14 December 2020
The Continuous Mortality Investigation (CMI) has confirmed that it will modify the method used in the next version of its Mortality Projections Model, CMI_2020. This is due to the impact of the coronavirus pandemic on mortality rates in England & Wales this year, which have been well outside the range of year-on-year changes seen in the past 40 years. While 2020 mortality experience will affect actuarial calculations, it is likely to be an outlier and not indicative of the future path that mortality rates will follow. For this reason, CMI_2020 will place no weight on the data for 2020 when projecting mortality rates.
The CMI consulted with users of the Model on these changes in September. Respondents acknowledged that there was no perfect way to address the impact of the pandemic on the Model but were strongly supportive of the decision to discount the 2020 data.
Cobus Daneel, Chair of the CMI Mortality Projections Committee, said: “The premise of the Model is that recent changes in mortality are a reasonable guide to short term future changes in mortality. However, if we gave full weight to 2020 data, CMI_2020 would have resulted in substantial falls in projected life expectancy. The reduction in life expectancy would have been in excess of what most users of the Model would consider reasonable.
“The consultation respondents generally considered the decision to modify the Model, by placing no weight on the data for 2020, to be a sensible and pragmatic approach. The change will lead to a much more modest fall in life expectancy compared to the previous version CMI_2019. Once the Model has been released, users will be able to adjust various Model parameters to reflect their views. This will allow them to place partial or full weight on the 2020 data if they wish.”
The CMI Mortality Projections Model is widely used in the pensions and insurance industries to project future mortality. The CMI expects to release CMI_2020 in March 2021.
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Contact
Sonia Sequeira, Media Relations Manager, IFoA
Tel: 07525 592 198
Email: sonia.sequeira@actuaries.org.uk
Notes to Editor
The CMI consulted on a more technical change, not related to the pandemic. It proposed a change to the age range of the data used to calibrate the Model, to provide a better fit to historical data at ages 90 and above. This change will not be made in CMI_2020.
About the Continuous Mortality Investigation
The CMI’s mission is to produce high-quality impartial analysis, standard tables and models of mortality and morbidity for long-term insurance products and pension scheme liabilities on behalf of subscribers and, in doing so, to further actuarial understanding.
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