On a few occasions, the industry has experienced very volatile market shifts as a result of underwriters’ mortality table revisions. The way to mitigate this risk, and develop a truly realistic expectation of mortality is to conduct an A to E study.
Actual mortality is measured by tracking the actual deaths of a specific population from the time of underwriting until the present. MLA tracks 42,000 unique lives in its database on a very regular basis, solely for purposes of maintaining its own insight into the burgeoning experience of the life settlement market. Expected mortality for a portfolio is based upon the life expectancy estimates provided by the preferred medical underwriter(s). We are then able to compare actual versus expected across different periods of time, broken down by insured age, gender, length of LE, impairment group, face amount, and several other factors.
This analysis allows us to target groups of insureds and policies where underwriters have over or under projected mortality – highly valuable information that can be used to accurately price in potential underwriting discrepancies.