Browsing: Commentary
Opinion and observations from life risk industry insiders, academics and policy makers
People with mental health conditions often suffer from worse physical health, have more age-related diseases, and have a lower average life expectancy than people without a mental illness.
The temptation for schemes to reach blindly for the ‘quick and easy’ option is high, particularly for smaller schemes. This could result in requests for contributions from sponsors that are not strictly required, and lower returning investment strategies being implemented.
Advances in early detection and treatment have significantly improved survival outcomes, especially in non-metastatic cases. However, prognosis varies greatly depending on the stage at diagnosis, molecular characteristics, and the extent of metastasis.
Fund managers should begin by asking their underwriters whether and how wealth is factored into the life expectancy estimates.
The bulk annuity market has high barriers to entry. Firms require significant long-term capital and specialist expertise, including asset sourcing, actuarial modelling and risk management, and regulatory approval is not straightforward.
For investors, the fundamental value proposition of lifespan-based financial products is simple: they have near-zero correlation to traditional market indices and the often-chaotic impulses of global markets.
Gareth Truran of the Bank of England’s Prudential Regulation Authority offers a regulator’s view of the UK bulk purchase annuity market.
Given the importance of systemic risks such as climate change in determining the long-term stability of the insurance regime, insurers’ climate change approach should be considered as part of the scheme trustee’s selection process in the bulk purchase annuity market.
The International Capital Standard (ICS) introduces a new approach to discounting illiquid liabilities — one that includes an explicit credit risk premium. But how does it compare to Solvency II’s Fundamental Spread? And what might it mean for UK insurers already familiar with the Matching Adjustment?
As our population ages, the significance and frequency of falls increases. This affects life expectancy as well as morbidity and mortality.