Periodical Payment Orders (PPO)

Background to the project

The PPO Working Party was established in 2010 to investigate PPOs and their effects on the UK insurance and reinsurance industry. The group has been at the forefront of advising GI actuaries about the impacts on their work, such as the need to use life insurance techniques in reserving. In 2012, the group addressed impaired life mortality (ILM) specific to UK PPO awards.  This is an area identified by the group as worth investigating and is also one of the main concerns of the industry: how different is ILM from general population mortality.

In early 2018 the Periodical Payment Orders Working Party requested funding for commissioned research, in order to commission a feasibility study with the aim of compiling mortality tables of impaired lives who have suffered brain and/or spinal injury following a severe trauma (specific to UK PPO awards). This funding request was approved by the GI Board and subsequently approved by the IFoA's Research and Thought Leadership Board (RTLB) in July 2018. RTLB further agreed that the PPO research should be commissioned through the IFoA’s Actuarial Research Centre (ARC), and that the opportunity to seek external partners to jointly fund and commission the work should be explored. It is intended that the data for the feasibility study will be compiled from the most relevant UK medical research database(s) of patient records as entered by GPs (e.g. THIN, CPRD or such other source as identified via the research) with comparison to overall population statistics from the ONS. If successful, the data will enable more accurate reserving, pricing and capital setting for PPOs.

Given the relevance of this research for industry, we’re also keen to commission and deliver this leading-edge ARC project in partnership with interested parties.

Please read the PPO research project summary for more information on the research project proposal.

Events

ARC event on Periodical Payment Orders (PPOs) 

The ARC hosted a mortality research event on 20^th February 2019 at Staple Inn Hall London. This event facilitated an open discussion between industry experts, insurers, healthcare providers and academics who specialise in the development of mortality data. The aim of this event, which was achieved, was to refine the challenges that would be faced in developing mortality tables of impaired lives (who have suffered the types of traumatic injury that gives rise to PPO awards), and the potential solutions available.

A summary of the event, including feedback responses from delegates, is available.

Expected outputs

It is expected that these mortality tables will become a reference point for actuaries and others involved in the management of PPO liabilities when considering the future mortality rates likely to be experienced by PPO recipients (for example for the purpose of calculating reserves).