Modeling of Policyholder Behavior for Life Insurance and Annuity Products A Survey and Literature Review

The Financial Reporting Section and Committee on Life Insurance Research announce the release of a new report examining current practice around the development of policyholder behavior assumptions for life insurance and annuity products. Authored by Jason Campbell, Michael Chan, Kate Li, Anand Rao, and Louis Lombardi of PwC and Lucian Lombardi and Marianne Purushotham of LIMRA, the report provides an overview of the current state of the life insurance and annuity industry with respect to: (1) available policyholder behavior experience data sources, (2) credibility of current experience data, (3) assumption structure and modeling, including modeling tools, validation processes, and governance, and (4) current challenges in the area of policyholder behavior modeling. In addition, the research examines developments in other industries and disciplines that could help actuaries better understand policyholder behavior. Finally, the report includes a discussion of current practice around the modeling of potential buyer behavior to support the development of more effective life insurance and retirement product marketing and education campaigns.

A company survey of insurers was conducted as part of this project. Results are summarized in the report. Detailed quantitative survey results are also available. For additional insight on the report, listen to the podcast by researchers,  Lucian Lombardi and Marianne Purushotham.

The Sponsors would like to thank the following individuals that served on the Project Oversight Group:

  • Kathryn Cantor, FSA, MAAA, Chair
  • Michael DuBois, FSA, MAAA
  • Timothy Gaule, FSA, MAAA
  • Marshall Lin, FSA, MAAA
  • David Ruiz, FSA, FIA, MAAA
  • William Sayre, FSA, MAAA
  • David Wang, FSA, FIA, MAAA
  • Lisa Winters, FSA, MAAA
  • Ronora Stryker, ASA, MAAA, SOA Research Actuary
  • Jan Schuh, SOA Sr. Research Administrator

If you have questions or comments on this research, please contact Ronora Stryker, SOA Research Actuary, at rstryker@soa.org.