An Actuarial Overview on Human Longevity and Mortality

When you look at the vast sums of money involved, one might argue that the actuarial community has a greater incentive to understand aging than the aging research establishment does - billions of dollars rest on the degree to which predictions of future human longevity match up to reality. Unfortunately for the actuaries (and the rest of us) that future is very uncertain. We stand at a cusp in biomedical research, an era of rapid progress in fundamental biotechnology, and one in which great leaps forward in application may or may not happen at any time.

Producing true rejuvenation in laboratory mammals is a matter of a billion dollars and ten years or so at this point in time, and the vagaries of human organization that lead up to sufficient interest and funding to start on that goal are essentially random: perhaps we manage to talk the world around to it five years from now, perhaps fifteen, perhaps longer. Who knows - it's a people and persuasion issue, and those are hard to pin to a timeline.

Here is an interesting PDF that tours some of the present thinking on human longevity by the actuarial community:

Longevity is an important issue: the implication of increasing longevity has far-reaching effects for our social programs; and for our financial security as we grow into old age. It is also a trend which actuaries are well suited to analyze: we have unique training and experience that allows us to distill large volumes of data into key elements that can inform predictions of future events. As we partner with other experts, we are helping to shape the discussion on the implications of increasing longevity.

First, around the globe people are living longer. While there is evidence that the rate of improvement is different between men and women, and between people of different races, geographies and social statuses, the evidence remains that we are all living longer.

Secondly, our understanding of what factors have a material effect on our expected lifetime is growing, but it is not complete. In particular, our understanding of older age mortality is limited, in part because the data at older ages is sparse and of varying quality. There are open questions related both to the rate of improvement and the ultimate age at which it is appropriate to assume a mortality table should end.

Thirdly, in many regions, there is no broad consensus on the appropriate base mortality rates and improvement factors that should be used to value life-contingent liabilities, or on the models that should be used to forecast those rates into the future. This creates challenges for practitioners who must develop their own projections; inefficiencies as the use of different data, assumptions and models leads to different mortality forecasts; and inconsistencies across disciplines - for example, between the pension and insurance communities - as each develops its own independent view of future mortality. Having said this, the actuarial community has dealt with issues of this magnitude in the past: We need to begin to hone in on techniques that will allow us to become comfortable with the wide variances that can be produced by our projection models. As evidenced by the material presented in the body of this report, there are techniques - stress testing, scenario testing, risk heat maps, screening systems - that we can use to give us insight into what base mortality rates and improvement factors could be.


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