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2006 General Meeting Assemblée générale 2006 Chicago, Illinois

Canadian Institute of Actuaries. L’Institut canadien des actuaires. 2006 General Meeting Assemblée générale 2006 Chicago, Illinois. IP-31Group Disability Reserving. Gary Walters 20 October 2006. Group Disability Reserving Current State of Affairs. Based on a survey done fall 2005

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2006 General Meeting Assemblée générale 2006 Chicago, Illinois

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  1. Canadian Institute of Actuaries L’Institut canadien des actuaires 2006 General Meeting Assemblée générale 2006 Chicago, Illinois

  2. IP-31Group Disability Reserving Gary Walters 20 October 2006

  3. Group Disability ReservingCurrent State of Affairs • Based on a survey done fall 2005 • 14 responding companies • Covers $12B of LTD reserves and $1.6B Life waiver reserves • No companies use stochastic methods for morbidity

  4. Group Disability ReservingCurrent State of Affairs • Adjudication of Life Waiver done with LTD, yet reserve termination and mortality assumptions match for only 2 companies • 12 Companies use CGDT/GLTD phased in after 2 to 10 years • 20 year old US table! • Only one company varies termination by diagnosis, only 1 by incidence rate, 1 by COLA and 3 by province

  5. Group Disability ReservingCurrent State of Affairs • Two companies do not allow for unknown CPP/QPP decisions, 7 of rest just reduce gross reserve by a % • Termination rates based on block or industry experience usually used for refund accounted groups • Morbidity PADs usually constant % of expected terminations, 5 companies do have some variation (usually by duration only)

  6. Group Disability ReservingCurrent State of Affairs • LTD reserving is just not • Sensitive to the risks for each claim or • Sensitive to changes in the mix of business • Reflective of the level of fluctuation within a block • Let’s find out how this could be addressed

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