The CMI (Continuous Mortality Investigation) Income Protection Committee has recently published Working Paper 193, presenting an analysis of experience during 2017-2020.
This blog briefly summarises key points from the analysis. CMI Subscribers can find more details in Working Paper 193.
We have an expanded dataset, with four new contributing insurers. We believe we have substantial coverage of the UK income protection market.
This marks our first experience analysis since making significant changes to the inception exposure calculation methodology and data collection format. The analysis compares the experience relative to the IP11 rates, with claim inception rates adjusted to allow for data issues identified in the graduation dataset noted in Working Paper 149.
Notably, we have excluded data relating to policies with a maximum benefit payment period typically for a set period of one, two, three or five years. These policies show considerably heavier experience compared to full-term income protection policies. We plan to continue collecting data in respect of these policies and hope to be able to analyse their experience when data volumes allow.
Claims inception experience is generally lighter for both sexes relative to the IP11 basis, except for DP4 for females. When broken down by other factors, there are some differences relative to the IP 11 basis such as:
The claimant recovery experience for both sexes is mixed for each deferred period reflecting the higher volatility that is typically observed when analysing recovery experience. The experience by age band appeared to still be broadly similar to that in IP11.
The recovery experience of male non-smokers is higher (i.e. better) compared to smokers. For females, the data has been limited and so no clear patterns are evident.
Inceptions experience in 2020 is generally lighter than from 2017 to 2019, except for OC1 DP1 for males. For females, there is no clear pattern. While an increase in claim inceptions due to COVID-19 might have been expected, this could have been limited or offset by factors such as furlough, operational issues, and delays in diagnoses.
There is no clear pattern in claimant recovery experience in 2020, possibly indicating that it is still too early to form a credible view of termination experience during the pandemic.
We are currently collecting data for 2021-2023 and intend to publish experience analysis results soon. We anticipate that we will be able to publish experience analysis more regularly in the future.
