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Information Overload Steven Rimmer Towers Watson

Information Overload Steven Rimmer Towers Watson. Information overload: Setting mortality assumptions in the modern era. Steven Rimmer , Towers Watson. What we promised to talk about. What we are going to conclude. A brief history of base assumptions. Single assumption. Own experience

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Information Overload Steven Rimmer Towers Watson

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  1. Information Overload Steven RimmerTowers Watson towerswatson.com

  2. Information overload:Setting mortality assumptions in the modern era Steven Rimmer, Towers Watson

  3. What we promised to talk about

  4. What we are going to conclude

  5. A brief history of base assumptions Single assumption • Own experience • Industry standard tables • Adjusted for industry / amount

  6. A brief history of base assumptions Postcode rating • Everyone is ‘different’? • Postcode vs individual • Data quality

  7. Quick aside – Knightian uncertainty “The essential fact is that 'risk' means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating” Risk, Uncertainty, and Profit (1921) Frank Knight (1885 – 1972) towerswatson.com

  8. Quick aside – Ellsberg paradox • Set-up • 90 sweets in a jar • 30 are red • 60 are either yellow or black • Wager 1 • £100 if you draw a red; or • £100 if you draw a black • Wager 2 • £100 if you draw a red or yellow; or • £100 if you draw a black or yellow towerswatson.com

  9. A brief history of base assumptions Postcode rating • Everyone is ‘different’? • Postcode vs individual • Data quality

  10. A brief history of base assumptions £10,000 pensionSmoker Heart attack No financial dependants Individual underwriting • Current hot topic • Role for Trustees? • Insurability?

  11. Quick aside – The market for lemons “This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets… … good cars may be driven out of the market by the lemons.” The Market for “Lemons”: Quality Uncertainty and the Market Mechanism (1970) George Akerlof (1940 – ) towerswatson.com

  12. Quick aside – The market for lemons Buyers Sellers towerswatson.com

  13. Quick aside – The market for lemons Buyers Sellers towerswatson.com

  14. Quick aside – The market for lemons Buyers Sellers towerswatson.com

  15. Quick aside – The (annuity) market for lemons Pension schemes Insurers towerswatson.com

  16. Quick aside – The (annuity) market for lemons Non-underwritten Pension schemes Medical underwriting towerswatson.com

  17. Quick aside – The (annuity) market for lemons Non-underwritten Pension schemes Medical underwriting towerswatson.com

  18. A brief history of base assumptions £10,000 pensionSmoker Heart attack No financial dependants Individual underwriting • Current hot topic • Role for Trustees? • Insurability?

  19. What next? £10,000 pensionSmoker Heart attack No financial dependants Genetic profiling • Next step? • Explains a lot of variation at oldest ages • Would we want to gather the information?

  20. “It's hard to make predictions, especially about the future.”ZZZ towerswatson.com

  21. “Trend risk” towerswatson.com

  22. Deaths by quarter towerswatson.com

  23. CMI Working Paper 69 towerswatson.com

  24. Male life expectancies towerswatson.com

  25. Female life expectancies towerswatson.com

  26. Deaths in England & Wales 2001 to 2012 Total Change from previous year towerswatson.com

  27. Ten most prevalent causes of death in E&W 2001 towerswatson.com

  28. Ten most prevalent causes of death in E&W 2001 towerswatson.com

  29. Nine of Top 30 are diseases of the circulatory system towerswatson.com

  30. Twelve of Top 30 are malignant neoplasms towerswatson.com

  31. Other nine of Top 30 towerswatson.com

  32. Ten most prevalent causes of death in E&W 2001 towerswatson.com

  33. Ten most prevalent causes of death in E&W 2001 towerswatson.com

  34. Ten biggest increases over last 12 years towerswatson.com

  35. Ten biggest fallers over last 12 years towerswatson.com

  36. Biggest risers and fallers 2011 to 2012 towerswatson.com

  37. Differentiating rates of improvement Evidence from Italy Low pension High pension Source: Article in The Actuary by Piero Cocevar and Luigi De Falco towerswatson.com

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