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This PDF is a 32-page compilation of global indust This PDF is a 32-page compilation of global industry and regulatory comments submitted to the IAIS (International Association of Insurance Supervisors) during the public consultation on the Risk-based Global Insurance Capital Standard (ICS) Version 1.0. It specifically covers Section 6.6: Mortality and Longevity Risk, summarizing how regulators, insurers, actuarial bodies, and global industry groups view the modeling, calibration, and treatment of mortality and longevity risks within the proposed ICS framework.
It is highly technical and structured around seven key consultation questions (Q104–Q110), with each organization providing:
a yes/no answer
detailed written rationale
often jurisdiction-specific data or regulatory perspectives
The document reflects a global debate on how mortality and longevity should be measured, shocked, correlated, and calibrated for capital adequacy.
🔶 1. Core Purpose of the Document
The document gathers formal feedback from:
Regulators (e.g., EIOPA, BaFin, NAIC, FSS Korea)
Global reinsurers (Swiss Re, Munich Re)
Life insurers (AIA, Aegon, Ageas, MetLife, Prudential, Ping An)
Actuarial bodies (IAA, CIA, Actuarial Association of Europe)
Industry groups (ABI, Insurance Europe)
All feedback focuses on improving ICS Section 6.6, which defines the capital charges for:
Mortality risk (risk of higher-than-expected deaths)
Longevity risk (risk of people living longer than expected)
🔶 2. Major Themes and International Consensus
Although perspectives vary, several dominant themes emerge:
A) Should mortality trends be explicitly modeled? (Q104)
Most organizations say no.
Reasons:
Adds complexity without meaningful precision
Trend is already embedded in best-estimate assumptions
A single level-shock is simpler and produces similar results
Mortality and Longevity risk
A minority (e.g., NAIC, Swiss Re, ACLI) argue trend shock is essential, especially for large insurers exposed to changing mortality patterns.
B) Are mortality stress levels appropriate? (Q105)
Split opinions, but common views:
Many European groups prefer 15% shock (higher than IAIS’s 10%)
U.S. groups argue 10% is too high for large insurers with credible data
Several Asian groups suggest country-specific calibration
Mortality and Longevity risk
C) Should longevity trend be explicitly modeled? (Q106)
This question generates the strongest disagreement:
Many regulators and European institutions: NO, too complex
North American insurers and reinsurers: YES, trend is the main longevity risk
Several groups highlight the need for independent level and trend shocks, not 100% correlated treatment
Mortality and Longevity risk
D) Are current longevity stress levels appropriate? (Q107)
Most respondents believe:
The 15% level shock for longevity is too high
The combination of trend shock + level shock is excessively conservative
Stress calibration lacks transparency and requires more empirical justification
Mortality and Longevity risk
E) Should stresses vary by geographic region? (Q108)
Opinions vary:
Supporters (mainly Asia & some reinsurers): mortality differs significantly by country; calibration should reflect this
Opponents (Europe, NAIC): regional drift should be handled in best-estimate assumptions, not capital shocks
Several warn that “regions” (e.g., “Asia”, “emerging markets”) are too broad to be meaningful
Mortality and Longevity risk
F) How should IAIS determine region-specific stress (if used)? (Q109)
Suggestions include:
Use national mortality tables
Use Human Mortality Database / comparable global datasets
Calibrate using ICS Field Testing Phase 2+ results
Allow actuarial judgment + internal models where appropriate
Mortality and Longevity risk
G) Additional Comments (Q110)
Key points:
Mortality and longevity shocks should often be independent, not perfectly negatively correlated
Life insurers writing both annuity and protection business benefit from natural hedging
Trend shocks should not apply at the policy level but at group or portfolio level
Several insurers describe IAIS’s proposed shocks as “overly conservative” and “insufficiently justified”
Mortality and Longevity risk
🔶 3. What This PDF Represents
Overall, the document provides:
A global snapshot of how different jurisdictions view mortality and longevity risk
A strong critique of ICS calibration methods
Industry concerns about complexity, excessive conservatism, and lack of transparency
Recommendations for more granular, data-driven modeling
Persistent disagreements between Europe, North America, and Asia on best practices
It is effectively a policy negotiation document that shows the tensions between simplicity, accuracy, supervisory consistency, and insurer diversity.
⭐ Perfect One-Sentence Summary
This PDF compiles worldwide regulatory, actuarial, and insurance industry feedback on the IAIS’s proposed capital standards for mortality and longevity risk, revealing broad disagreement on trend modeling, stress calibration, geographic differentiation, and the balance between simplicity and realism in the global insurance capital framework.... |