Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • Sections
  • News

CMI launches consultation on mortality modelling

Open-access content Wednesday 23rd September 2020
CMI launches consultation on mortality modelling

The Continuous Mortality Investigation (CMI) has launched a consultation on how its next model should incorporate mortality data for 2020 following the COVID-19 outbreak.

Owned by the Institute and Faculty of Actuaries (IFoA), the CMI typically releases an updated version of its Mortality Projections Model each year, which are critical for valuing pension scheme and insurance company liabilities.

The next version, CMI_2020, is expected by the end of March 2021, however, it is feared that mortality rates recorded during the COVID-19 crisis could skew life expectancy expectations in a misleading way.

“The exceptional mortality experience during the coronavirus pandemic means that a version of CMI_2020 that takes account of mortality data for 2020 in the usual way would be likely to show substantial falls in life expectancy, which we think would be in excess of what most users of the model would consider reasonable,” the CMI said.

In response, the CMI is consulting on two proposed changes to the methodology for CMI_2020:

  • To address the exceptional data for 2020, it has proposed to modify the calibration process for the model so that users can place more or less weight on data for individual years. For the core version of the model, it currently proposes to place no weight on data for 2020, and full weight on other years, but will review this in light of mortality experience for the rest of 2020.
  • Unrelated to the experience of 2020, it has proposed to amend the age range of the dataset used to calibrate the model. The intention of this change is to avoid unrealistically low initial mortality improvements at high ages, caused by limitations in how the model copes with large historical shifts in mortality improvements that have varied significantly by age.

The CMI currently estimates that there have been around 60,600 more deaths in the UK since the start of the COVID-19 pandemic than there were during the corresponding period for 2019.

However, professional services firm Aon has cautioned against an overreaction, and suggested that future mortality may actually be lighter than anticipated.

The company explained how individuals who died in 2020 may have otherwise died in the next few years, while increased attention to healthcare and social care as a result of the pandemic could actually improve long-term mortality rates.

Tim Gordon, head of demographic horizons at Aon's Risk Settlement Group, said: "The mortality experienced in 2020 is unlikely to be indicative of longer-term trends. For this reason, we think the CMI’s proposal to place no weight on 2020 data is a sensible ‘least bad’ option. 

“COVID-19 is going to cause real problems for all mortality models that project trends, but it’s important that insurers, reinsurers and pension schemes do not overreact to this short-term disruption to their model updates.

“Longevity risk has not gone away. Pension schemes and insurance companies trying to reduce their exposure to longevity risk have the same access to the necessary tools, such as longevity swaps and bulk annuities, as they had before the pandemic. And the risk settlement market pricing remains competitive.”

The deadline for responses to the CMI's consultation is 1 November 2020, with the results expected by mid-December.

 

Image credit: iStock

Author: Chris Seekings

You may also be interested in...

New approach to DB pension funding could generate £40bn

New approach to DB pension funding could generate £40bn

A more contemporary approach to how liabilities for UK defined benefit (DB) pension schemes are funded could generate £40bn in extra value, PricewaterhouseCoopers (PwC) has found.
Wednesday 23rd September 2020
Open-access content
Quarter of UK adults are not confident about their finances

Quarter of UK adults are not confident about their finances

A quarter of UK adults aged over 25 are not confident about their financial situation following the strains of the COVID-19 pandemic, according to the Chartered Institute for Securities & Investment (CISI).
Tuesday 29th September 2020
Open-access content
Rising number of savers opting to withdraw pensions fully

Rising number of savers opting to withdraw pensions fully

There has been a significant rise in the number of UK savers fully withdrawing their pensions over the last year, figures released yesterday by the Financial Conduct Authority (FCA) show.
Wednesday 30th September 2020
Open-access content
UK pensions need 'once-a-century' equity performance to close funding gaps

UK pensions need 'once-a-century' equity performance to close funding gaps

UK defined benefit (DB) pension schemes are overly-dependent on improbable equity returns, and need a “once-a-century” performance to close funding gaps by 2030, Willis Towers Watson (WTW) has warned.
Wednesday 16th September 2020
Open-access content
Half of DB pension schemes now targeting buyouts

