Going Deeper Into German Data Pools
Gen Re maintains three data pools for the German Life/Health market covering mortality, disability and annuity sales. By monitoring these important life insurance products, we can uncover trends relating to morbidity, mortality and incidence rates as well as highlight any changes in new business development.
The latest findings, which were drawn from 2012 statistics, were presented to contributing insurers at our annual pool event in November last year. Participating companies will receive detailed reports on observations in the overall pool, together with analyses of their portfolio’s experience against the benchmark results.
In view of the introduction of mandatory unisex premiums on December 21, 2012 in Germany, we were particularly curious about the development of gender mix leading up to the deadline. Sure enough, we observed an increased proportion of males buying more annuities while the number of females buying term products increased towards the end of the year.
Interestingly, we also saw that last minute sales of disability income insurance rose for males, in favor of the more attractive unisex products. We even observed a noticeable difference between occupational classes in line with the expected premium changes. Plus, overall new business figures went up. So it seems that sales based on highlighting the switch to unisex products has been a success in the short-term.
In the disability pool, we observed an increase in incidence rates for disability income products, notably for the younger age groups and most evident in female rates than for males. Part of this effect may be explained by more generous product features or underlying – maybe societal – causes. We’ll continue to monitor this trend and further investigate any potential causes.
In analysing the termination rates for this past year, we used generalised linear models to consider the impact of each factor influencing the overall termination rates in isolation. The multivariate analysis allowed us to identify the influence of, for instance, occupational classes on the probability for recovery and the effect of claims cause on expected terminations. This analysis confirmed, or rather refined, our insights from the single variable analyses.
In the mortality pool, we observed a considerable reduction in recent mortality levels by sum-insured - as well as a significantly higher mortality for the substandard lives. Both were in line with our expectations. For policies covering funeral expenses, we noticed a remarkable anti-selection effect in ages below 60 (for males) or 50 (for females).
The annuity pool showed another year of strong mortality improvements – in particular during the deferral period. Annuity sales are even more dominated by tied agents than overall Life insurance business.
To round off the spectrum of biometric products at this year’s pool event, we also gave an overview of the German Long Term Care market and the different LTC covers on offer from life and health insurers. New ideas around the inclusion of LTC riders – be it immediate or deferred cover, or the option of LTC cover later on – in traditional disability income or annuity policies, were particularly interesting.
From a more technical perspective, we discussed the German Insurance Association’s new coding system for occupational information based on the 2010 classification of professions published by the German Federal Employment Agency. This coding system is relevant not only for underwriting purposes and industry wide monitoring, but also for our data collection. Accurate coding of occupations is essential for our database if we are to draw meaningful conclusions about the impact of different occupational factors on the underwriting result.