You are here

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

Filter or search events

Start date
E.g., 23/11/2020
End date
E.g., 23/11/2020

Events calendar

  • Spaces available

    The webinar will discuss the challenges and opportunities schemes face in evaluating end game options, choosing a target state and understanding the impact this strategic decision could have on member outcomes long after the “end state” is reached. Adolfo, Kevin and Rhian bring over 60 years of experience in the industry and a variety of perspectives as scheme actuary, covenant adviser, trustee, de-risking adviser and insurer.

  • Spaces available

    Retail banking is going through a period of substantial change as it moves into the digital age. Banks have large amounts of data about their customers and about their risks. Open data application programming interface (APIs) and data science are enabling banks to use their data to offer innovative and sometimes personalised services. Data science is also adding value in risk areas such as fraud detection and cyber security. At the same time, the move to online banking is making it easier for firms including fintechs to enter banking without having to establish branch networks.

  • UK Town Hall 08:30-09:30

    Webinar
    4 December 2020

    Spaces available

    IFoA President Tan Suee Chieh would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual UK Town Hall 2020, hosted by Tan Suee Chieh with IFoA’s Immediate Past President, John Taylor, President Elect, Louise Pryor and IFoA Chief Executive, Stephen Mann.  

  • UK Town Hall 10:00-11:00

    Webinar
    4 December 2020

    Spaces available

    IFoA President Tan Suee Chieh would like to invite you to the Institute and Faculty of Actuaries’ (IFoA) virtual UK Town Hall 2020, hosted by Tan Suee Chieh with IFoA’s Immediate Past President, John Taylor, President Elect, Louise Pryor and IFoA Chief Executive, Stephen Mann.  

  • Spaces available

    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.

  • Spaces available

    Patrick Kennedy, Partner at Gateley Legal and Founding Director of Entrust (a leading professional pensions trustee company), will be delivering an update on the latest legal developments during the course of 2020. With both a pensions legal perspective and over 25 years of trustee service, Patrick will seek to highlight how the letter of the law has continued to evolve against the backdrop of a difficult and challenging year

  • Spaces available

    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. 

  • Spaces available

    Running off the £2 trillion of UK corporate sector defined benefit liabilities in an efficient and effective fashion is the biggest challenge facing the UK pensions industry. Trustees and sponsors overseeing those schemes need to be clear on their target end-state and the associated journey plan – but too few have well articulated and robust plans.

  • Spaces available

    The actuarial skill set has much to offer the banking industry. So many of the skills that actuaries acquire during their working life translate across to the world of banking and yet banking is perceived as an alien environment to many actuaries. But is it?

  • Spaces available

    Covid-19 has required an urgent and cross-practice initiative to facilitate the extensive impact this pandemic has across all industries. IFoA members have been keen to contribute in a different way, so we developed the IFoA Covid-19 Action Taskforce [ICAT] to coordinate our effort, with a more efficient governance.

    We have over 500 volunteers and countless topics which we have amalgamated into 93 workstreams.