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Love them or loathe them, actuaries cannot get by without standard tables in some shape or form. Even when performing analysis of your own experience data to avoid basis risk, standard tables are often used as a kind of lingua franca between parties, a convenient way to express approximate results in a way everyone can understand.
East meets West
This month sees the twentieth anniversary of the fall of the Berlin Wall. This is therefore an appropriate time to remind ourselves of a dramatic example of the plasticity of mortality.
Island life
We have written extensively about the use of postcodes and geodemographics for mortality modelling. Two peer-reviewed papers recently presented to the Institute of Actuaries in London have testified to the power of geodemographics when applied to pensioner mortality: Richards (2008) and Madrigal et al (2009).
Cause and effect
Examining past trends in cause of death can be very instructive. However, in some quarters it has become popular to try to extrapolate trends in causes of death to create a forecast of future mortality rates.
Fifteen-year (h)itch
Effective risk modelling is about grouping people with shared characteristics which affect this risk. In mortality analysis by far the most important risk factor is age, so it is not a good idea to mix the young and old if it can be avoided. By way of illustration, Figure 1 shows that mortality rates increase exponentially over much of the post-retirement age range.
Top of the table
In an earlier post we also showed how the U.K. was top of the obesity league amongst major EU nations. Happily, the U.K. is top of a more constructive EU league table, namely the (lack of) affordability of cigarettes.
Open verdict
If any doubt about Linux and Open Source technologies existed in Enterprise IT departments it must surely have been erased by last week's news: The London Stock Exchange, one of the engines that propelled the UK to the top of the World Economic Forum rankings, has invested in a Linux trading platform.
Part of the story
The Institute of Actuaries' sessional meeting on 28th September 2009 discussed an interesting paper. It covered similar material to that in Richards (2008), but used different methods and different data.
Back(test) to the future
Stochastic projections of future mortality are increasingly used not just to set future best-estimates, but also to inform on stress tests such as for ICAs in the UK. By the time the Solvency II regime comes into force, I expect most major insurers across the EU will be using stochastic models for mortality projections (if they are not already doing so).
Forecasting with limited portfolio data
In a recent post on basis risk in mortality projections, I floated the idea of forecasting with limited data and even suggested that it would be possible to use the method to produce a family of consistent forecasts for different classes of business. The present post describes an example of how this idea works in practice.