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8/14/2019 Society of Actuaries Annual Meeting
1/26
Society of Actuaries
Annual Meeting
Disability and Group Life Experience Studies:
What Have We Learned?
Results of IDEC StudyRobert Beal
Consulting Actuary, Milliman, Inc
SOA Study Parameters
Study Period: 1990-1999
Approximately 80%+ of industry experience represented
Results measured relative to 85 CIDA
Incidence and Terminations studied separately.
Most results measured in terms of indemnity.
Whats new? Data from all 12 contributors
Analysis by contract type: A&S, OE, DBO Analysis by occupation
Termination experience by diagnosis
Total Disability vs. Total & Residual
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Major Lessons From the SOA DI Study1. Significant improvement trend in claim incidence
over the 10 years.
2. Blue/grey occ classes have had much more favorableexperience relative to 85 CIDA than the whitecollar/professional occ classes.
3. Substantial claim incidence improvements in businessissued 1996+.
4. Wide disparity of incidence results by occupation,particularly in Occ Class 1.
Major Lessons From the SOA DI Study
5. Excellent incidence from executives/managers,
accountants, engineers and teachers.
6. Poor incidence from physicians, dentists, nurses,
insurance agents, stockbrokers, chiropractors,
podiatrists.
7. Medical occs have had improving incidence only in thelast few years.
8. Lifetime benefits have major impact on claim incidence.
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Major Lessons From the SOA DI Study
9. CA has uniformly worse experience though positive
signs in 1996+ issue years.
10. FL has poor experience in white collar EP >=90+.
11. Multi-life does not always have lower incidence than
single life.
12. Claim termination experience has been more difficult
to improve.
Major Lessons From the SOA DI Study
13. Longer BPs decrease claim termination rates.
14. COLA decreases claim termination rates.
15. Significant differences in claim terminations by
diagnoses.
16. Residual benefits product somewhat lower claimterminations.
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
8/14/2019 Society of Actuaries Annual Meeting
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Claim Incidence Experience
by Contract Type
119%DBO
63%OE
102%A&S
Overall Claim Incidence Results - % 85 CIDA
1990 - 1999
50%
60%
70%
80%
90%
100%
110%
120%
130%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Occ CI 1
Occ CI 2-4
Claim Incidence TrendsA&S Experience
Key Reasons for Improving Incidence Trend:
Tighter underwriting & contracts
Favorable economy
% 85 CIDA by Calendar Year
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Claim Incidence Trends
by Year of Issue and Policy Year
0%
20%
40%
60%
80%
100%
120%
140%
160%
Year
1
Year
2
Year
3
Year
4
Year
5
Years6
-10
Years11+
Prior to 1990
1990-92
1993-95
1996 & Later
ALL
Observations:
Prior to 1990 issues incidence is higher than more recent years
1996 & later still looks exceptional
Significant increase after year 2 (contestable period)
General decreasing trend after year 5
A&S - % 85 CIDA Occ Class 1
Claim Incidence Trendsby Year of Issue and Policy Year
0%
20%
40%
60%
80%
100%
Year
1
Year
2
Year
3
Yea
r4
Year
5
Years6-10
Years11+
Prior to 1990
1990-92
1993-95
1996 & Later
ALL
Observations:
Differences arent as significant among issue year groups
Relatively small differences by policy year
Similar decreasing trend after year 5
A&S - % 85 CIDA Occ Classes 2-4
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Claim Incidence Trends
by Key Occupations
140%
150%
160%
170%
180%
190%
200%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Medical Occs
Phys/Surg
Observations:
1993-94 increase in incidence
Recently returning to 1990-92 level
Medical Occupations in Class 1 Incidence by Year
Percent of 85 CIDA
