The Life & Longevity Markets Association ("LLMA") is proposing a standardised framework for longevity indices.
The purpose is to provide a consistent and transparent set of standards for developing, producing and publishing longevity indices that market participants can use.
The LLMA says this will bring greater standardisation to the longevity market, enabling insurers and pension plans to execute longevity hedges with greater certainty over shorter timescales.
Key elements of the proposed LLMA Longevity Index Framework include a set of principles on which all longevity indices should be based and a set of guidelines for the methodology of the index.
The LLMA Longevity Index Framework has been designed to facilitate the development of various longevity indices, which can be developed for different pools of lives including national populations of countries, populations of annuitants, populations of pensioners and other customised pools of lives.
Guy Coughlan, Chair of the LLMA Technical Committee, and Managing Director, J.P. Morgan says:"The LLMA proposal is a significant milestone in the creation of a robust and efficient longevity marketplace. This standardisation will foster much-needed consistency in this area, providing greater comfort to first-time counterparties and improved efficiency in the execution of these transactions."
The consultation period on the proposal framework, which can be downloaded at www.llma.org, will run until 4 October 2010.
