New technology aims to improve protection accuracy

PulseModel incorporates the impact of medical conditions, such as diabetes, to inform future mortality patterns.

According to Willis Towers Watson, PulseModel can be used by insurers to consider future longevity trends more scientifically and set assumptions accordingly. The company suggests that elevated improvement assumptions are largely due to regulatory pressure which - in conjunction with the current structure of UK annuities - is effectively forcing insurers to overprice. It asserts that the effect of this forced overpricing can reduce by around 2% the annual amount received by a 60-year-old on a typical annuity.

Matthew Edwards, Head of Mortality and Longevity in Willis Towers Watson’s life insurance practice, said:

“We have been concerned for some time that the mortality models in common use do not properly incorporate medical information – such as whether people are healthy or have some disease history – quite apart from lifestyle information such as smoking status or basic medical markers.

"What is clear from our research and the development of this new model is that we can no longer rely only on an extrapolative approach to setting longevity improvement assumptions which ignores medical views. Such approaches can give results detached from medical and biological reality and add a layer of cost which the man on the street ends up paying.”