Category Archives: Research

Top 15 global articles and reports for 2017

Milliman’s most viewed articles worldwide in 2017 covered topics related to healthcare in the United States, the rise of InsurTech, and the challenges of IFRS 17. (For summaries and links to all of the articles, click here.)

Here is the list of the top global articles and reports for the year:

15. MACRA: Key Considerations for health plans, By Colleen Norris and Mary van der Heijde

14. Multiemployer Pension Funding Study, By Kevin Campe

13. The American Health Care Act, By Jason Karcher

12. MACRA and Medicare Advantage plans: Synergies and potential opportunities, By Christopher Kunkel, Drew Osborne, Lynn Dong, Michael Polakowski, Noah Champagne, and Charlie Mills

11. Effective employee communication: The benefits of best practices, By Jessica Gonchar, Heidi tenBroek, and Sharon Stocker

10. Building blocks: Block grants, per capita caps, and Medicaid reform, By Justin Birrell, Jennifer Gerstorff, Nicholas Johnson, and Brad Armstrong

9. Overview and practical considerations of the new insurance contract standard: IFRS 17, By Gillian Tucker and Andrew Kay

8. InsurTech: Innovation in the P&C insurance space, By Thomas Ryan

7. The employer stop-loss insurance marketplace since the Affordable Care Act, By Mehb Khoja

6. 2017 Public Pension Funding Study, By Rebecca Sielman

5. Summary of individual market enrollment and Affordable Care Act subsidies, By Paul Houchens, Jason Clarkson, and Zachary Fohl

4. Impact of the transition from RAPS to EDS on Medicare Advantage risk scores, By Deana Bell, David Koenig, and Charlie Mills

3. Corporate Pension Funding Study, By Zorast Wadia, Alan Perry, and Charles Clark

2. Pension Funding Index, By Zorast Wadia and Charles Clark

1. Milliman Medical Index, By Christopher Girod, Susan Hart, and Scott Weltz

Asian life insurance growth story continues boosting embedded value and new business values

Milliman has released its latest report, 2017 Mid-Year Embedded Value Results (excl. Japan), which summarises mid-year 2017 embedded value (EV) results disclosed by Asian insurers in eight key countries. The report examines the results at a company and country level and supplements the 2016 Embedded Value Results: Asia (excl. Japan) report released in August 2017. It also includes an update of the India 2016 full-year results, not available earlier due to the market’s March financial year-end. The findings highlight an overall increase in growth of EV, increase in value of new business (VNB) and improvement in new business margins.

‘As expected, positive performances by Asian equity markets and improving yields have led to an increase in the EV of life insurers within the region,’ said Milliman principal and consulting actuary Paul Sinnott. ‘These favourable economic conditions, combined with refined product strategies and improved distribution channel productivity, continue to drive growth in life insurance premiums, margins and the overall business in Asia.’

Key findings from the report include:

• Overall, insurers have reported positive gains in their 2017 mid-year embedded values over their 2016 mid-year values, with many companies showing single-digit EV growth but some posting larger gains in Hong Kong and mainland China.
• Hong Kong and mainland China insurers continued to report significant increases in VNB in the first half of 2017 compared to the first half of 2016, with over 50% increases in VNB for several companies, primarily driven by strong new business sales.
• Nearly all operating entities reported an increase in their new business margins between the first half of 2016 and the first half of 2017, with single- or double-digit increases in new business margins for many.
• As initial public offering (IPO) activity among insurers continues in India, companies are adopting the market-consistent Indian Embedded Value methodology (which is prescribed for IPO disclosures).

A copy of the report is available for download here.

Milliman and Zendrive create driving risk score with 30 billion miles of smartphone data

As more drivers use smartphones to talk, text, and perform other functions while driving, concern over distracted driving and its contribution to climbing collision rates has increased. Using data collected by Zendrive, Milliman recently studied the impact of distracted driving and other driving behaviors on collision frequency. Consultant Sheri Scott provides some perspective in this article.

Using predictive modelling in assumption setting

Milliman is carrying out a series of policyholder behaviour experience studies using predictive analytics. This blog post discusses the most recent US-based study looking at Guaranteed Lifetime Withdrawal Benefit (GLWB) utilisation, which, along with lapse, is a key driver of variable annuity (VA) business value.

