Life cos on mortality tables
The much-awaited new mortality tables for the life insurance market, which have been pending for more than a year now, are likely to come out in the next six months.
These tables are almost a decade old and the industry, as a whole, has been asking for revised mortality tables to give an accurate picture of life graph on today's consumers.
LIC chief actuary GN Agarwal said, "We arrived at an agreement in today's meeting with the life insurance council and the Institute of Actuaries of India to form a governing committee. This committee will carry out the collection and procession of data, which would help in the computation of new mortality tables for the life insurance industry."
The agreement has been signed by both parties after having arrived at some consensus, he added. In recent years, there has been a move to have an industry-level body to compute life expectancy levels. This has resulted in the creation of the Mortality and Morbidity Research Institute (MMRI), an arm of the Institute of Actuaries of India.
This institute will collect data and relevant statistics from insurers. However, the data and insurers' individual experiences would be highly confidential. Every insurer can have an access only to its individual information and industry-related experiences.
"Everybody in the insurance industry welcomes this move. In fact, the confidentiality of information has comforted insurance players to share their experiences and data with the research institute," said sources.
One of the main reasons for proposing changes in mortality tables is the steady increase in longevity. As per industry estimates, the average life expectancy of Indian men has increased to 63.87 years from 59.7 in 1991 and that of women to 66.91 years from 60.9 in 1991. An increase in longevity usually prompts insurers to revise premium charges once in a few years. Prices are based on a `mortality table' which is computed based on historic data on life expectancy rates at different ages.
The research institute will carry out fresh calculation on mortality rates, life expectancy and relevant numbers for mortality tables in different consumer pockets in the country, said Life Insurance Council secretary general SV Mony. Mortality tables are used to calculate the premium of an insurance policy. For now, private insurers use LIC's mortality tables as a base and combine that with their own claim ratios for calculating the premium. One of the main reasons why insurers depend on LIC's mortality tables is that mortality calculations require some historical data. However, once the MMRI releases the revised mortality tables, insurers will use them as a base, along with their own claim ratios, to compute the premium.
These tables are almost a decade old and the industry, as a whole, has been asking for revised mortality tables to give an accurate picture of life graph on today's consumers.
LIC chief actuary GN Agarwal said, "We arrived at an agreement in today's meeting with the life insurance council and the Institute of Actuaries of India to form a governing committee. This committee will carry out the collection and procession of data, which would help in the computation of new mortality tables for the life insurance industry."
The agreement has been signed by both parties after having arrived at some consensus, he added. In recent years, there has been a move to have an industry-level body to compute life expectancy levels. This has resulted in the creation of the Mortality and Morbidity Research Institute (MMRI), an arm of the Institute of Actuaries of India.
This institute will collect data and relevant statistics from insurers. However, the data and insurers' individual experiences would be highly confidential. Every insurer can have an access only to its individual information and industry-related experiences.
"Everybody in the insurance industry welcomes this move. In fact, the confidentiality of information has comforted insurance players to share their experiences and data with the research institute," said sources.
One of the main reasons for proposing changes in mortality tables is the steady increase in longevity. As per industry estimates, the average life expectancy of Indian men has increased to 63.87 years from 59.7 in 1991 and that of women to 66.91 years from 60.9 in 1991. An increase in longevity usually prompts insurers to revise premium charges once in a few years. Prices are based on a `mortality table' which is computed based on historic data on life expectancy rates at different ages.
The research institute will carry out fresh calculation on mortality rates, life expectancy and relevant numbers for mortality tables in different consumer pockets in the country, said Life Insurance Council secretary general SV Mony. Mortality tables are used to calculate the premium of an insurance policy. For now, private insurers use LIC's mortality tables as a base and combine that with their own claim ratios for calculating the premium. One of the main reasons why insurers depend on LIC's mortality tables is that mortality calculations require some historical data. However, once the MMRI releases the revised mortality tables, insurers will use them as a base, along with their own claim ratios, to compute the premium.
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