The Canadian Institute of Actuaries (CIA) has published its 75th annual report on the intercompany mortality experience for Canadian individual life insurance policies showing that the overall actual-to-expected (A/E) ratio by amount for the most recent policy year is down considerably when compared to previous years.
Entitled Canadian Individual Life Experience Updated to Policy Year 2023-24, the report also affirms that A/E ratios decrease with increasing policy size. “This fact is certainly the most significant one not currently reflected in published mortality tables. The decrease in A/E is strongest and most consistent for non-smokers,” they write.
“The study adds the one-year period beginning with the policy anniversary in 2023 and on an age-nearest birthday basis for data submitted by 10 companies and focuses on the most recent five policy years. This report primarily presents the experience of individual life insurance policies and riders issued in Canada that require full underwriting,” the report adds.
The A/E amount by the most recent year is 87.4 per cent, well below previous year when the A/E by amount was 94.3 per cent. “It may be that a downward trend has resumed,” but, they add that it will take a few more years before researchers are confident about that. The overall A/E for the most recent five years is 92.3 per cent. They say this has not changed materially from previous study periods.
The report also continues to show that the A/E ratio for whole life par policies is consistently lower than for non-par policies. Analysis contained in the report also looks at preferred and non-preferred experience and analysis of substandard, converted and simplified-issue policies. Different policy types are studied. It is also the second year that the CIA has included an analysis of the experience of joint, two lives policies.
The CIA has also released a supplemental workbook tables and database to go with the in-depth report. All told, the 10 companies involved in the study submitted 12.9 million records for the 2023-2024 policy year, with a total face amount of $3-trillion.