Claim Incidence Trendsby Key Occupations
0%
20%
40%
60%
80%
100%
120%
140%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
All Non-Med Occs
Exec/Mngrs
Observation:
Consistent incidence improvement since 1990
Non-Medical Occupations in Class 1 Incidence by Year
Percent of 85 CIDA
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Impact of Lifetime Benefits
on Claim Incidence
0%
50%
100%
150%
200%
250%
Non-Med Occs Med Occs
No Lifetime
Lifetime
Average Incidence 1990-99
Percentage of 85 CIDA
Geographical Differences
In Claim Incidence
67%91%84%1996 & Later
101%154%145%1993-95
122%160%182%1990-92
140%212%198%Prior to 1990
OtherFLCAIssue YearEP 90 Days & Over
91%57%133%1996 & Later
97%84%133%1993-95
83%91%127%1990-92
92%106%129%Prior to 1990
OtherFLCAIssue Year
EP Under 90 Days
Occ Class 1 Percent of 85 CIDA
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
8/14/2019 Society of Actuaries Annual Meeting
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Claim Incidence
Multi-life vs. Single-life
Multi/SingleMulti-life Single-life
82%
89%
85%
105%
163%
116%
86%
146%
99%
No Lifetime
Lifetime
Total
Elimination Periods 90 Days and Higher
105%
77%
100%
77%
97%
80%
81%
75%
80%
No Lifetime
Lifetime
Total
Elimination Periods Under 90 Days
Business Issued 1990 & Later
Percent of 85 CIDA
Observation:
Multi-life incidence is not always lower than single life
Multi-life best when EP >=90+, No Lifetime
Claim Termination Trendsby Calendar Year of Incurral
0%
20%
40%
60%
80%
100%
120%
Yea
r1
Yea
r2
Yea
r3
Year4
-5
Year6
-10
Years1
1+
Claim Duration
%8
5CIDA All
Pre-1990
1990-92
1993-95
1996 & Later
Reasons for no significant termination improvements:
More difficult claims
Lower incidence might mean avg claims with longer duration
A&S Claims 1990-99
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Claim Termination Experience
by Gender
0%
20%
40%
60%
80%
100%
120%
140%
160%
Year
1
Year
2
Year
3
Year
4-5
Year
6-1
0
Years11+
Claim Duration
%8
5CIDA
Male
Female
Observation:
Female termination experience sharply better than 85 CIDA after 2 years.
A&S Claims 1990-99
Percent 85 CIDA
Claim Termination Experienceby Benefit PeriodAverage Termination Experience (1990-99)
40%
60%80%
100%120%
140%160%180%200%
Year1
Year2
Year3
Year
4-5
Year6-1
0
Year
11+
Claim Duration
%8
5CIDA
Short BP
To 65-70
Lifetime
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Claim Termination Trends
Ultimate Claim Durations
1,27486%110%All Ages
3458%68%70+
6443%65%65-69
26859%75%60-64
29086%108%55-59
269108%130%50-54
219133%184%45-49
88129%187%40-44
38382%425%35-39
Number of TerminationsBy IndemnityBy CountAttained Age
Observations:
Long term termination rates converging to around 60% of 85 CIDA
Big impact on valuation of lifetime claims
Claim Duration 11+ by Attained AgePercent 85 CIDA
Claim Termination ExperienceBy Diagnoses(Part 1)
Benefit Periods = To Age 65-70 or Lifetime
20%
40%
60%
80%
100%
120%
Year
1
Year2
Year
3
Year
4-5
Year6
-10
Year
11+
Claim Duration
%8
5CIDA All Diagnoses
Back
Musculoskeletal
Other Injury
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Claim Termination Experience
By Diagnoses(Part 2)
Benefit Periods = To Age 65-70 or Lifetime
20%
70%
120%
170%
220%
270%
320%
Year
1
Year
2
Year
3
Year
4-5
Year
6-10
Year
11+
Claim Duration
%8
5CIDA All Diagnoses
Cardiovascular
Cancer
Immunodef
Claim Termination ExperienceBy Diagnoses(Part 3)
Benefit Periods = To Age 65-70 or Lifetime
0%
20%
40%
60%
80%
100%
120%
140%
Year
1
Year
2
Year
3
Year
4-5
Year
6-10
Year11+
Claim Duration
%8
5CIDA All Diagnoses
Mental
Nervous
Alcohol & Drugs
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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Society of Actuaries
New York City Annual Meeting
October 26 - 28
Session 132 OF
Disability and Group Life Experience Studies:
What have we learned?
