Author: Dharmesh Roopun
4most is renowned for its specialist and technical capabilities in risk modelling across the life insurance and banking sectors. Combining the market and expert views on longevity trend risk to the various actuarial fields, 4most can help with:
Managing Part VIIs transfers and the migration of blocks of business, in particular Bulk Purchase Annuities.
Assessing impacts on solvency positions and the risk margin.
Setting assumptions related to mortality risk and aiding product pricing strategy.
Asset origination and modelling to assist with matching liabilities driven by longevity risk.
British Longevity Trend from Victorian Era to Covid-19
On the 7th of July 2021, the UK’s Office of National Statistics (ONS) published the total number of deaths recorded across England and Wales during the year 2020. The data paints a clear picture of excess deaths compared to 2019 which can be linked, either directly or indirectly, to Covid-19. In 2020, estimated excess deaths amounted to around 88,000; of which, 81,795 involved or were attributed to Covid-19.
Understanding longevity is an age-old theme. Actuaries have for many years, been utilising data spanning over three centuries to gauge the socioeconomic impact of mortality. The graph below plots the survival curves for the population of England and Wales over 180 years, constructed from deaths statistics from the ONS. The steepness of each curve indicates the likelihood of death at respective ages.
In 1841, in a Dickensian society, a new-born had only an 85% chance of surviving to their first birthday and life expectancy at birth was a measly 43 years. However, things changed rapidly over the course of the next half century with the advent of vaccinations against smallpox, rabies, cholera, typhoid etc., and rapid improvements in natal care. As a result, survival rates of infants doubled.
Despite being plastered across signs in enclosed spaces over the past year, handwashing was once perceived as risible in the medical field. This was until Joseph Lister’s work on germ contamination and antiseptic surgery in the second half of the 19th century. Alongside this came the invention of anaesthesia, which eventually facilitated longer and more successful surgeries.
The prowess in surgery continued well into the next century. The roaring twenties saw longevity rates improve rapidly across all ages up until World War I in 1914. At a time when Burberry trench coats were trendy, trench warfare brought high casualties among younger generations – exacerbated further by the outbreak of Spanish Flu. The latter came in waves – a word we are all too familiar with – and decimated close to a percent of the England & Wales population. Some years later, World War II would hit, albeit with a lower death toll than its predecessor. A new positive and socialist era is coming, and the NHS is created in 1948.
Queue in the 60s with the release of “Please Please Me” by The Beatles. Coincidentally, their record studio EMI (Electric and Musical Industries), would also be the main investor in the medical imaging field for decades to come. We are now in the Golden Age of Medicine where the first organ transplant, successful cardiovascular surgeries, drug discovery and mass production extend longevity rates to unprecedented levels.
Cardiologic medicine continues to evolve into the 90s and aids in tackling the leading cause of death in the UK. As we get a better understanding of cellular functions and DNA, scientists ask the question whether the survival curve will continue to “rectangularise” – a term used to describe the rapid pace of life improvement in older generations since the 60s. This would imply an outer limit on the human lifespan – a notion many scientists disagree with as there is no evolutionary evidence that humans are programmed to die.
The curtain falls on the 20th century with impacts from medical advances and falls in the number of smokers, tailing off. At the same time, as life expectancy increases, age-related illnesses such as dementia, are overtaking ischemic heart illnesses as the leading cause of death. Mental illnesses, coupled with austerity measures and a shift to an unhealthier lifestyle, lead to a stall in life improvement.
There is perhaps no need to relive 2020-2021 by expanding on this mortality story. Having said that, going forwards, it is expected that the curve will jump outwardly in the next year or two with lower mortality rates for a surviving, healthier and vaccinated British population. It is evidently difficult to predict what will happen past this period, but data from the UN shows that people in China, Italy, Spain, Japan and Sweden are already outliving the British. It is almost certain that British longevity will continue to improve, though the rate at which it will do so, is uncertain.
DO YOU HAVE ANY QUESTIONS? Please contact Dharmesh at dharmesh.roopun@4-most.co.uk
