One of the main responsibilities of the Mortality Research Steering Committee (MRSC) is to steer the Profession’s research relating to the demographic risks of mortality, morbidity and longevity. We have reviewed what we believe should be the priorities for research activity and have identified six areas.
1. Predicting future population mortality improvement
The IFoA (through the CMI) provides the Mortality Projections Model, which is a world-leading model that smooths recent trends in mortality and blends it into projected long-term mortality improvements. However, there is no equivalent robust and reliable method for deriving plausible population mortality improvement assumptions from more discrete data sources (such as a cause of death data), necessarily supported by subjective judgements. The MRSC wants to see a methodology created that does this, and our current approach is to use a bespoke multiple cause of death dataset provided by the ONS.
The MRSC has undertaken to produce a model that provides a method of deriving plausible population mortality improvement assumptions for the UK general population by looking at data showing deaths by cause, and then considering how these may change in the future as a result of longevity ‘catalysts’. As an initial step to understanding these longevity catalysts and their potential impacts on different cause of death groups, a paper ‘Universe of Longevity Catalysts: Call For Research’ has been written that sets out a universe of material catalysts and which causes of death they are most likely to impact.
The MRSC steering committee are now looking for the assistance of the actuarial community and its wider contacts to help identify research that can provide evidence to help parameterise the resulting model. We are asking people to read this paper and let us know of any research that has been carried out in the areas identified.
2. Forecasting trends in morbidity
Forecasting morbidity is currently a difficult task, as morbidity trends are complex, influenced by changes in the biological incidence of diseases and affected by changes in diagnostic techniques. We want to improve the understanding of these trends and their interactions to help maintain access to protection products serving a strong consumer need, and also provides richer insights into mortality and longevity trends.
3. Supporting the profession's efforts to resolve the challenge of providing older age care
In recent years the UK population has aged significantly and is expected to continue to age in the future. As a result, the number of people requiring good quality care has increased but the provision of the required care has not met the needs of society. The solutions that the actuarial profession can devise may help to address this issue and the MRSC can contribute to this.
4. Managing risk in products providing longevity protection
The risk management of longevity is still in its infancy and there are a number of aspects that could improve this:
- Creation of an industry standard definition of all the risks behaviours underlying longevity risk.
- Development of a method to benchmark the output of different risk models used by individual companies using this standard definition.
- Identification of new ways to reduce risk using this standard definition to identify the intrinsic and avoidable risks.
- Consideration of the differing longevity risk exposures of different kinds of beneficiaries
5. Tools and techniques used for analysing portfolio experience
The potential tools and techniques available to actuaries to analyse portfolio experience continue to evolve. Actuaries need to look beyond the traditional methods to decide what might best serve their clients. The following areas would benefit from investigation and communication to the actuarial community:
- The potential new sources of data that can be used to enhance the assessment of portfolio experience.
- The increased range of analyses that areas such as data science are bringing to the actuarial toolkit.
- The assumptions being made by traditional and new techniques, and whether these are reasonable in the uses made by actuaries.
- The relative advantages and disadvantages of these approaches, technically but also as regards interpretability and ease of implementation.
6. Communication of complex risk behaviours in ways that are easy to understand
Longevity, mortality and morbidity risks are complex and simplistic measures, such as expectations of life, do not provide reliable metrics for non-experts to base decisions upon. New means of communicating this complex behaviour are required that better serve the needs of stakeholders.
We have started to work on advancing the six areas above and we will publish any research and outputs on these areas via the IFoA website.
In October 2019 the MRSC held a Stakeholder Event. This included discussion of the MRSC’s six priority areas as well as discussion of alternative priorities. A summary of the discussions is available on the stakeholder event page.
We would welcome any further feedback or comments on our research priorities. Please let us know any comments at firstname.lastname@example.org.
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Wicked Problems, Clumsy Solutions and Leading Change
Dr Catherine Donnelly will present the basics of the structures for pooling longevity risks and summarise recent research results in this area in addition to outlinging future research around this topic. This is work under a research programme funded by the IFoA's Actuarial Research Centre, called 'Minimizing longevity and investment risk while optimising future pension plans'.
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