Ruth Gilbert reviews recent ONS reports as they affect the ages for buying life cover
As discussed in my last article, the Office for National Statistics (ONS) published new figures showing rates of death registrations and suicides worked out on a slightly different basis than previous reports. This article follows up on that to see what we can actually deduce for the direction of mortality and suicides as it affects life insurers. Helpfully, since then, the very useful triennial mortality rates up to 2018 have also been published.
Less usefully, ONS headlines about these figures don't necessarily reflect what's happening to people in the age brackets of interest to life insurers.
It won't surprise COVER readers to learn that most life cover is taken out in the age bands from 30 to 54. As iPipeline 2019 data confirms, the five year bands between these ages are the ones which each account for over 10% of life cover sales, up to 18% for ages 35-39.
Looking at ages 30-54 shows a very different picture from the overall population and the age bands the ONS focus on. As does looking at mortality rates, rather than "life expectancy".
For these ages each of the reports is looked at in turn.
Some alarm was caused by the issue of the UK latest numbers of suicides reported. The ONS has explained that the higher numbers reported in 2018 will be partly due to the burden of proof in England and Wales changing in H2 2018 from 'beyond all reasonable doubt' to 'balance of probabilities'. By how much, they're not able to say yet. They also note that numbers went up in 2018 before the change.
However, a rough idea can be gained by comparing the full rolling years ending in June to previous years. Since the peaks of 2013/2014, the trend has continued down again across the age groups. In the year ending June 2018, however, there was an overall 4.3% increase (5.4% for aged 30-54), after a particularly improved previous year. It's unclear if this relates to increased delays with the coroners, who have been under particular resource pressures. There was actually hardly any change compared to an average of the previous four twelve month periods.
If the year into mid 2018 does represent an increasing trend repeated at the same rate into the 2019 equivalent months, we could say overall rates are going up by about 4% a year and the burden of proof change has added another four or 5%. But on that logic for the 30-54 group, the latter would only account for one or 2%. At the other end of the scale, if there's no real change in trend, overall the definition change could be accounting for an increase of up to 9%, although again it looks lower at 7% for ages 30-54.
England Q2 2019 registered deaths
The good news is that 2019 may turn out to be one of the best we've had for some time. Overall. However, the improvement in mortality trend we should see in triennial mortality rates this time next year are being driven by just one age band, the 40-44 group. Even when trying to iron out fluctuations by taking triennial groups of 12 month periods ending at the half year, the 40-44 group is a notable outlier trending down by 8% since 2013/2015. But sadly, all the others have been going up since then.
What this doesn't take into account is the age composition and population numbers of each age group. This all goes to show the value of the actuarially adjusted figures out from the ONS this week
UK 2018 triennial rates
The life tables produced for this report are the most useful for seeing trends, as they even out the normal fluctuations the yearly results can be skewed by. Also importantly, numbers of deaths are translated into age adjusted mortality rates so that changes in population numbers at the different ages are ironed out.
The headline news was that life expectancy has increased (a little) by about a month, so (overall) we're still living longer than we used to, but certainly not by as much. And it's noted that the UK has the lowest improvements compared with similar countries.
But what's lurking in the detail is the continued rise in mortality rates amongst the middle-aged.
Death rates are increasing
This is the fourth year in a row where death rates for people aged 30-54 have gone up. This is not driven by increases in the population. Despite this, the 'life expectancy' for all ages in the group, even taken single year of age, are calculated to show some improvement.
So how can this be? People of a particular age can't both be dying at a greater rate whilst expecting to live longer.
'Life expectancy' is a backwards approach
The anomaly is explained by the lumping together the experiences last year (and before) of everyone at the age we're looking at with the experiences of all the older age groups.
The odd thing about 'life expectancy' used in the context of these "how did we do last year reports?" is that it implies some sort of prediction about the future. But really, in this context it might better be described as 'life duration'. When we talk about life expectancy at birth, it's not a prediction, but simply a statement of how long people lasted as a weighted average from cradle to grave. Or for life expectancy from age 65, it's how many years of life on average people who had got as far as (the old) retirement age managed to add beyond 65.
Coming back to the odd looking mix of bad death rates but "improving" life expectancy amongst the 30-54 ages, although more people are dying at those ages, people who had already lived past those ages managed to live longer than their equivalents in previous years. It doesn't necessarily mean the next batch of survivors beyond the 30-54 bands can expect to live longer than they might have done based on previous years. It all depends on what happens in the future!
Ruth Gilbert heads up insuringchange.co.uk
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