Insurance Statistics:
It’s all in the data
Susan Silverman, FSA, MAAA
Pi Day
March 14, 2008

Examples of Insurance
Statistics
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Lots of statistically significant data
Less data

Mortality Rates Ages 0-120
2001 CSO Male Nonsmoker
1.0
0.8
0.6
0.4
0.2
0.0
1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121
Age

Mortality Rates Ages 0-40
2001 CSO Male Nonsmoker
0.0016
0.0014
0.0012
0.0010
0.0008
0.0006
0.0004
0.0002
0.0000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41
Age

Mortality Experience
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Insurer’s own experience - Best source!
Population statistics
- National Center for Health Statistics
- Social Security Administration
- U.S. Decennial Life Tables
Intercompany Studies by SOA and CIA

Mortality Rates – breakdowns needed
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 age gender smoking/nonsmoking underwriting class insurance plan amount of insurance

Measuring your own Mortality
Rates
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 surprisingly difficult: mortality rates are very small, and need a lot of data
(exposure) to get significant results difficult even for group insurance: Large groups are self-administered  hard to get data to measure experience
1 st priority (as it should be) is to pay the claims

Population statistics
Higher mortality than for insured lives, but useful for:
 estimating annual improvements in mortality
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 ratios of mortality by age bracket comparing male and female mortality extending rates to the very young and very old

Mortality Experience Studies
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Northampton Table (1780's): studied parish records of deaths and baptisms from 1735-1780
Carlisle Table (1815) tapes and 8” floppy disks mainframe systems contracted out to Medical Information
Bureau (MIB; Braintree, MA)

2002–04 Individual Life
Experience Report
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 www.soa.org
– report and pivot tables
Data from 35 companies
1996-2000: 10-12 companies
2000-2001: 21 companies
Rapid increase + Request for more detailed information  data problems
Previous report (2000-01 policy years) removed from the SOA web site – problems with some companies’ data led to overstating mortality
2001-2002 study never published (data problems)

2002–04 Individual Life
Experience Report
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 mortality experience in the 25-year select period was 88% of the 2001
Valuation Basic Table (VBT) by policy
Smoker vs. Nonsmoker
Term vs. Non-Term
Slope of 2001 VBT may be too steep in the early durations

Insurance Statistics:
It’s all in the data
Questions?