Heterogeneity of Australian Population Mortality and Implications for a Viable Life Annuity Market
Shu Su () and
Michael Sherris ()
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Shu Su: Australian School of Business, University of New South Wales
Michael Sherris: School of Risk and Actuarial Studies and ARC Centre of Excellence in Population Ageing Research, Australian School of Business, University of New South Wales
No 201103, Working Papers from ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales
Heterogeneity in mortality rates is known to exist in populations, undermining the use of age and sex as the only rating factors for life insurance and annuity products. Life insurers underwrite life products using a variety of rating factors to allow for this heterogeneity. In the case of life annuities, there is limited underwriting used. Life insurers rely on an assumption that lives will self select and price the longevity risk with an annuity mortality table that assumes above average longevity.
Keywords: Longevity risk; mortality heterogeneity; frailty model; Markov ageing model; physiological age; annuity pricing (search for similar items in EconPapers)
JEL-codes: G22 G23 J11 C46 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:asb:wpaper:201103
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