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Swiss Re urges new approach to mortality figures

The report by Swiss Re, 'A window into the future: Understanding and predicting longevity', published today, suggested current models - blended or stochastic - made insufficient use of information available and could not be easily adapted to reflect medical progress.

The report's author, head of life and health research and development Daniel Ryan (pictured), said the key was to use commercial databases such as the General Practice Research Database to build a picture of how combinations of diseases have affected overall mortality.

He advocated combining this historical information with forward-looking scenarios considering treatments in trial to give a series of different events which could be used to describe the reasons for predicted changes in mortality.

This meant when medical advances were realised, it could easily be explained whether they had already been factored in and, if they had not, projections could be updated.

"It's putting a covering of a narrative over the numbers that are churned out by a particular model," Ryan explained.

He conceded unforeseen checks to advances in treatment - such as health scares or the failure of promising treatments - could cause predictions to change but said this was addressed by calculating a range of long-term assumptions on a disease by-disease basis.

Ryan said this type of approach would have been better able to predict the dramatic improvements in longevity in the '90s.

"We still would have had to change our expectations, but it would have been over a more gradual period of time rather than the kind of step change we saw," he explained.

Ryan added this approach could address the problem of limited market capacity for longevity swaps by opening up the field to new players.

"By providing greater information to the capital markets we can help them understand that, while longevity in the future is an unknown, it is inherently no more unknown than many of the other variables people have to consider when taking on future risk," he said.

>> In a separate statement, Legal & General gave its backing to the Swiss Re report. The firm's longevity expert Joseph Lu said: "We support Daniel Ryan's call for greater and easier access to public health data. This data is so crucial in helping to understand the long term implications on the population's future life expectancy. The data enable us to conduct more accurate analysis on longevity risk, which would help more people to plan and ensure they do have sufficient savings in retirement.

"It is great that overall people are living longer but it is life expectancy at older ages where there has been the most dramatic rise. Over the last ten years, life expectancy at age 65 has risen by about 95 days per year for men and by 75 days per year for women.

"This improvement in life expectancy makes it extremely difficult to estimate how long we can expect to live and why so many of us still greatly underestimate how long that will be. Research has shown that men between the ages of 60 and 69 tend to underestimate how long they will live by nearly three years and women by nearly five years. If they were to plan their retirement on this basis then many run a high risk of outliving their savings."