when should you die what would a vulcan do · mqaa 23 mqaa = the point in time at which the...

Actuarial Society 2017 Convention 17-18 October 2017

WHEN SHOULD YOU DIE – WHAT WOULD A VULCAN DO

Daniël Erasmus

Insight Actuaries and Consultants


Home for two

2


The Goal

3


Innovations

18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87

Age

Heart Valve Replacements

Robotic surgery


Innovations


Are we heading for a maximum?

What does an aging population do?


Slowing improvements

8

Source: STATCAN Data

Source: STATCAN Data, RGA

Canadian Life Expectancy


Longevity vs. quality

9


Age

Qu

alit

y

Death

Thinking about quality


Defining Quality

Can be considered in the context of a lemon event


Pillars of quality

12

HealthFinancial Stability

Functional & Relational

• Significant

contributor

• Well defined

• Relatively easy to

measure and

generalisable

• Variable and

highly subjective

• Country and

cultural specific

• Key driver in

longevity and

quality

• Priced in for

longevity?

• New research


Health

Pillars of quality Health


Health Event Data

14

0%

100%

200%

300%

400%

500%

600%

700%

15 -

20

20 -

25

25 -

30

30 -

35

35 -

40

40 -

45

45 -

50

50 -

55

55 -

60

60 -

65

65 -

70

70 -

75

75 -

80

80+

As

% o

f A

ve

rag

e

Major Medical Claims Curves

Female Male

0

0.1

0.2

0.3

0.4

18 22 26 30 34 38 42 46 50 54 58 62 66 70 74 78 82

DRG Related Claims Analysis

“Lemon events”

Female Male

15 -

20

20 -

25

25 -

30

30 -

35

35 -

40

40 -

45

45 -

50

50 -

55

55 -

60

60 -

65

65 -

70

70 -

75

75 -

80

80+

Inc

ide

nc

e R

ate

Sources: Insight Data

Age Age


Disease Data

15

0%

50%

100%

150%

200%

250%

15 -

20

20 -

25

25 -

30

30 -

35

35 -

40

40 -

45

45 -

50

50 -

55

55 -

60

60 -

65

65 -

70

70 -

75

75 -

80

80+

As

% o

f A

ve

rag

e

Chronic Claims Curves

Female Male

-

500

1 000

1 500

2 000

2 500

3 000

3 500

Ra

te p

er

10,0

00 liv

es

Disease Based Diagnoses Rates per

10'000

Males Females

15 -

20

20 -

25

25 -

30

30 -

35

35 -

40

40 -

45

45 -

50

50 -

55

55 -

60

60 -

65

65 -

70

70 -

75

75 -

80

80+

Sources: Insight Data, Extending the Critical Path (Staple Inn Actuarial Society),

Working Paper 89 (IFA), RGA Data

Age Age


15 - 20 20 - 25 25 - 30 30 - 35 35 - 40 40 - 45 45 - 50 50 - 55 55 - 60 60 - 65 65 - 70 70 - 75 75 - 80 80+

Mental Health Data

• Diagnoses rates SA

private medical

scheme market

• Incidence rates from

developed countries

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Inc

ide

nc

e R

ate

Age

Mental Illness Incidence Rates

Famales Males

Sources: Insight Data, Extending the Critical Path (Staple Inn Actuarial Society),

Working Paper 89 (IFA), RGA Data


Financial Factors


A race against time

0

0.2

0.4

0.6

0.8

1

1.2

66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103

Ratio V

alu

es

Age

Income sustianiability - low Income sustianiability - medium Income sustianiability - high Financial destitution index

Financial Stability

Sources: Insight Data, STATS SA, RGA


Functional and Relational

Availability of key

relationships

Ability to access

relationships


Functional and Relational

20

0

0.05

0.1

0.15

0.2

0.25

0.3

18

22

26

30

34

38

42

46

50

54

58

62

66

70

74

78

82

86

90

94

98

10

2

10

6

11

0

11

4

Inc

ide

nc

e R

ate

Axis Title

Relational Risk Factors

Male NS married to Female S Male S married to Female NS

Female S married to Male NS Female S married to Male S

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

18

23

28

33

38

43

48

53

58

63

68

73

78

83

88

93

98

103

108

113

118

Inc

ide

nc

e R

ate

Age

Functional Impairment Risk Factors

Female NS Female S Male NS Male S

Sources: Insight Data, Extending the Critical Path (Staple Inn Actuarial Society), RGA Data


-0.2

0

0.2

0.4

0.6

0.8

1

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

100

102

104

Ris

k R

ate

s

Age

Scenario - Main Risk Rates by Age

Health Index Financial Stability Functional and Relational

Designing a Quality Index

21 Sources: Insight Own Calculations – Referenced Source Data


Designing a Quality Index

22

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

100

102

104

Indexed V

alu

es

Age

Indexed Values

Health Index Financial Stability Functional and Relational

Sources: Insight Own Calculations – Referenced Source Data


0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

18 28 38 48 58 68 78 88 98 108 118

Ind

ex

Age

Quality Ajusted Index

MQAA

23

MQAA = the point in time at which the permanent decline in quality of life within 1

time year is deemed to be permanent, significant and increasing in terms of velocity.

Decay function> 25

MQAA

QAAI



0

10

20

30

40

50

60

70

21

23

25

27

29

31

33

35

37

39

41

43

45

47

49

51

53

55

57

59

61

63

65

67

69

71

73

75

77

79

81

83

85

87

89

91

93

95

97

99

10

1

10

3

10

5

QA

AI

De

ca

y F

un

ctio

n V

alu

es

Age

QAAI Decay Function

MQAA

24

Risk factor

considered as

P(survival past this

point given

survival to

age ex)



18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 100 102 104

Functional Example – Leonard aged 35

25

Expected age at death = 79

MQAA = 85

Risk factor 34%

Age at the time of assessment =

35




26

Age at death

79 83

85 86

MQAA

VS.

Additional life

years

8%BUT

9% Increase in risk factor

32%

17% 15%

18%



Influencing the key drivers

27

Mortality and quality

improvements are not

linear

Sources: RGA, Insight Own Calculations – Referenced Source Data

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

100

102

104

106

108

110

112

114

Age

Mortality Improvements vs. QAAI

STD MS MS with 15% improvement MS with 30% improvement

Inc

ide

nc

e R

ate

QAAI St rates QAAI 15% impact QAAI 30% impact

MS

Decay QAAI Decay QAAI 15%

Improvement

Decay QAAI 30%

Improvement



28

“Live long and prosper”…

Consider data and minimise personal longevity risk, so why do we not consider this?

Leonard Nimoy “Spock”

26 March 1931 – 27 February 2015

Age 83…


MQAA Implications

Death

Disease

Financial Wellbeing

Inability to be self

sufficiency

Legacy

Dependents being left destitute

Ill health


Bending the Curve

30

0

10

20

30

40

50

60

70

80

90

100

18

20

22

24

26

28

30

32

34

36

38

40

42

44

46

48

50

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

100

102

104

106

108

110

112

114

DF V

alu

es

Age

QAAI Decay Function

Imperative to

increase MQAA



Implications

Considering longevity in isolation and as a net good at all times is potentially

harmful to your health (and future client retention strategy…)


Data Sources

32

when should you die what would a vulcan do · mqaa 23 mqaa = the point in time at which the...

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