LTD Experience Committee Recent Analysis Update
2
LTD Experience Committee
Participating Companies
AIG/American General Lafayette Life
American United Life Insurance Co. Liberty Mutual
Anthem Life Insurance Company MetLife Ins. Co.
Assurant Mutual of Omaha Insurance Co.
CIGNA Group Insurance Principal Financial Group
CNA Insurance Co Prudential Financial
Florida Combined Life Reliance Standard Life Ins. Co.
Genworth Safeco Insurance Co.Guardian Life Insurance Co. Standard Insurance Co.
Hartford Life Insurance Co States West
Jefferson Pilot Financial UnumProvident Corp.
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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3
LTD Experience Committee
Experience Committee Members
Edd Bailey - Assurant Paul Hitchcox - ULR
Warren Cohen - Relaince Standard Rick Leavitt - Smith Group
Tom Corcoran - Tillinghast Allen Livingood - UnumProvident
Peter Doucette - Hartford Jack Luff - SOA
Pat Fay - MassMutual Roger Martin - UnumProvident, Chairman
Deb Fredricks - MetLife Chuck Meintel - JHA
Steve Garf ield - Standard Eric Poirier - UnumProvident
Ray Siwek - Prudential
Special thanks to Todd Fuhs and Steve Atkins as prior
committee members
Independent Vendor: Solucient Perry Beals, Julia Havey
4
LTD Experience Committee
Committee Focus Paid claim termination study with separate analysis of
recoveries, mortality, benefit maximums, and settlements.
Timeline
Initial data request sent out summer of 2003. Initial data analysis, mapping and
validation during the winter and spring of 2004. Resubmission for several
companies in Spring of 2004.
Present initial review 2004 SOA annual meeting.
Distribute detailed results of initial review to participating companies - Fall 2004.
Develop Experience Report and Experience table 2005.
Consider valuation table implications 2006.
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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5
LTD Experience Committee
Profile of Initial Review 19 companies participating.
More than 1.7 million claims submitted with more than 1.0 million currently in
experience study.
Not all data submitted by each company was in sufficient detail to be included in
this initial review most notable exclusion was by calendar year.
25 million months of claim exposure over 10+ calendar years.
Dampening factors will be applied to reduce the influence of those companies
supplying the largest exposures.
Initial variables reviewed include age, gender, elimination period, duration,
diagnosis of claim, definition of disability, and gross benefit amount.
Analysis of raw recovery and death rates along with actual to expected ratiosrelative to Table95A (t95a).
6
LTD Experience Committee
Recovery Rate - Company Distribution
0.01%
0.10%
1.00%
10.00%
100.00%
1-67-
12
13-18
19-24
25-30
31-36
37-42
43-48
49-54
55-60
61-66
67-72
73-78
79-84 96 10
8120
132
144
156
168
180
192
20421
622
8
240+
Claim Duration
TerminationRate
Min 25%-ile Median 75%-ile Max
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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LTD Experience Committee
Mix comparison to Table95a
Age Mix Comparison
4%
10%
16%
22%
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LTD Experience Committee
Death Rate
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
4 16 28 40 52 64 76
Monthly Claim Duration
TerminationRate
Actual Death
Expected Death - t95a
10
LTD Experience Committee