The study was based on a data set containing around 2 million unique VA policies issued between 2003 and 2015 of seven large variable annuity writers based in the US. These policies represent roughly $220 billion of account value (based on initial purchase amounts) and cover a range of GLWB product designs as well as demographic attributes. This provides a rich data set with which to study policyholder behaviour.

A predictive model can be constructed with common variables such as age, tax-qualified status and single/joint status to allow easy implementation. The models constructed for our study use drivers that are readily available in a typical in-force data file, making them suitable for implementation in existing actuarial projection platforms. Including additional explanatory variables or interactions to the assumption formula is a natural step of predictive modelling because many variables can be captured in a single model without double-counting the individual variables’ effects. This framework allows iterative improvements to predictions and better differentiation of policyholder behaviour at a seriatim level.

The 2016 Milliman VALUES™ GLWB Utilisation study examined both when the policyholders chose to begin taking lifetime withdrawals, as well as how efficiently they continued to take them thereafter. We were able to confirm and, more importantly, quantify many intuitive assumptions about these behaviours and what drives them, and discovered new insights as well. For example, less than half of all policyholders currently taking GLWB withdrawals utilise their GLWB benefit with 100% efficiency (i.e., taking precisely the maximum allowed withdrawal amount). This is interesting as we believe many companies price on a basis of 100% efficiency.

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20/20 Beyond the Numbers: Retirement in Asia-Pacific

Join Milliman consultants on this webinar as they consider the implications of the recently published “Asia retirement income report.” The webinar will include a 20-minute presentation led by Wade Matterson, practice leader for Milliman’s Australia office, and Richard Holloway, managing director for Milliman’s South East Asia and India Life consulting practice. A 20-minute Q&A session will follow.

Date: Wednesday, 23 August
Time: 11 a.m. India time
12:30 p.m. Thailand/Indonesia time
1:30 p.m. Singapore/Hong Kong/Taiwan/Malaysia time
3:30 p.m. Sydney time

To confirm your participation, RSVP before 16 August. Registered participants will receive a link to the webinar and local/toll-free numbers for most countries in the Asia-Pacific region a few days prior to the webinar.

New business surge leads to double-digit embedded value growth in Asia

Milliman has announced the findings of its study on reported year-end 2016 embedded value (EV) results for 34 major insurance companies operating in Asia, excluding Japan. The report highlights trends among companies reporting EVs and reveals a growth in reported 2016 EV of 15.3% by Asian insurance companies. This was primarily driven by a 40% growth over 2015 in value of new business (VNB) across the region in 2016.

The Milliman 2016 Embedded Value Results: Asia (excl. Japan) report analyses and discusses the EV methodologies and assumptions with the impact of regulations, as well as recent developments in the long-awaited International Financial Reporting Standard (IFRS) 17 reporting regime.

‘The China and Hong Kong markets were the main drivers of the VNB explosion in the region; both having mainland consumers to thank for these results,’ said Milliman principal and consulting actuary Paul Sinnott. ‘Although we have some longer-term concerns about the sustainability of profit margins in the region, recent yield curve rises are relieving some margin pressure in the short term.’

A few key insights from the Asian report include:

• In 2016, total reported Asian EV grew by 15.3%, on a comparable basis, to USD 339 billion from USD 294 billion.
• While some European multinationals reduced their Asian EV reporting last year, there were three companies disclosing EV results for the first time in India, along with the first comprehensive Indian Embedded Value (IEV) disclosure associated with ICICI Prudential’s initial public offering (IPO) in September 2016.
• Life insurance sales continued to rise strongly in the region during 2016. Gross written premium (GWP) is estimated to have increased by 28%, with China’s 43% growth being a major contributor.
• Value of in-force (VIF) increased for all markets. South Korea recorded the largest VIF growth of 31%, mainly from margin-driven growth in VNB across all companies; Hong Kong also posted strong VIF growth of 20%, driven by large volumes of business sold to mainland Chinese visitors.

To download the report, click here.