annuity underwriting in the united kingdom（年金保险在英国）.pdf

Annuity underwriting in the United Kingdom 1. Purpose This note is for the International Actuarial Association Mortality Working Group (IAAMWG). It aims to provide an overview for an international audience, of the current position with the underwriting of annuities1 in the UK. It does not discuss how future mortality changes are projected or how the underlying mortality models used by underwriters are developed. I have drawn on materials on the internet and from discussions with Hannover Life Re, Towers Watson, Swiss Re, RGA, Avelo, CMI, the UK Actuarial Profession, the Association of British Insurers (ABI) and others, and am grateful for the information which is not always attributed. For more about the subject, please see the papers mentioned in the Appendix. 2. Background The large size of the annuity market in the UK is due in part to the tax environment of the individual pensions savings market where an individual’s savings are protected from tax while they accumulate. Only part of the proceeds may however be taken as cash, the remainder must be used to purchase a pensions annuity. The ability to “shop around” for a better pensions annuity (the “Open Market Option” or OMO) supports a competitive market in annuities. However, there is also an active immediate annuity market, a market for lifetime care annuities, and annuities are written for structured settlements. Enhanced annuities2 were introduced in the UK by Hannover Life Re around 1995 to enable higher annuity payments to be offered to clients with a lower-than-average expectation of life (although in the USA, Chait’s “The Medical Underwriting of Substandard Life Annuities” appeared in 1983) . The UK market has grown rapidly in recent years, with ABI figures showing sales of 76,000 enhanced annuities in 2011, accounting for 19% of total annuity sales and 27% of premiums. Annuity business is written by a number of insurers, and the number offer