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Gen Re’s 2023 U.S. Group Life Rate & Risk Management full survey results have been distributed to study participants, so I am sharing a few pricing topics for others to get a flavor of the findings. The comprehensive survey covered underwriting, pricing, and claims management for both employer- and employee-paid Group Life and AD&D. The study includes a wealth of manual rate and pricing data.
The core of the manual rate section includes claim rates and manual rates for single age and gender censuses, i.e., female age 25, female age 35, female age 45, etc. Retiree and non-retiree rates are included for age 75 to provide data on the additional retiree charge. There is also a census with a mix of ages and genders so we can see rates for a typical 100 life group.
The idea is to provide data for participants to compare their age/gender mortality and manual rate curves to other companies’ data. Knowing where your rates are outliers allows you to identify pricing issues you weren’t aware of. Understanding where your rates are higher or lower than other companies leads to more effective marketing and sales efforts.
In addition to manual rates, the study includes extensive SIC, area, and other rate factor data to support rate analysis.
Taking a look at the average age curve for males and females, the increase in manual rates accelerates dramatically at older ages, as expected. Across all ages, male rates are steeper by age than female rates. The average load for age 75 retirees regardless of gender is approximately 50%.
In addition to the averages shown here, study data includes each participant’s (anonymous) rates, which gives insight into the variability of rate slopes across the industry. In every study conducted since our first in 1999, we see high rate variability company-to‑company.
At core working ages, the highest rate for a given census is two to four times the lowest. For age 75 and retirees, the ratio hits 6x. This helps explain the range of rates sometimes seen for live quotes.
Our survey also includes an employee-paid census for which there are claim rates and manual rates by 5‑year age band. Average employee-paid rates are higher than employer-paid due to higher claim costs and expenses, but the shape of the rate curve is similar.
Rate variability by company is also similar. Tobacco rate volatility is higher than unismoker.
In addition to manual rates, the survey includes extensive data on pricing assumptions and processes. One aspect covered is aging and mortality improvement. 82% of companies do not include mortality improvement in pricing, and 59% of companies include neither aging nor mortality improvement. For the companies that do not include either, there is an implicit assumption that aging offsets mortality improvement.
Pricing for aging but not mortality improvement was conservative pre-COVID. As post-COVID excess mortality is sorted out, it’s less clear if this is aggressive or conservative.
Average employer-paid target loss ratios range from 59% for a $5,000 annual premium case to 83% for a $5 million case. Target loss ratios vary dramatically by company, depending on what size cases they tend to write.
Insurers focused on larger cases tend to have higher target loss ratios, driven by lower commission rates and economies of scale for home office expenses.
This sampling of information gives a taste of the survey data, but there’s a lot more to explore. Digging deeper reveals why rates are competitive (or not) for specific kinds of groups. And the survey allows participants to easily benchmark pricing, underwriting, and claims practices. If you did not participate, please consider joining our next survey! Everyone can access our longer summary report.
