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Mortality Tortoises Gain On The Hares

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Life and annuity reinsurers are wrestling with the possibility that technological advances could help large numbers of U.S. residents live to 120.

But actuaries and other longevity experts say they are already seeing another interesting change: groups of people who once died young now seem to be catching up with the groups who were already living to a ripe old age.

U.S. mortality rates “are not improving evenly,” says Robert Friedland, founding director of the Center On An Aging Society at Georgetown University in Washington.

Technology may be increasing the maximum possible life span for a few 90-year-old women to 110, but the fact that more young men can expect to live into their 90s is probably more important for society, Friedland says.

“Is life span changing, or just life expectancy?” Friedland asks. “My view is that life span has not increased at all.”

Market researchers have made an art of slicing and dicing the U.S. population into easy-to-understand demographic groups, such as “Volvo-owning term life buyers.”

Actuaries are more comfortable with variables taken from more traditional information sources.

Stacy Gill, a vice president at the MIB Group Inc., Westwood, Mass., a life insurance industry data collection and analysis consortium, says life insurers typically look at four major variables when assessing mortality rates, or the risk that a member of a particular group might die in a particular period of time: sex, smoking, age and life insurance policy characteristics, such as the number of years a policy has been in effect.

Some researchers have tried looking at more offbeat variables, such as the correlation between pet ownership and mortality among the elderly, but finding reliable, published data even on meat-and-potatoes variables such as the insureds occupation or state of residence can be difficult, Gill says.

“There arent standard industry statistics for geographical differences,” Gill says.

When life insurers, life reinsurers and actuarial firms do use life claims databases to break down mortality rates in unusual ways, they may be more likely to use the results to gauge whether applicants are insurable than to try to use the results to set rates, experts report.

One popular method of dividing the population is to compare the insured with the uninsured population, and policyholders who own large amounts of coverage with those owning small amounts.

“The insured population does not have the same characteristics” as the general population, says Rick Bergstrom, a consulting actuary in the Seattle office of Milliman USA.

Thanks to improvements in food, sanitation and lifestyle, “the mortality rate in the general population has been improving about 1% per year for a long time,” Bergstrom says.

U.S. residents who own any life insurance tend to have longer life expectancies than those who own no life insurance, and “young old” annuity holders tend to do even better.

“Between the ages of 65 and 75, the mortality rate [for annuity holders] is roughly half of that for the general population,” according to a paper prepared in April 2000 by a team led by Jeffrey Brown, a researcher at Harvard University.

Meanwhile, the typical customer who owns $1 million in life insurance coverage will be far healthier than the typical customers who own $50,000 in coverage, because the holder of the $1 million policy must go through a far more rigorous underwriting process, Bergstrom says.

But he points out that the rate of improvement in mortality is slowing down for people over age 70 and improving for people under age 40.

Bergstrom emphasizes that he cannot draw any firm conclusions from the data, but says the figures could be a sign that improvements in mortality rates for older people, who are nearing the limits of the ordinary human span, are hard to make, and that medicine and society are having better luck at helping younger people who might have died young avoid death.

Bergstrom points out that mortality rates for women under age 40 are improving about 2% per year, while mortality rates for women over age 70 are deteriorating.

That might be because imperfect medical treatments are postponing the day when women die from conditions such as breast cancer rather than completely curing the conditions or extending womens maximum life span, Bergstrom says.

Mortality rates for older U.S. residents are of keen interest to life insurers, because insurers need extended mortality tables to meet the needs of consumers over age 65 who want to buy life insurance, says Tom Rhodes, a consulting actuary based in New Jersey.

Rhodes helped develop the 2001 Commissioners Standard Ordinary Table which is currently nearing adoption by the National Association of Insurance Commissioners, Kansas City, Mo.

“One of our primary concerns was extending the mortality table from age 100 to 120,” Rhodes says.

But, especially for insureds over age 100, the CSO team relied more on scientific studies about longevity than on actual claims data for people over age 100, Rhodes says.

Actuaries are also studying the relationship of mortality to variables such as weight, income and asset ownership.

Researchers at Lincoln Re, Fort Wayne, Ind., a reinsurer that was recently sold to Swiss Reinsurance Company, Zurich, and is now part of the companys operations, looked at obesity, in a paper published in 2001 in the Journal of Insurance Medicine. Obesity turned out to have the biggest effect on the mortality rate for male, middle-aged nonsmokers.

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 26, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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