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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.

The CMI has previously published three main sets of graduated rates for individual IP claim inceptions and two for terminations. The “IP06” claim inception rates were based on individual IP experience of males and females, separately by occupation class, in 2003-2010, and were published in March 2019 alongside Working Paper 120. 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 1.2 of the CMI IP Tool incorporates the “IP11” claim inception and termination rates.

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

  • Finance in the Public Interest Series

    16 March 2021 - 23 March 2021

    Spaces available

    There is widening debate that many of our social, financial and regulatory institutions need to be rethought so that we can create more sustainable futures, particularly in light of the Covid-19 pandemic, the policy/macro-economic response to the pandemic and how it affects consumers, as well as the impending climate crisis. This multi-day series of three keynote webinars, individually presented by leading economist John Kay, Sir Paul Collier, Professor of Economics and Public Policy at the Blavatnik School of Government, Ashok Gupta, Chair at Mercer Ltd, and Nico Aspinall, Chief Investment Officer at B&CE, will open up discussion on these essential topics. The series will culminate in a panel session with Chief Economist of the Bank of England, Andy Haldane.

  • The price is righter

    16 March 2021

    Spaces available

    This webinar provides an overview of the state of the UK protection market, and how different insurers are using different levels of sophistication to price (such as using customer demand models). It considers how insurers have implemented these sophisticated pricing techniques, and the practical challenges they have faced.

  • Spaces available

    This discussion will revolve around the latest industry developments including and introduction to Part VII transfers and Schemes of Arrangement (process, parties involved and recent events), insights and lessons from recent with-profits transactions and restructurings (including Equitable Life and Pru-Rothesay), how firms can apply these learnings to future arrangements, and the outlook for future with-profits transactions and restructurings (including the impacts of Covid-19 and Brexit)

     

  • Spaces available

    What is stewardship and how has the landscape changed under the 2020 UK Stewardship Code? How does effective stewardship create long term value for beneficiaries and what roles do asset owners and asset managers play in active stewardship. This webinar will offer answers to these questions in a practical approach to stewardship reporting.

  • Spaces available

    Mis-estimation risk is a key element of demographic risk, and past work has focused on mis-estimation risk on a run-off basis.  However, this does not meet the requirements of regulatory regimes like Solvency II, which demands that capital requirements are set through the prism of a finite horizon like one year.  This paper presents a value-at-risk approach to mis-estimation risk suitable for Solvency II work.