Edition

Mental Health Underwriting

Background and Purpose

Predicting mortality (or longevity) and measuring the associated risk are the keys to the success of insurance business. Underwriting has been used for years for this purpose and approved effective.

Currently, underwriting has been focusing on human physical conditions such as BMI, blood sample, medical history, and others, as well as severe mental diseases; occasionally, there are mental health assessments such as mental illness or cognitive testing that have been used in underwriting Life or Long-Term Care (LTC) business.

Recent studies/research (including SOA research, links can be found at the end of this RFP) have shown people mental health conditions, such as mental illness, intelligence (cognitive ability), personality (optimistic or pessimistic), ability of dealing with stress, religion, family bond, social connectivity, will of living (especially in difficult or challenge circumstances) have direct link to their life expectancy; it has become more eminent during recent COVID pandemic.

The Actuarial Innovation and Technology Steering Committee (AITSC) is interested in exploration of mental health conditions that impact mortality and longevity, and the potential of utilization this measure as a tool to better predict people’s life expectancy in underwriting life and annuity policies. The findings are expected to make an improvement in prediction of longevity/mortality, resulting in better assumption setting for pricing, valuation, and risk management, eventually benefit the human society.

The AITSC encourages researchers to respond to this RFP even if their bid does not perfectly match the purpose above. The AITSC is eager to work with researchers on a mutually agreed scope of research.

Research Objective

The AITSC is seeking researchers to identify and analyze mental health conditions or characteristics that link to human’s death. In particular, the AITSC wants to consider the following topics in the process:

  1. Exploration phase: Explore and solidify the relationship between mental health condition and mortality (or longevity)
    1. Summarize current underwriting practice in the insurance industry related to mental health (including mental diseases) through literature review. This can include, but not limited to, the following:
      • Which insurers have considered mental health conditions in their underwriting?
      • What mental health conditions and considerations have been used in underwriting, and in which areas or on which products?
      • Any predictive algorithms/methods are in place for mental health assessment in individual life insurance given accelerated underwriting or in health insurance risk assessment? Are there any applications on longevity products?
      • Given the mental health concerns during the COVID pandemic, what is the trend of underwriting mental health conditions in the insurance industry looking forward?
    2. Identify and compile mental health conditions and considerations that are highly correlated with mortality/longevity and can be used to improve the prediction of human death.
    3. This can be done through meta-analysis of existing studies or through own studies designed and conducted by the researchers.
      • Analyze reliability of these measures identified, i.e., are the measures stable or consistent across repetitive assessment over time.
      • Comment upon thea validity of these measures if used as predictors of mortality or longevity.
  2. Application phase: apply the conclusion and implement it in underwriting.
    1. Analyze the feasibility of implementation of the finding in insurance business.
      • Comment on the legal, ethical and privacy issues or concerns, current and potential.
      • Comment on the biases when quantifying the factors.
      • Suggest ways to obtain the measure in practice. For example, the measure can be obtained through, as simple as using an online questionnaire, as sophisticated as conducting 1 on 1 interview with professionals and performing mental health assessments in a private setting.
    2. Integrate the mental health measures into a mortality or longevity scale. The scale can be ordinal or interval, e.g. it can be as simple as 3-point (such as preferred, standard, substandard) or 5-point scale similar to current life insurance risk classes; or it can be a score from a normal distribution with specified mean and standard deviation.
    3. Map the mental health risk classes to different mortality table, or different multipliers to the same mortality table. Demonstrate the life expectancy for different risk classes.
    4. Provide practical use cases (on life insurance, payout annuity, elder care business) of quantifying the severity of mental health conditions to improve the prediction of mortality or longevity risks.

Note that the list above is not meant to be exhaustive but merely examples of proposed topics that may be researched.

Proposal Requirements

To facilitate the evaluation of proposals, the following information should be submitted:

  1. Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.

  2. An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.

  3. A description of the expected deliverables and any supporting data, tools or other resources.

  4. Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.

    Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.

    As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix)

  5. A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The AITSC is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.

  6. Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.

Selection Process

The AITSC will appoint a Project Oversight Group (POG) to oversee the project. The [sponsoring entity/POG] is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the AITSC will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.

Questions

Any questions regarding this RFP should be directed to Research-AIT@soa.org.

Notification of Intent to submit Proposal

If you intend to submit a proposal, please email written notification by December 6, 2023 to Research-AIT@soa.org.

Submission of Proposal

Please email your proposal to Research-AIT@soa.org; proposals must be received no later than December 19, 2023. It is anticipated that all proposers will be informed of the status of their proposal by the end of January 2024.

Conditions

The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.

The AITSC reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The AITSC also reserves the right to redirect the project as is deemed advisable.

The AITSC plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).

The Society of Actuaries Research Institute and AITSC may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the [Society of Actuaries/sponsoring entity] in publicizing or promoting the research and responding to media requests.

The Society of Actuaries and AITSC may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute and AITSC, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.

Conflict of Interest

You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries Research Institute and AITSC.

Appendix

The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.

All Contracted Projects

This category includes all contracted projects that the Institute has undertaken within the last several years.

The 33rd-66th percentile project costs range is $25,000 - $50,000.

Literature Reviews

This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.

The 33rd-66th percentile project costs range is $15,000 - $20,000.

Surveys

This category includes all projects that had a survey as their primary component.

The 33rd-66th percentile project costs range is $28,000 - $55,000.