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The Actuary The magazine of the Institute & Faculty of Actuaries

Life: Under cover operations

The regular and highly publicised reports of fatalities in Afghanistan highlight the dangers faced by the members of the British Armed Forces who are deployed in conflict zones and the need for them to make financial provision for their dependents. In this article, I consider what life cover is available for members of the British Armed Forces, the additional risks associated with providing this cover and ways to manage the risk.

Composition of the British Armed Forces
The British Armed Forces is made up of just over 190,000 full-time trained and untrained personnel1, as well as regular and volunteer reserves. Regular reserves are made up of former members of the regular full-time British Armed Forces who remain liable for recall. Due to data quality problems, the Defence Analytical Services Agency (DASA) has not published statistics on all of the regular reserve forces since 2005 when the figure was just over 190,0002. Regular reserves are rarely mobilised. Around 420 regular army reservists were called up for service in Iraq in 2003 and around 90 are serving in Iraq, Afghanistan and the Balkans3. Some regular reservists also join the volunteer reserves.

According to DASA statistics, there were just under 40,000 volunteer reservists at April 2010, most of whom are in the Territorial Army4. Since the invasion of Iraq in March 2003, more than 17,000 reservists have served in operations around the world. Volunteer reserves are mostly civilians who are trained and provide operational support when required. They receive payment for each day that they train or are on duty.

Life cover available
Under the British Armed Forces Compensation Scheme5, dependents of regular or reserve members of the British Armed Forces are entitled to compensation in the event of a member’s death that has resulted from their service duties. The benefits consist of:
>> A bereavement grant of up to £20,000.
>> An income benefit of roughly 50% of military salary, which is payable for life to a surviving spouse or partner. The exact proportion of salary paid depends on the member’s age at death.
>> An income benefit of around 12% of salary is payable for up to two dependent children and these payments continue while a child is under the age of 18 (or under the age of 23 if engaged in full-time study).
>> The maximum income benefit payment is made when there are four or more children. The total income the family will receive will be 80% to 90% of salary, depending on the member’s age at death. The salary determination rules are complex for reservists and may include some allowance to reflect higher civilian earnings. Income benefits are reduced by 75% of any income benefits paid by a British Armed Forces or employer pension scheme. Lump sum life-cover products that have been designed specifically for regular and reserve members of the British Armed Forces are available. The sum assured is limited to between £150,000 and £200,000.

Most UK insurers ask about involvement in the regular British Armed Forces in their standard underwriting questionnaires. Fewer insurers also ask about involvement in the reserve forces. There are various treatments of British Armed Forces cases. A temporary or permanent per mille loading may be applied, and loadings will be highest for members who are ’under orders’ for active service and those whose duties involve particularly high-risk activities such as bomb disposal or diving. Those not under orders or reservists may or may not be loaded. Sometimes cover may be offered only if it is mortgage-related or the sum assured may be restricted, especially where the applicant is under orders at the underwriting stage. Insurers generally do not apply exclusions in respect of death in service. Enforcing such an exclusion carries reputation risk because of media attention on military deaths.

Recent mortality rates
By comparing historic mortality rates for the population and the British Armed Forces, we can start to get an idea of any additional cost of cover. DASA publishes an annual report on death in the regular British Armed Forces and the most recent issue shows death rates for the period 2000-20096. Table 1 shows some of the mortality statistics from this report.

Until 2005, mortality in the British Armed Forces was significantly lower than in the general population. This could indicate general good health and fitness of members of the British Armed Forces. To put the mortality ratios shown in Table 1 into context, we have compared ultimate mortality rates in the AMC00 standard insured lives mortality tables against the interim English Life Table for 1999-2001 for males aged 30 to 40. We use this age range because insured life data is sparse below the age of 30. Insured life mortality is around 50% of population mortality, which means that British Armed Forces mortality may still be heavier than insured lives mortality.

The increasing number of deaths due to hostile action in more recent years had pushed British Armed Forces mortality rates up to population levels. Death rates from hostile action are higher in the British Army than in the British Armed Forces in total. The military operations in which most of these deaths have taken place are Operation Telic in Iraq and Operation Herrick in Afghanistan. Operation Telic began in 2003 and 46,000 members of the British Armed Forces were deployed at the peak of operations in March and April of 2003. This number reduced to roughly 18,000 in May 2003 and then to around 8,500 in 2004/5 and continued reducing to 150 in January 20107. To date there have been 179 fatalities8.

