Research Reports etc

CRIS Research Reports

Other Papers & Reports

Conference Papers and Presentations

CRIS Research Reports

2005/2 - Closed life funds: causes, consequences and issues

Summary only

This paper examines the development of closed life insurance firms in the UK from 1995 to 2004. Covering all UK-authorised life insurers and significant friendly societies, it documents which firms have been closed, and describes the growth of closed fund consolidators. The paper goes on to identify a number of differences in performance indicators between open and closed firms, e.g. regarding solvency and expenses. The study uses multiple regression analysis to identify the factors that distinguish firms that close from firms that remain open. It also analyses the performance of a number of firms that have closed, in comparison with firms of a similar size that have remained open. Relative to those non-closers, the solvency of closers tends to improve after closure, although there is a noticeable increase in lapses/surrenders. The paper also comments on some issues for policyholders and shareholders, and notes the role of the regulator (Financial Services Authority) in closed with-profits funds.

2005/1 - Survey: how long do people expect to live?

Summary only

We report the results of a survey of over 3500 individuals in Great Britain, questioned on how long they expected to live. On average, they under-estimated by 4.62 years (males), 5.95 years (females) compared with the estimates of the Government Actuary's Department, although on average they were optimistic in the sense of thinking they would live longer than other people of their age and sex. Relevant risk factors seem to be taken into account in forming expectations, but not always accurately; in particular, smokers appeared to under-state risks significantly. A "reference group effect" was apparent: those in poor health, and smokers, gave relatively low answers for how long they thought people of their age and sex would live. We also find that people who under-estimated how long the population was expected to live were significantly less likely to have bought a pensions policy.

2004/1 - Mutual life offices: a contribution to the governance debate
There is a substantial theoretical literature on the co-existence of mutual and proprietary insurers. There is also a substantial body of empirical research in this area, much of which discusses the performance of mutual and proprietary life insurance in the UK. We have been able to add to the empirical research, updating it so that we can make up to date comparisons using 2003 data and, in addition, looking at trends from 1985 onwards. We show that the market size of mutuals (by assets) has more than halved in the past ten years. The size of the average mutual has not grown since 1995. We have found that mutuality does have a significant effect on the customer-orientated performance measures that we identified. For example, it is associated with lower withdrawal rates; but the average free asset ratio was lower than for proprietary life insurers writing with profit business. However, and perhaps surprisingly, mutuality as such did not have a significant effect on the manager-orientated performance measures, such as expense ratios. We also examined the impact of a number of corporate governance measures on the performance of mutuals. We found that the proportion of directors who are non-executive appears to reduce "managerial" behaviour.

Other Papers & Reports

Chris O'Brien., With profits insurers' financial strength , 2006, 2005, 2004, 2003, 2002, 2001

David Bartlett.; Mark Chaplin.; Kevin Dowd.; Patrick Kelliher and Chris O'Brien. (2005) Risk management by UK life assurers: a survey

Blake, D.; Cairns, A. and Dowd, K. (2005), "Living with mortality: Longevity bonds and other mortality-linked securities"

Diacon, S.; O'Brien, C. and Blake, A. (2005), "The Economic Value of General Insurance"

Fenn, P.; Vencappa, D.; O'Brien, C. and Diacon, S. (2005), "Is there a "compensation culture" in the UK? Trends in employer's liability claim frequency and severity"

P.O.J.Kelliher.; D.L.Bartlett.; M.Chaplin.; K.Dowd and C.O'Brien. (2005), Reports of the Faculty & Institute of Actuaries working party on risk management in UK life assurers Liquidity risk in life insurance: a discussion paper,

Diacon, S.; Fenn, P. and O'Brien, C. (2003), "How Accurate are the Disclosed Provisions of UK General Insurers?"



Conference Papers and Presentations

Papers presented at CRIS London Seminar series Thursday 8 December 2005

Papers presented at CRIS London Seminar series Tuesday 23 November 2004

Papers presented at the Global Risk and Insurance Forum Wednesday 17 & Thursday 18 April 2002