Month: June 2022

Murder-Suicides By Pilots Are Vexing Airlines As Deaths Mount

Mary Pat Campbell

Link: https://www.ndtv.com/world-news/murder-suicides-by-pilots-are-vexing-airlines-as-deaths-mount-3074762

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Excerpt:

For decades, commercial airline travel has gotten progressively safer. But one cause of deaths has stubbornly persisted: pilots who intentionally crash in murder-suicides.


Preliminary evidence suggests the crash of a China Eastern Airlines Corp. jet in March may be the latest such tragedy, a person familiar with the investigation said. If confirmed, that would make it the fourth since 2013, bringing deaths in those crashes to 554.

So as aircraft become more reliable and pilots grow less susceptible to errors, fatalities caused by murder-suicides are becoming an increasingly large share of the total. While intentional acts traditionally aren’t included in air-crash statistics, they would be the second-largest category of deaths worldwide if they were, according to data compiled by Bloomberg. By comparison, 1,745 people died as a result of pilot error, mechanical failures or other causes on Western-built jets from 2012 through 2021.

Author(s): Alan Levin, Bloomberg

Publication Date: 17 June 2022

Publication Site: NDTV

5 Ways the New Stock Market Rollercoaster Could Affect Life Insurers

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2022/06/16/5-ways-the-new-stock-market-rollercoaster-could-affect-life-insurers/

Excerpt:

1. Clients could swarm on life and annuity products with benefits guarantees like ants on a candy bar that fell under the picnic table.

Sales of products such as non-variable indexed annuities and non-variable indexed universal life insurance policies soar, as clients flocks to arrangements that can protect them against further drops in stock prices but help them share in gains if and when prices go back up.

Author(s): Allison Bell

Publication Date: 16 June 2022

Publication Site: Think Advisor

R Street Institute Testifies Before Senate Banking Committee on National Flood Insurance Program

Mary Pat Campbell

Link: https://www.rstreet.org/2022/06/16/r-street-institute-testifies-before-senate-banking-committee-on-national-flood-insurance-program/

Video:

Additional link: https://www.rstreet.org/2022/06/16/five-solutions-to-help-fix-the-national-flood-insurance-program-from-r-street-testimony-to-the-u-s-senate-banking-housing-and-urban-affairs-committee/

Excerpt:

Regarding the second objective, there is no equitable sharing of costs between the public and private sectors. The private sector is only peripherally involved in bearing flood risk. The involvement of the private insurance sector is restricted to administration of the program, for which insurers are remunerated by the NFIP. The participation of private insurers in flood insurance as a risk-bearer is de minimis, writing less than a tenth the premium collected by the NFIP.

Instead of attaining the overarching goal of reducing economic losses caused by flooding, flood-
related economic losses have increased. In the past decade, U.S. economic losses caused by flooding were $943 billion, close to five times more than the $211 billion cumulative flood-related losses in the prior decade. In this testimony, we highlight five issues standing in the way of the NFIP falling short of achieving its mission, and propose solutions to remedy those problem areas.

Author(s): Jerry Theodorou

Publication Date: 16 June 2022

Publication Site: R Street Institute

With higher rates, total 2022 issuance projections keep falling

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202206101515SM______BNDBUYER_00000181-4ebf-d2a2-a9ab-dffffeab0000_110.1

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Excerpt:

Market participants are revising their supply projections downward as rising interest rates have stymied refunding and taxable volumes and overall market volatility has held some issuers to the sidelines.

The pace of issuance so far in 2022 makes it less likely the market will hit previous records seen in 2020 and 2021.

BofA Securities was the latest shop to revise expectations downward because of the dearth of refundings, with strategists Yingchen Li and Ian Rogow forecasting total volume in 2022 to be $50 billion less than the $550 billion assumption they made at the end of 2021.

Author(s): Gabriel Rivera

Publication Date: 10 June 2022

Publication Site: Fidelity Fixed Income

Big Data, Big Discussions

Mary Pat Campbell

Link: https://theactuarymagazine.org/big-data-big-discussions/

Excerpt:

Why is the insurance industry now facing increased scrutiny on certain underwriting methods?

Insurers increasingly are turning to nontraditional data sets, sources and scores. The methods used to obtain traditional data—that were at one time costly and time-consuming—can now be done quickly and cheaply.

As insurers continue to innovate their underwriting techniques, increased scrutiny should be expected. It is not unreasonable for consumer advocates to push for increased transparency and explainability when insurers employ these advanced methods.

What is the latest regulatory activity on this topic in the various states and at the NAIC?

Activity in the states has been minimal. In 2021, Colorado became the first (and so far, only) state to enact legislation requiring insurers to test their algorithms for bias. Legislation nearly identical to the Colorado law was introduced in Oklahoma and Rhode Island in 2022, and it is likely other states will consider similar legislation. Connecticut is finalizing guidance that would require insurers to attest that their use of data is nondiscriminatory. Other states have targeted specific factors, but most have adopted a wait-and-see approach.

