The richer collection of data that has been accrued into the new life tables for the insurance industry will not only benefit underwriters but also consumers, according to the Institute of Actuaries of Australia (IAA).
The updated industry-wide tables would provide fundamental data and trends for the insurance sector, which include updated statistics on death, trauma and possibly total and permanent disablement, IAA chief executive Melinda Howes told InvestorDaily.
“The industry’s collaboration on this accumulation of data allows them to benchmark their own experience against the industry and it lets them correctly price their products, so that protects their profitability and obviously it’s vital for their underwriting,” she said.
“But probably the most important thing is it lets them look at trends in morbidity and mortality, and that’s the new thing that this is going to provide as our last data point was 10 years ago.”
The comprehensive data available also meant consumers would benefit with more accurately priced products, Howes said.
“The more certainty we have in the data the less margins for error that the insurance companies have to build into their pricing, and so that means that customers are getting a better and more accurate pricing,” she said.
“These are very difficult products to price because they are such long-term products, so the richer the data you have the better the result you get.
“The next step is for the actuaries to graduate the tables to provide a smooth set of data and once that’s done everyone can then start to do some of the solvency analysis and really start using it in their long-term modelling.”
While the Investment and Financial Services Association (IFSA) has circulated initial cuts of this data, it plans to release trends from the study at the IFSA Annual Life Insurance Conference next week.
