The Continuous Mortality Investigation (CMI) has announced that it will place no weight on 2020 data when it releases its next model for projecting UK mortality rates.
This is due to the impact of the coronavirus pandemic on mortality rates in England and Wales this year, which have been well outside the range of year-on-year changes seen over the past four decades.
While 2020 deaths will affect actuarial calculations, the CMI said that this is likely to be an outlier, and not indicative of the future path that mortality rates will follow.
The decision to discount this year's data was made following a consultation with potential users of the model in September.
“The premise of the model is that recent changes in mortality are a reasonable guide to short-term future changes in mortality,” explained Cobus Daneel, chair of the CMI's Mortality Projections Committee.
“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 CMI – which is owned by the Institute and Faculty of Actuaries – produces models that are widely used in the pensions and insurance industries to project future mortality.
Respondents to this year's consultation acknowledged that there was no perfect way to address the impact of the pandemic on the next model, but were strongly supportive of the decision to discount 2020 data.
Daneel said that this will lead to a “much more modest fall” in life expectancy when compared to the previous CMI_2019 version.
“Once the model has been released, users will be able to adjust various model parameters to reflect their views,” he continued. “This will allow them to place partial or full weight on the 2020 data if they wish.”
The CMI expects to release its CMI_2020 model in March 2021.
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Author: Chris Seekings