Improving annuity pricing with address data

Socioeconomic group is an important factor for determining life expectancy, and actuaries have traditionally used pension or benefit size as a proxy for this. This article shows the weaknesses of relying solely on benefit size or amount, and explains how using postcode or address data can improve the assessment of life expectancy

When bond yields were high, accurate assessment of mortality was only of modest importance for pension reserving and annuity pricing. However, now that bond yields are low, accurate estimation of mortality rates has become much more important. With a backdrop of lower long-term interest rates, life insurers need to ensure that they rate policyholders accurately for their mortality and longevity to remain competitive and avoid anti-selection. One particularly important factor is socioeconomic