New Model Projects Levels of Mortality Improvement Will Decline in the Coming Decades
12 November 2014 - 3:05PM
Business Wire
Report looks at whether longevity improvements are
sustainable or have begun to reverse
Although U.S. population mortality has shown significant
improvement over the past three decades, the overall rates of
future mortality improvement could decline in the coming years,
according to a new report about longevity trends published by
global professional services company Towers Watson (NYSE, NASDAQ:
TW). The report examined the leading factors that drive mortality
improvement by using a newly constructed cause-of-death model to
assess future levels of mortality improvement.
“Understanding longevity trends in the U.S. life insurance and
annuity market is critical for insurers,” said John Fenton,
director, Americas Life practice, Towers Watson. “Recent history
shows longevity improvements have been high, but the relevant risk
management issue for life insurers is whether they will endure.
Life insurers can benefit if they start to examine the trends that
will drive future mortality improvement, including those in
individual and overall causes of death. This will affect their
products and risk limits over time.”
The cause-of-death model developed by Towers Watson uses a
blended age- and cohort-based approach, and projects that mortality
improvement will moderate in the coming years, primarily because
some of the diseases with the largest rates of improvement — heart
disease, stroke and cancer — will represent a smaller portion of
total deaths in the future. In turn, these will be replaced by
causes of death where mortality is not improving (or actually
deteriorating), such as Alzheimer’s and accidents. The result is
that future mortality improvement levels may drop to 50% of their
near-term levels in approximately 30 years.
The report concluded that socioeconomic factors play a greater
role with longevity than most have realized. Individuals at the
upper end of the socioeconomic spectrum can be expected to have
mortality improvement rates in excess of 1% higher than those at
the lower end, which can have a significant impact on some insured
populations. Various factors underpin the improved mortality
associated with higher socioeconomic levels, such as increased
access to medical care, greater awareness of personal health issues
and lower job-related risks.
“The socioeconomic variable can be applied to help insurers make
provisions for the impact of the socioeconomic level of the insured
block of business. This will vary depending on the nature of the
market in which the business is sold. It may be appropriate to
consider making adjustments that fall into several categories.
Affluent, middle market and blue collar may be natural fits,” said
Fenton.
The report addressed several factors that will impact mortality
in the future, including obesity, universal health care, medical
technology, drug efficacy in the long term and new diseases.
Smoking prevalence, which has declined over the past 30 to 40 years
and led to mortality improvements, will have less of an impact in
the future, as smoking has leveled out. Obesity will continue to
have an adverse impact on overall life expectancy, since it has led
to an increase in diabetes, which is a drag on longevity
improvements.
“Early assessment will help life insurers better understand the
risks that may exist within specific product portfolios and may be
undetected. A sophisticated, expert analysis of the impact of
longevity trends will make enterprise risk management and long-term
planning more manageable and precise,” said Fenton.
About the Report
To purchase or request more information on the complete
“Longevity Trends in the U.S.” report, please e-mail:
longevity.study@towerswatson.com.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global
professional services company that helps organizations improve
performance through effective people, risk and financial
management. With 15,000 associates around the world, the company
offers consulting, technology and solutions in the areas of
benefits, talent management, rewards, and risk and capital
management. Learn more at towerswatson.com.
Towers WatsonJosh Wozman, +1
703-258-7670josh.wozman@towerswatson.comorBinoli Savani, +1
703-258-7648binoli.savani@towerswatson.com
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