The NAIC created a new high-level committee to focus on innovation and AI, but it has become clear that a national standard is not likely at this time.

Author(s): INTERVIEW BY STEPHEN ABROKWAH, Interview with Neil Sprackling, president of Swiss Re Life & Health America Inc.

Publication Date: March 2022

Publication Site: The Actuary

Munis sit on sidelines while USTs rally post-Fed rate hike

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202206151637SM______BNDBUYER_00000181-67cc-d98e-a5fb-efcf1bfc0001_110.1

Excerpt:

Municipals took a backseat as the Federal Open Market Committee announced its decision to implement a three-quarter point rate hike while U.S. Treasuries rallied into late afternoon following the news. Equities rallied.

The move, prompted partly by hotter-than-expected inflation data Friday, is the largest rate hike since 1994.

?Investors appear encouraged that the FOMC is willing to take forceful action to try and get inflation under control,” Wilmington Trust Chief Economist Luke Tilley said.

By front loading rate hikes, he said, the FOMC will have ?more optionality as the year unfolds,? and will be able to accelerate hikes if inflation persists, ?but if any cracks appear in the economic recovery they?ll have the option to slow down while still having rates below their estimate of neutral.?

Triple-A muni yields were cut a basis point or were little changed while UST yields fell up to 23 basis points on the short end.

Author(s): Christine Albano

Publication Date: 15 June 2022

Publication Site: Fidelity Fixed Income

The Mortality Improvement Model, MIM-2021-v2

Mary Pat Campbell

Link: https://www.soa.org/resources/research-reports/2021/mortality-improvement-model/

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Excerpt:

Different mortality projection methodologies are utilized by actuaries across applications and practice areas. As a result, the SOA’s Longevity Advisory Group (“Advisory Group”) developed a single framework to serve as a consistent base for practitioners in projecting mortality improvement.  The Mortality Improvement Model, MIM-2021-v2, Tools and User Guides, compose the consistent approach and are defined below.

  1. A report describing MIM-2021-v2 which summarizes the evolution of MIM-2021-v2; provides an overview of MIM-2021-v2; presents considerations for applying mortality assumptions in the model; and outlines issues the Advisory Group is currently considering for future model enhancements.
  2. A status report of the items listed in Section V of Developing a Consistent Framework for Mortality Improvement. This report advises practitioners about subsequent research and analysis conducted by the Advisory Group regarding these items.
  3. An Excel-based tool, MIM-2021-v2 Application Tool, and user guide, MIM-2021-v2 Application Tool User Guide, for practitioners to construct sets of mortality improvement rates under this framework for specific applications.
  4. An Excel-based tool, MIM-2021-v2 Data Analysis Tool, and user guide, MIM-2021-v2 Data Analysis Tool User Guide, for practitioners to analyze the historical data sets included in the MIM-2021-v2 Application Tool.

The Longevity Advisory Group is planning to update the framework annually as new data and enhancements become available. MIM-2021-v2 is the first revision since the initial release in April 2021.  This version uses the same underpinning as the initial MIM-2021 release but has been refreshed to include another year of historical U.S. population mortality data as well as more user flexibility and functionality to replicate RPEC’s MP-2021 and O2-2021 scales.  

Author(s): Longevity Advisory Group

Publication Date: June 2022, most recent update

Publication Site: Society of Actuaries

The Myth of the Disease-Ridden Red States

Mary Pat Campbell

Link: https://brownstone.org/articles/the-myth-of-the-disease-ridden-red-states/

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Excerpt:

Another way of looking at this is to look at the Year over Year change of rates within each group. As you can see from the chart below, the percentage change remains pretty consistent among each individual grouping, with 2020 seeing the largest change rate, and 2021 seeing a small but significant change rate from 2020 (meaning overall mortality was still quite elevated relative to 2019).

In summary, when we take a historical view and higher level view while maintaining these same groupings, these stark differences in Covid-19 mortality rates do not seem to translate into overall morality rates. Why?

At the risk of this analysis turning into another pile-on pointing out the New York Time’s errors, I’d like to offer a more benign explanation. It’s one that has plagued journalists and reports throughout the pandemic. Why is it that everything is framed in Red and Blue? One simple reason: the availability of the data. Leonhardt is using data that is easily accessible and is already formatted for easy analysis.

This is what is called an availability bias. It’s essentially creating a hypothesis or completing a study based on a specific set of data, purely for no other reason than that the data is there. Just because the data is available does not mean it’s the best data to use to try to answer a question.

Author(s): Josh Stevenson

Publication Date: 3 June 2022

Publication Site: Brownstone Institute

CAS Releases Two Additional Papers in Race and Insurance Pricing Series

Mary Pat Campbell

Link: https://www.casact.org/article/cas-releases-two-additional-papers-race-and-insurance-pricing-series

Excerpt:

Arlington, VA – Two new research reports designed to guide the insurance industry toward proactive, quantitative solutions to identify, measure and address potential racial bias in insurance pricing were published by the Casualty Actuarial Society (CAS) today.

