic
(any r ace)
Non-Hispanic
Black alon e
Non-Hispanic
al l o ther races
M ale Fem ale M ale Fem ale M ale Fem ale
2010 78.4 83.7 70.1 77.1 76.4 81.1
2030 80.2 85.0 74.8 80.9 78.7 83.2
2050 81.9 86.3 79.0 84.3 81.0 85.3
0
5
10
70
75
30
35
80
85
90
1984 1989 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049
M ale
Female
Li fe Expectancy at Bir th f or th e Uni ted Stat es: 1984 t o 2050
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Where can you find the data?
Where can you find projections data?
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Where can you find projections data?
Summary Table Example (1)
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Summary Table Example (2)
Summary Table Example (3)
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Downloadable Files
File Layout Sample
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Downloadable File Example
Using the DataCombining the population and components,
you can calculate:
Survival rates
Life expectancy
Crude death rates
Age-sex-specific death rates
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Crude Death Rate (CDR)
Examples:
CDRdeaths
population mid period=
( )1000
CDR2030
3 316 342
370 297 901 373 503 674 21 000 8 92=
+
=, ,
( , , , , ) / , .
Age Specific Death Rate (ASDR)
ASDR age2030 5014 284
4 327 028 4 528 235 21 000 3 23,
,
( , , , , ) / , .
==
+
=
ASDR age2030 505153
2 174 749 2 278 777 21 000 2 31,
,
( , , , , ) / , .
==
+
=
ASDR age2030 509 131
2 152 279 2 249 458 21 000 4 15,
,
( , , , , ) / , .
==
+
=
Bot h Sexes
Fem ale
M ale
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15
0
50
10 0
15 0
20 0
25 0
30 0
35 0
40 0
45 0
0 5 1 0 15 20 2 5 3 0 35 40 4 5 50 55 6 0 6 5 70 75 8 0 85 90 9 5 100
ASDR
Ag e
ASDR - Fem ale
ASDR - M ale
Projected Age Specif ic Death Rates (ASDR): 2030
Note: ASDR per 1,000 populationSource: 2008 Nat ional Pro ject ions
National Center for Health Statistics
www.cdc.gov/nchs/deaths.htm
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National Longitudinal Mortality Study
www.census.gov/did/www/nlms/index.html
Contact InformationDavid Waddington
Chief, Population Projections BranchPopulation DivisionU.S. Census Bureau
Office: 301-763-2428
Fax: 301-763-6636
E-mail: [email protected]
www.census.gov
http://www.census.gov/did/www/nlms/index.htmlmailto:[email protected]://www.census.gov/http://www.census.gov/mailto:[email protected]://www.census.gov/did/www/nlms/index.html