Life Expectancy by Age
As life settlements are primarily concerned with the management of longevity risk, life expectancies are always one of the most talked about subdivisions of the industry. Used in every aspect of the business, from qualifying insured client expectations to generating prices and projecting investment returns, the degree to which the industry depends on life expectancies cannot be underestimated. Consequently, with so much reliance on accuracy, life expectancy providers are quick to be viewed with scrutiny.
To compare different medical underwriters providers, we separated the life expectancies by age groups. Although we received a different number of underwritten lives from each life expectancy provider, it is most appropriate to compare them on the same set of lives. The graph above shows the average life expectancy in months at various age groups for each of the life expectancy providers in our sample. Data collected for insureds with ages below 70 have been disregarded, as they represent a much smaller sample set than in the overall dataset and present with anomalies.
Fasano Associates consistently provided the longest life expectancies overall, and EMSI appears to have consistently been the shortest among the five life expectancy providers. AVS Underwriting, 21st Services and ISC are between the two, exhibiting almost identical changes in slope with each other. It is interesting to note that the AVS and 21st life expectancy reports are now closer than they were last year, after both life expectancy providers exercised changes in their underwriting methodology. As interesting, is the virtually total convergence of 21st and ISC at every age group. Another observation worth noting is that there is a strong convergence in life expectancy underwriting at ages above 80 among all the medical underwriters except for Fasano.