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An Indian experience
Rajeev Shah from the Life team reports back from the 5th Global Conference of Actuaries
The life insurance industry in India was deregulated in 1998 following nationalisation in the 1950s. Prior to deregulation there was a single state-owned monopoly insurer that concentrated on writing savings business. Within the last four years, 10 new insurers have started operations and are moving into writing business with a much bigger element of insurance risk. However, the data needed to enable them to write risk business is limited to the Life Insurance Corporation of India experience which is not always relevant or suitable.
The Indian actuarial profession and regulators, eager to have an independent body to collect and analyse industry experience (similarly to that done by the CMIB in the UK) have set up the Mortality and Morbidity Investigation Bureau (MMIB). Barnett Waddingham, via its role as the CMIB secretariat, was asked for advice by the MMIB on its structure, management, systems and other issues.
Pensions products have also recently been introduced in India but there is particularly little experience data on pension annuitant mortality in India. The need to provide annuity quotes and projections based on tables derived from this limited experience has highlighted the need to get the MMIB running. The recent research by the CMIB on the cohort effect on mortality improvements within the UK experience was felt to be of interest in this context as it highlighted some of the risks in writing annuity business.
Rajeev Shah, who is closely involved in the work for the CMIB, particularly the research into the cohort effect on mortality improvements, accepted an invitation to present this research at the 5th Global Conference of Actuaries, held over 18-20 February 2003 in New Delhi. The conference covered life, general and pensions matters and was attended by some 300 delegates. Media interest was also generated as the regulator attended the conference and gave his views on the future direction of regulation. Rajeev's presentation raised some eyebrows when he showed that the Indian annuitant life table had lighter mortality than the equivalent UK table for the same calendar years. Rajeev then showed that the UK tables were still more prudent due to the use of projected mortality improvements being factored into the current mortality rates giving higher annuity values. This caused further interest and after the presentation, whilst expressing delight with the range of psychedelic colours used, many delegates asked for more detailed explanations.
Whilst at the conference Rajeev also spoke at a meeting of the Indian actuarial profession's life assurance board on the various issues that the MMIB would need to resolve before starting its work and how these issues had been resolved by the CMIB within the UK.
Whilst not new to Indian food, Rajeev was impressed with the catering at the conference and almost suggested to the local caterers that they apply to do the catering at UK actuarial conferences. However, he got distracted by some more questions on the psychedelic colours in his presentation.
Rajeev and Barnett Waddingham look forward to the MMIB starting its operations and wish it well.
Rajeev Shah, March 2003.