Around 9,500 members of the British Armed Forces are currently deployed in Afghanistan9. 327 deaths have been recorded under Operation Herrick between October 2001 and 11 August 201010. From the detailed breakdown of fatalities in these data sources, we estimate that mortality rates in calendar years 2004-2009 ranged from two to eight per thousand in Iraq. The mortality rate in Afghanistan was approximately eight and 17 per thousand in 2008 and 2009 respectively. There have been 103 deaths in Afghanistan between 1 January and 11 August 2010, suggesting an annualised mortality rate of 18 per thousand.

The Falklands War lasted for 74 days in 1982 and claimed 255 lives out of the 28,000 mobilised British Armed Forces11, giving an annualised mortality rate of 45 per thousand. Around half of the fatalities were in the Royal Navy and Royal Marines as a result of the sinking of ships12. In addition to the high mortality rates in 1982, it has been suggested that suicide rates have been high among veterans suffering from post-traumatic stress disorder. The death rates in these recent conflicts are still much lower than those seen in the two World Wars.

Providing cover but managing the risk
Past data shows that mortality rates are volatile. In addition, future British Armed Forces operations are difficult to predict. Despite media speculation, no timetable has been set for the withdrawal of British troops from Afghanistan. Also, as in the case of the Falklands War, the British Armed Forces across all disciplines could become involved in a new conflict at short notice.

On aggregate, mortality rates for members of the British Armed Forces have been only a little higher than rates for other insured lives because not all personnel are deployed to the major conflict zones and tours of duty typically last for six months at a time. However, given the uncertainty of the cost and the potential for catastrophe, it is important for insurers to monitor exposure by sum assured to the members of the British Armed Forces. It is also advisable to monitor new business volumes to ensure that a company’s loading methodology and underwriting stance do not inadvertently expose it to an undue share of British Armed Forces business.


Adele Groyer is an actuary at Gen Re. The opinions in this article do not necessarily reflect the opinions of her employer


This article references source material from Ministry of Defence (MOD) websites that is subject to Crown copyright. Crown copyright material is reproduced with the permission of the Controller of the HMSO and the Queen’s Printer for Scotland.

1. MOD,UK Armed Forces Quarterly Manning Report , Edition 1 April 2010, Released on 27 May 2010 http://www.dasa.mod.uk/applications/newWeb/www/index.php?page=48&thiscontent=170&pubType=1&date=2010-05-27&PublishTime=09:30:00

2. MOD,TSP 7 - UK Reserve Forces Strengths, Edition - 1 April 2010, Released on 10 June 2010 http://www.dasa.mod.uk/applications/newWeb/www/index.php?page=48&pubType=1&thiscontent=70&PublishTime=09:30:00&date=2010-06-10&disText=1 April 2010&from=listing&topDate=2010-06-10

3. MOD http://www.army.mod.uk/structure/1654.aspx

4. MOD http://www.mod.uk/DefenceInternet/AboutDefence/WhatWeDo/ReserveForcesandCadets/ReserveForces/

5. MOD http://www.mod.uk/NR/rdonlyres/526B60F0-4D05-4ECF-83C7-19978D3B295A/0/afcs_booklet.pdf

6. MOD, Mortality Data - Deaths in the UK Regular Armed Forces, Edition - 2009 Revised, Released on 31 March 2010 http://www.dasa.mod.uk/applications/newWeb/www/index.php?page=48&thiscontent=300&date=2010-03-31&pubType=1&from=current&PublishTime=09:30:00

7. MOD http://www.mod.uk/DefenceInternet/FactSheets/OperationsFactsheets/OperationsInIraqFactsandFigures.htm

8. MOD http://www.mod.uk/DefenceInternet/FactSheets/OperationsFactsheets/OperationsInIraqBritishFatalities.htm

9. MOD http://www.mod.uk/DefenceInternet/FactSheets/OperationsFactsheets/OperationsInAfghanistanBritishForces.htm

10. MOD http://www.mod.uk/DefenceInternet/FactSheets/OperationsFactsheets/OperationsInAfghanistanBritishCasualties.htm

11. Rayner, G and Chapman, J. “Afghanistan death rate tops Vietnam” published 14 August 2007; Daily Mail article accessed via www.dailymail.co.uk/news/article-475213/Afghanistan-death-rate-tops-Vietnam.html

12. BBC News http://news.bbc.co.uk/1/hi/8507998.stm