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Income protection investigation

The CMI investigates the sickness experience of income protection policyholders

Brief history

A sub-committee of the CMI was set up in 1970 to investigate sickness rates under policies providing permanent health insurance, now better known as income protection. The main dataset extends back to 1975 although occupation class is only included from 1991. There are separate pools for individual business (still open) and group business (closed 2006).

Data and methodology

Data is submitted annually by life offices. Records are generally provided for each individual policy at the start and end of the year, and for each claim in payment during the year, although we are flexible with formatting. See CMI data for more information about data submission. 

Initially the investigations used a Manchester Unity approach, but now the experience is analysed in terms of claim inceptions and terminations (by recovery or death). The current methodology is described in CMI Working Paper 59.

Results

Subscribing life offices receive results in respect of the business for which they have submitted data. Aggregate 'All offices' results are also produced. CMI Working Paper 124 presents the most recent published analysis covering the period 2011 to 2016. 

The actual claim inceptions experience is compared with that expected using the IP06 graduated inception rates from investigation year 2011, and with that expected using the IPM 1991-98 graduations for 2011-2016 and earlier years. The actual claim terminations experience is compared with that expected using the IPM 1991-98 graduations.

An overview of the IPM 1991-98 graduations is presented in CMI Working Paper 48; details of the IP06 inceptions graduations can be found in CMI Working Paper 120.

Claim experience tables

“IP11” claim inception and termination rates, based on individual IP experience of males and females, separately by occupation class, in 2007-2016, were finalised in September 2020. Analysis of actual experience compared to that expected using the IP11 rates will commence from investigation year 2017.

Final “IP06” claim inception rates, based on individual IP experience of males and females, separately by occupation class, in 2003-2010, were published in March 2019.  The intention had been to produce graduated claim termination rates based on the 2003-2010 dataset to accompany the “IP06” claim inceptions rates. However, “all offices” experience results for 2011-2016 were released while this work was at a relatively early stage. Having a more recent dataset available, the decision was made to graduate the termination rates based on 2007-2016 and to also update the claim inception rates.

The CMI has previously published two main sets of graduated rates for individual IP claim inceptions and terminations. The second, IPM 1991-98, reflects the experience of male lives in CMI occupation class 1 policies for 1991-98, with an overview presented in CMI Working Paper 48.

The CMI Income Protection Rate Table Tool is a spreadsheet-based application, designed to assist practitioners in deriving claim inception and termination rates, as well as other factors required for their in-house profit testing, valuation and experience analysis tools, such as claim annuity values. It is intended to help practitioners make full use of the published graduations and experience. Version 1.1 of the CMI IP Tool incorporates the IP06 claim inception rates. An updated version of the CMI IP Tool, incorporating the IP11 claim inception and termination rates, is due to be released shortly.

Further analysis

An analysis of individual Income Protection experience, 1991-2009, by cause of sickness is contained in CMI Working Paper 72.  An accompanying spreadsheet containing two databases, covering inceptions and terminations experience, was also made available to enable practitioners to pursue further investigations. An updated version of these databases, covering 1991-2010, was released alongside Working Paper 96 in which some of the previous analyses were updated.

Supplementary analyses to those included in regular ‘all offices’ results were released in Working Paper 102. These consider IP experience in 2003-2010 by benefit amount and policy duration.

Related documents

Contact Details

If you have any questions about the CMI please email

info@cmilimited.co.uk

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Events calendar

  • Asia Conference Webinar Series

    Webinars
    7 September 2020 - 25 September 2020

    Spaces available

    There will be a prestigious line-up of international speakers discussing the insurance and financial industry’s innovation and change in Asia.  The conference will take place throughout September via an online platform. The webinars consist of plenary speaking sessions and a series of workshop sessions including Life, GI, Data Science, Sustainability, Risk Management and Investment.

    This will be the perfect opportunity for you to discover,ask questions and be at the forefront of current and developing actuarial/financial topics and trends in Asia.

     

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    This free 90 minute webinar is designed to support the IFoA CPD Co-ordinators, and others, involved in supporting our members to achieve their CPD requirements. 

    The programme will include an overview of the new CPD Scheme; specifically sharing with you key messages to support you implement and embrace the new CPD Scheme for our members within your organisation and regional community; how to arrange a reflective practice discussion; and an interactive reflective practice discussion learning exercise.  In addition, delegates will gain information about accessing, and making the most of the IFoA event Toolkits which you can make use of to run your own in-house events and events for regional communities. 

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    16.00-17.00 GMT+8

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  • Spaces available

    12.00-13.00 GMT+8

    This presenter / panel workshop hybrid will be anchored by two presentations examining the socioeconomic, medical and technological factors that will have a significant impact on mortality and our pricing over the next 20 years and beyond. It will also discuss whether significant mortality improvement will continue in Asia or whether varying experience of low improvements or deterioration. 

  • Spaces available

    12.00-13.00 GMT+8

    This presentation aims to provides an overview of the reformation of current Chinese regulatory solvency regime, how industry coping with the new normal after pandemic time and how the reformation of the regulation could help the insurance industry gets back on its feet as well as coming back to the “protection” core value for the policyholders. The presentation would include:

  • Spaces available

    16.00-17.00 (GMT+8) | 09.00-10.00 (BST)

    The basic data of China’s 2nd Critical Illness Mortality Table covers 2000+ products in Chinese market, including about 340 million insurance policies and 5.1 million claimants. Presenter will give the audience a general understanding including but not limited to the following contents:

  • Autumn Lecture 2020: Professor Elroy Dimson

    Online webinar
    14 October 2020

    Spaces available

    Many individuals and institutions have a long-term focus, and invest funds for the benefit of future generations. Their strategy should reflect their long horizon. University endowments are one of the oldest classes of institutional investor, and I will present the first study of the management of these endowments over the very long term.

  • GIRO Conference 2020 Webinar Series

    Available to watch globally in November.
    02-13 November 2020
    Spaces available

    This year's GIRO has been re-designed as a virtual conference to offer members and non-members the opportunity to get up to date content from leading experts in the general insurance field via online webinars. All sessions will be recorded and made available to purchase and re-watch post-event on the IFoA's GI Online Learning Resource area.

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    Cash-flow driven investing is a game-changer for DB pension funds navigating their end-game. Suitable for sponsors who want to reduce risks on their balance sheets. And for trustees, it shifts the focus to providing greater certainty of returns, managing funding level volatility and ensuring they have enough income to pay cash-flow requirements.

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    The talk will provide an understanding of the priorities and relationships between deficit reduction contributions, in the context of wider scheme funding, and different types of value outflow from the employer based on the working party’s recently published report.