Industry Termination Summary
96%
114%
141%
79% 77% 82% 79%85% 88% 87% 83%
96%
102%
114%
73%
141%
110%
108%
160%
103%
131%
79%
102%
84%
97%
50%
100%
150%
200%
1-3 mo 4-6 mo 7-9 mo 10-12
mo
Yr 2 Yr 3 Yr 4 Yr 5-7 Yr 8-10 Yr 11-
14
Yr 15+ All
Claim Duration
%t95a
A/E Recovery A/E Death 'Combined' A/E
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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LTD Experience Committee
Claim Termination Trends by EP 90
106% 107% 105%94%
120%
106%117%
78% 81% 82%
103%92% 96% 95% 96%
109%
114%
138%112%
90%87%
88%
103%
50%
100%
150%
200%
4-6 mo 7-9 mo 10-12
mo
Yr 2 Yr 3 Yr 4 Yr 5-7 Yr 8-
10
Yr 11-
14
Yr 15+ All
Claim Duration
%t
95a
A/E Recovery A/E Death
'Combined' A/E
12
LTD Experience Committee
Claim Termination Trends by EP 180
123% 123%117%
108%
149%157%
73%78% 78%
95%
81% 84% 82% 80%
97%
81%
133% 133%
130% 127%
182%
65%
107%
50%
100%
150%
200%
4-6 mo 7-9 mo 10-12mo
Yr 2 Yr 3 Yr 4 Yr 5-7 Yr 8-10
Yr 11-14
Yr 15+ All
Claim Duration
%t
95a
A/E Recovery A/E Death
'Combined' A/E
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LTD Experience Committee
Male Claim Termination by Duration
63%
95%
116% 115%121% 116%
95%
196%
77% 74%
89%
77% 76% 79% 77% 78%
109%
158%
154%151%
73%66% 72%
96% 96%
50%
75%
100%
125%
150%
175%
200%
1-3
mo
4-6
mo
7-9
mo
10-12
mo
Yr 2 Yr 3 Yr 4 Year
5-7
Yr 8-
10
Yr 11-
14
Yr 15+ All
Claim Duration
%t
95a
A/E Recovery A/E Death 'Combined' A/E
14
LTD Experience Committee
Female Claim Termination by Duration
96%
107%
119%109%
100% 101%
100%112%110%
76%
104%
128%131% 129%
87%82%
86%
121%
96% 94%94%114%
88%
92%
98.4%
50%
75%
100%
125%
150%
175%
200%
1-3
mo
4-6
mo
7-9
mo
10-12
mo
Yr 2 Yr 3 Yr 4 Yr 5-7 Yr 8-
10
Yr 11-
14
Yr 15+ All
Claim Duration
%t
95a
A/E Recovery A/E Death 'Combined' A/E
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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LTD Experience Committee
Claim Terminations by Diagnosis
104%
361%
264%
89%
25%
50%
75%
100%
125%
150%
01 06 11 02 03 04 05 07 08 09 10 12 13 U 95-oth
Category
%t
95a-Recover
0%
100%
200%
300%
400%
%t
95a-Death
A/E Recovery A/E Death
% Cat # Description % Cat # Description
0.9% 1 Maternity or Pregnancy/Childbirth
7.0% 6 Mental Nervous 25.1% 8 Muscoloskeletal/Connective Tissue1.9% 11 Aids/HIV 3.6% 9 Other
1.6% 2 Reproductive/Urinary Disease 3.4% 10 Respiratory
2.0% 3 Digestive 12.8% 12
Nervous System & Sense Organ,
Infectious/Parasitic
9.4% 4 Injury/Poisioning 17.4% 13 Circulatory
7.2% 5 Neoplasms 3.0% U Unknown
4.8% 7 Emergent Disabling Conditions 90 .2% 95-o th
All categories except 1, 6, & 11 are
mapped to t95a all-oth diagnosis cat
Diagnosis Category
16
LTD Experience Committee
Recovery Rates by Calendar Year & Duration
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
90-92 93-95 1996 1997 1998 1999 2000 2001 2002
Calendar Year
Term
inationRate-Yrs>1
0%
1%
2%
3%
4%
5%
6%
7%
8%
Term
ination
RateYr1
Yr 2 Yr 3 Yr 4 All Yr 1
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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LTD Experience Committee
Death Rates by Calendar Year & Duration
0.25%
0.50%
0.75%
1.00%
90-92 93-95 1996 1997 1998 1999 2000 2001 2002
Calendar Year
TerminationRate
Yr 1 Yr 2 Yr 3 Yr 4 All
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October 27, 2004
Susan R. Sames
Tillinghast
2004 Towers Perrin
Session 132
Disabi l i ty and Group Li fe Exper ienc e Studies:
What Have We Learned?