“These two new reports in our CAS Research Series on Race and Insurance Pricing continue to provide additional insight into industry discussions on this topic,” said Victor Carter-Bey, DM, CAS chief executive officer. “We hope with this series to serve as a thought leader and role model for other insurance organizations and corporations in promoting fairness and progress.”

As the professional society of actuaries specializing in property and casualty insurance, the CAS is committed to diversity, equity and inclusion in actuarial work. To this end, the Society is releasing a series of four CAS Research Papers, which support the CAS’s Approach to Race and Insurance Pricing. This approach was adopted by the CAS Board of Directors in December 2020 and includes four key areas of focus and goals: basic and continuing education, research, leadership and influence, and collaboration. Each paper in the series addresses a different aspect of race and insurance pricing as viewed through the lens of property and casualty insurance.

Two of the four reports in the CAS Research Paper Series on Race and Insurance Pricing, Understanding Potential Influences of Racial Bias on P&C Insurance: Four Rating Factors Explored and Defining Discrimination in Insurance, are being released today. Here is a more detailed description of the two reports published today:

Defining Discrimination in Insurance. This report examines terms that are being used in discussions around potential discrimination in insurance, including protected class, unfair discrimination, proxy discrimination, disparate impact, disparate treatment, and disproportionate impact. The paper provides historical and practical context for these terms and illustrates the inconsistencies in how different stakeholders define them. It also describes the potential impacts of these definitions on actuarial work.

Understanding Potential Influences of Racial Bias on P&C Insurance: Four Rating Factors Explored. The paper examines four commonly used rating factors to understand how the data underlying insurance pricing models may be impacted by racially biased policies and practices outside of insurance. The goal is to highlight the multi-dimensional impacts of systemic racial bias, as it may relate to insurance pricing. The four factors included in the report are: Credit-Based Insurance Score (CBIS), geographic location, homeownership and Motor Vehicle Records.

The other two reports, Methods for Quantifying Discriminatory Effects on Protected Classes in Insurance, and Approaches to Address Racial Bias in Financial Services: Lessons for the Insurance Industry, were released March 10, 2022 during a virtual briefing.  

These four research reports are just one way the CAS supports evolving actuarial practices and strengthens the knowledge of its members. The papers demonstrate the Society’s recognition that actuaries—who are responsible for setting insurance rates—must be a voice in an ever-evolving dialogue. The CAS understands that this work is critical to maintaining the Society and its members’ public trust.

Publication Date: 31 Mar 2022

Publication Site: CAS

A Widening Gap in Life Expectancy Makes Raising Social Security’s Retirement Age a Particularly Bad Deal for Low-Wage Earners

Mary Pat Campbell

Link: https://sections.soa.org/publication/?m=58953&i=668685&view=articleBrowser&article_id=3731911&ver=html5

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Excerpt:

Many recent studies find the life expectancy gap is growing. By how much depends on how and when it’s measured. In 2014, the Congressional Budget Office (CBO) calculated that a 65-yearold man in the upper quintile (fifth) of life earnings could be expected to live more than three years longer than a similar man in the lowest quintile. By 2039, the difference would double to six years.

In a 2015 report, the National Academy of Sciences compared the 1930 and 1960 birth cohorts and found that life expectancy for the bottom quintile of men at age 50 decreased slightly to 26.1 years over the 30-year period. Meanwhile, life expectancy rose for men age 50 in higher-income quintiles. As shown in Figure 1, the life expectancy gap between the bottom (quintile 1) and top fifth of the income distribution widened from 5.1 to 12.7 years. In 2016, a Brookings study found, for men born in 1940, those in the lowest income decile at age 50 could expect to live to be about 76 years old compared with 88 years for the highest income decile. Another research team, led by Raj Chetty, found that disparity in longevity continued to increase over 2001–2014; the average gap between the bottom and top 1 percent was 14.6 years for men and 10.1 years for women.

Author(s): Karl Polzer

Publication Date: August 2020

Publication Site: In the Public Interest, SOA

South Carolina Withdraws From Interstate Insurance Compact

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2022/06/13/south-carolina-withdraws-from-interstate-insurance-compact/

Excerpt:

South Carolina — one of the leaders in the effort to create the Interstate Insurance Product Regulation Compact — has withdrawn from the compact because of a conflict over long-term care insurance rate increase application reviews.

Members of the Interstate Insurance Product Regulation Commission, the body that oversees the compact, voted in December 2021 to keep a rule that lets the compact review and approve requests for LTCI rate increases under 15%.

The rule conflicts with a new South Carolina law that requires the director of the South Carolina Department of Insurance or a director designee to review and rule on all LTCI rate filings.

Author(s): Allison Bell

Publication Date: 13 June 2022

Publication Site: Think Advisor