Half of DB pension schemes now targeting buyouts

Almost half of defined benefit (DB) pension schemes in the UK are now targeting a buyout as their long-term objective, up from just 15% four years ago, a survey of 100 trustees has found.
Wednesday 7th October 2020
Open-access content
Two in five pension schemes target de-risking transactions

Two in five pension schemes target de-risking transactions

Two in five defined benefit (DB) pension schemes in the UK expect to complete a de-risking transaction within the next three years, polling of over 129 trustees, pension managers and other key stakeholders has found.
Wednesday 14th October 2020
Open-access content

Latest from Pensions

ers

By halves

Reducing the pensions gap between men and women is a work in progress – and there’s still a long way to go, with women retiring on 50% less than men, says Alexandra Miles
Thursday 2nd March 2023
Open-access content
rdth

Make My Money Matter's Tony Burdon on the practical power of sustainable pensions

Years working in international development showed Tony Burdon, head of Make My Money Matter, that sustainable pensions can harness trillions of pounds to build a better world – at a scale governments and charities can’t. He talks to Travis Elsum
Wednesday 1st March 2023
Open-access content
KV

Liability-driven investments: new landscape

What now for liability-driven investments, after last year’s crash in the market? Pensions experts Rakesh Girdharlal and Moiz Khan say it should lead to a more balanced approach
Wednesday 1st February 2023
Open-access content

Latest from Life insurance

ytg

Seek cover

When it comes to sustaining your products’ performance in a ‘polycrisis’, customer engagement is key. Marco Spagnuolo outlines how life insurers can weather today’s economic storm
Wednesday 1st March 2023
Open-access content
67

Knock-on effects: the risks of cyber crime for life insurers

Life and health insurers need to consider how cyber risk could potentially impact them, say Visesh Gosrani, Mikhail Norshteyn and Karl Oliver
Wednesday 30th November 2022
Open-access content
tsj

On the write track: using machine learning to predict underwriting decisions

Yafei (Patricia) Wang looks at the use of machine learning to predict underwriting decisions for life and health insurance
Wednesday 3rd August 2022
Open-access content

Latest from Health care

yf

Animal crossing: the threat of zoonotic diseases

Prachi Patkee and Adam Strange discuss what the rising threat of climate-driven communicable disease means for insurers
Wednesday 30th November 2022
Open-access content
hb

Boiling point: the effect of rising temperatures on future mortality

As quantifying climate risk exposure becomes increasingly important, Dan Gill, Rajinder Poonian and Alex Harding investigate the effect of rising temperatures on future mortality
Wednesday 2nd November 2022
Open-access content
vb

Interview: Professor Paul Dalziel on changing the focus of economies from growth to wellbeing

Paul Dalziel talks to Alex Martin about the true purpose of economics and the lessons we can draw from the 2019 New Zealand wellbeing budget
Wednesday 2nd November 2022
Open-access content

Latest from News

web_Kartina-Tahir-Thomson.jpg

IFoA appoints new president-elect

The IFoA's next president-elect is to be Kartina Tahir Thomson, it was announced today (29 March 2023).
Wednesday 29th March 2023
Open-access content
tf

New online forum 'IFoA communities' – now live

IFoA communities is your new online digital community. Here’s how to get started on the platform
Thursday 2nd March 2023
Open-access content
uh

Climate risk course sees new growth

In April, the Climate Risk and Sustainability course will be one year old. During its first year, we welcomed 155 participants and awarded 148 certificates. Members from more than 19 countries came together at the seminars to discuss and share what they had learnt.
Wednesday 1st March 2023
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Capital & Reserving, Nearly Newly

London (Greater)
Depending on experience
Reference
149031

Reserving Actuary

Dublin
Competitive
Reference
149027

Senior Analyst - Actuarial and Funding Risk

England, London
£60000 - £65000 per annum + bonus + benefits
Reference
149029
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