Group Life Experience Committee Update
Towers Perrin
2
Group L i fe Exper ience Commit tee Members
PrincipalReg Yoder
Beneficial LifeChris SvedinFort DearbornJohn Schwegel
GuardianKari Powell
UnumProvidentGary Piccolo
PrudentialRocco Mariano
MJL AssociatesMarty Loughlin
MetLifeMarissa Limjoco
DeWeese ConsultingCharlie DeWeese
PrudentialJohn Bettano
MassMutualJay Barriss
SOAJack Luff
TillinghastSue Sames, Chair
Special thanks to Karen Edgerton and Ray Biondi as prior members of the Committee
Independent Vendor: Solucient
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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3
Group Li fe Exper ienc e Comm it tee has been
w ork ing on tw o stud ies s imul taneously
Mortality Study Incidence study to support pricing (and possible update to IRS
Table I rates)
Measures death, waiver and accidental death and
dismemberment (AD&D) claims vs. insurance exposure for
group life plans
Waiver Reserve Study; a.k.a, Update to Krieger
Claim termination study to support valuation (and pricing)
Measures deaths and recoveries vs. exposed group life waiver
claims
4
Timel ine for both exper ience s tud ies
2002
Design study and issue call for data
2003
Receive and review submissions
2004:
Audit data
Some down time while IDI and LTD were worked on
Next Steps
Resolve remaining data issues (2004)Distribute detailed results of initial review to participating
companies (through early 2005)
Release study results (early to mid 2005)
Consider waiver valuation table implications (late 2005 - 2006)
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5
Morta l i ty Study is a t data aud i t s t age
Identifying and resolving data issuesComplex structure due to linking multiple files; e.g., group data,
individual exposure, self-administered exposure, and claims for
basic, optional, and accidental death and dismemberment
Nearly 20 companies submitted data
Key issues include:
Few companies submitted self-administered data
Many companies had difficulty providing waiver provision data
Relatively little data on AD&D
Dampening factors will be applied to largest contributor
6
Data St ruc t ure for Mor ta l i ty Study
Lives and volume information was collected for
Claims (death, waiver, AD&D) and
Exposure (individual versus self-administered)
across the following parameters:
gender
age
waiver provision (e.g., lifetime, no waiver)
type of coverage (e.g., basic, supplemental, optional)
group size
group effective date
SIC code
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7
Sample p ivot t ab le for mor ta l i ty s t udy
The mortality study will have the following views for variouscombinations of those parameters:
REPORT LAYOUT
Deaths Waiver
Exposure Claims Rate A/E Claims Rate A/E
Central Age
17
22
27
32
37
42
47
52
57
62
Subtotal 17-62
67
72
77
8287
92
Subtotal 67 and Above
Total
8
Waiver Study is a lso a t data aud i t s tage
Waiver study was less complex, only one file per participating
company
23 companies submitted data
Two separate databases following Kriegers format:
1. Select period claim durations up through ten years
Age at disability and length of disability
2. Ultimate period
Claim durations beyond ten years by attained age
Key issues include:
Truncating exposure period appropriately, e.g., company may
have submitted exposure that covers all 10 years but really
has claims and recoveries for only the past five years.
Addressing impact of systems changes and clean-up efforts
SOA 2004 New York Annual Meeting - 132OF, Disability and Group Life Experience Studies: What Have We Learned?
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9
Data Struc ture for Waiver Study
Lives and volume information was collected for each claim
for the following parameters:
gender
age at disability
duration of disability
attained age
termination reason, e.g., death, recovery, expiration of benefits
10
Sample p ivot t ab le format for se lec t per iodREPORT LAYOUT
By Age at Disablement
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11
Sample p ivot t ab le format for u l t imat e per iod
REPORT LAYOUT
Rate of Expected (Krieger) Rate of Actual/Expected
Exposure Recovery Death Expiry Total Recovery Death Total Recovery Death
Central Age
17
22
27
32
37
42
47
52
57
62
67
72
77
82
87
92
12
What have w e learned?
Our initial strategy was to allow for more flexibility in
the structure of the submission to increase
participation
Having a tighter structure would have made the
linking much easier
Data audit process has been time consuming
Increasingly difficult for companies to commit
resources; however, the industry is very interested in
the results.