Insurance pede here. Couple of things. As noted this is group insurance so for the most part, there is no or little underwriting so you are going to have a generally less healthy group. I don't know what expected mortality is for group, but it is higher than the individual market which is my background. Still these numbers are way out there, considering this is a group of people that are working age.
Pru and Met have large blocks of group - they will be the ones to watch. NYL and NML are primarily individual - they are also mutual companies, not stock. Higher than expected mortality will be reflected in future dividends. I doubt they will announce anything . Don't be surprised to see rate increases on non-guaranteed premiums on in-force blocks as well as higher rates for new business going forward.
The key block to watch, is term. Most people believe 'whole life' is the money maker for the company compared to the less expensive term. Not true - term is the money maker. The expected mortality on term is about 7%. For everyone 100 term policies sold, the expectation is that only 7 will result in a claim. I recently worked for a company that targeted younger clientele (late 30s/early40s). They were fighting about a price increase because it wasn't in line with the competition. One of the roadblocks was bad mortality - 15% instead of 7%. All term. Ironically, they are the ones that are probably priced correctly.
I have tried to bring this story to the attention of people that are either in the industry or at least on the peripheral. It is amazing how many times I have heard 'it's because everyone put off going to the doctor to get preventative care.' Okay, that might be some, but there is no way it accounts for all.
Lastly, this is a highly regulated business. Ratings agencies will look at the numbers and this will have a snowball affect. Also, at one point, the CEOs are going g to have to address this as part of their fiduciary duties to the stockholders. The CV narrative has outlived its usefulness because people - and Wall Street - can see it is not adding up.
Insurance pede here. Couple of things. As noted this is group insurance so for the most part, there is no or little underwriting so you are going to have a generally less healthy group. I don't know what expected mortality is for group, but it is higher than the individual market which is my background. Still these numbers are way out there, considering this is a group of people that are working age.
Pru and Met have large blocks of group - they will be the ones to watch. NYL and NML are primarily individual - they are also mutual companies, not stock. Higher than expected mortality will be reflected in future dividends. I doubt they will announce anything . Don't be surprised to see rate increases on non-guaranteed premiums on in-force blocks as well as higher rates for new business going forward.
The key block to watch, is term. Most people believe 'whole life' is the money maker for the company compared to the less expensive term. Not true - term is the money maker. The expected mortality on term is about 7%. For everyone 100 term policies sold, the expectation is that only 7 will result in a claim. I recently worked for a company that targeted younger clientele (late 30s/early40s). They were fighting about a price increase because it wasn't in line with the competition. One of the roadblocks was bad mortality - 15% instead of 7%. All term. Ironically, they are the ones that are probably priced correctly.
I have tried to bring this story to the attention of people that are either in the industry or at least on the peripheral. It is amazing how many times I have heard 'it's because everyone put off going to the doctor to get preventative care.' Okay, that might be some, but there is no way it accounts for all.
Lastly, this is a highly regulated business. Ratings agencies will look at the numbers and this will have a snowball affect. Also, at one point, the CEOs are going g to have to address this as part of their fiduciary duties to the stockholders. The CV narrative has outlived its usefulness because people - and Wall Street - can see it is not adding up.