Reinsurance Section Research Update

By Ronora Stryker

Reinsurance News, June 2023

Did you know each year the Reinsurance Section Council (RSC) allocates a significant amount of Section revenue on research for its members? In fact, the RSC has assembled a dedicated group of volunteers to form a research team to oversee the process to ensure relevant and quality studies are produced. Currently the team is further developing research project ideas in topic areas such as COVID-19 and mortality assumption setting, the application of predictive analytics in reinsurance practice, and jurisdictions for offshore reinsurance.

Coming soon is a request for research proposals on in-force management. This study identifies the types of arrangements carriers utilize to efficiently manage blocks of in-force business and investigates the key components and goals of each structure as well as the considerations for success.

Here is an update, as of April 2023, on the Reinsurance Section’s sponsored research in process and studies recently completed.

Currently in Process

“Mortality by Socioeconomic Category in the United States 2020 and 2021 Update.” This study extends prior research and constructs detailed U.S. life tables by socioeconomic category through 2021 to allow year-over-year changes in mortality to be determined, giving insights into mortality improvement trends including how the impact of COVID-19 affected socioeconomic mortality differentials. The research report is expected to be completed by end of November.

“2023 Living to 100 Symposium.” About 25 research papers on such topics as mortality modeling, advanced age mortality patterns and mortality trends were presented at the January 2023 symposium. Papers are being prepared for publication in an online monograph to be released later in the year.

“Company Practice Survey of Individual Life Insurance Accelerated Underwriting.” A company practice survey was administered to both direct writers and reinsurers in late 2022 and early 2023. Besides examining specific accelerated underwriting practices, the study will investigate the history of accelerated underwriting, plans companies may have for the future around its accelerated underwriting program, and how COVID-19 has impacted accelerated underwriting programs. The survey is closed, and the aggregation and analysis of the responses has begun.

This effort also included a separate outreach to actuaries working for 12 different state insurance departments to gain a better understanding of the critical concepts they need to understand in examining companies’ mortality experience for accelerated underwritten blocks of business. This phase of the accelerated underwriting project is complete and available on the SOA website.

“Innovation and Underwriting.” Underway is the drafting of a primer paper about the current and future state of underwriting and how it is being affected by innovation and technology changes.

“Adapting to a New Normal.” The operating environment for insurers is changing. While in the early stages, this research investigates how companies should adapt to a new baseline of high inflation, high volatility, geopolitical tension, and high climate risks, as well as supply chain disruption and other elements that make the new normal environment.

Two research projects have just begun examining the use of behavioral economics (BE) in life insurance. The first study applies BE to the underwriting process to improve applicant honesty in responding to the underwriting questions. The second study focuses on using BE to improve consumers’ comprehension and appreciation of life insurance products.

“Effectiveness of Wellness Programs.” Wellness programs have been in place for a number of years by several insurance companies of Life, Health, Individual, and Group Insurance. These wellness programs have several benefits for the insurer to consider from increased retention, lower claims, positive selection bias, and improvements in marketing and branding. The question is: Have they delivered on the expectation of the benefits for the business and the customer? This research aims to measure the success of wellness programs.

Recent Publications

“Mortality Improvement Trends: Independent Analysis on Socioeconomic and Other Drivers.” To help actuaries develop and set mortality improvement assumptions, the authors analyzed mortality improvement patterns across key variables and causes of death and examine how they change over time. 

“Obesity Trends and the Morbidity and Longevity Impacts.” This research develops estimates of the impact of obesity on mortality and morbidity costs in the U.S. and Canada. 

“Cause of Death Contributions to Socioeconomic Inequalities in Mortality in the United States.” This study seeks to identify the causes of death contributing to the growing disadvantage in mortality between populations in the least and most affluent deciles. 

Request for Research Ideas

Do you have an idea for a research topic you would like to see the Reinsurance Section consider for funding? If so, we want to hear from you! For more information, please contact Tim Morant, chair of the Reinsurance Section’s research team, or Ronora Stryker.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.

Ronora Stryker, ASA, MAAA, is a senior practice research actuary for the Society of Actuaries. She can be reached at rstryker@soa.org.