Club Vita US LLC has worked with Mercer to develop a silky new lifespan forecasting tool: the VitaCurves longevity model.
Developers say the new model uses data broken down by people’s 9-digit ZIP+4 postal codes to get an extra close lifespan projection fit.
Club Vita — the Hoboken, New Jersey-based of a U.K. longevity data analysis firm — is preparing to begin offering access to its ZIP+4-based model to Mercer clients, and its own clients, in September.
Mercer is a major benefits consulting firm. It’s part of Marsh & McLennan Companies Inc.
Club Vita has been offering high-res life expectancy forecasting models in the United Kingdom since 2008. The company began offering a similar model in Canada in 2015.
Why Lifespan Forecasting?
Many employers want to shed some or all of their defined benefit pension risk, and many life insurers want to sell group annuities that employers can use in pension risk transfers.
Better longevity forecasting may help the pension risk transfer players make better deals, and it could also help reduce some pension plans’ apparent funding deficits, according to a Club Vita discussion of the VitaCurves modeling strategy.
If, for example, better modeling could improve U.S. pension liability forecasting by 1%, that could cut the current $3.4 trillion U.S. private pension benefits obligation total by $34 billion, according to Club Vita.
High-Res Analysis v. Low-Res Analysis
Dan Reddy, chief executive officer of Club Vita US , said in a statement about the new model using ZIP-code-based population health data can be a great, practical underwriting tool.
“Not only are ZIP codes insightful for assessing how healthy the lifestyles are of people living in different neighborhoods, but they are also readily available, so there is no need to collect sensitive individualized health information,” Reddy said in the statement.
All other factors of being equal, “neighborhoods with similar characteristics have similar longevity,” according to the Club Vita discussion of its product.
At least some competing lifespan forecasting models use population health data broken down only by people’s ordinary, 5-digit postal codes.
One problem with that lower-resolution approach is that some 5-digit ZIP code zones contain 100,000 people, and another problem is that the residents of some 5-digit ZIP codes are extremely diverse, according to Club Vita.
— Read 10 ZIP Codes Where the ACA Individual Mandate Hit hard, on ThinkAdvisor.