Mortality: towards reliable estimates in developing countries

Getting the most out of unreliable data, and actuarial applications

Indeed, by attempting to prove that the mortality datasets available for Mexico and Hong Kong can be exploited to produce reliable life tables, the JRI aims to set a standard methodology that can then be applicable to other countries with similar profiles. The research team’s approach will consist in three consecutive steps, starting with the actual production of the life tables for the two countries, covering as many years as possible, and constructed from yet unadjusted data. The second step will consist in establishing a standard set of data quality indicators to assess the reliability of both the input information and the output mortality series. The last step of this approach will consist in finding ways to adjust the flaws in the statistical information if and where it is necessary. To do this, the researchers intend to use existing indirect estimation techniques, and make the necessary adjustments. Once these steps are completed, the work with the AXA teams (AXA Group, AXA Mexico and AXA China Region) can start. Together, they aim to determine how the resulting mortality series can be used for actuarial purposes. More specifically, they want to use them for assessing variations in what insurers call biometrical risks – which refers to all risks related to the human condition, an essential aspect when calculating the premium of prospective applicants –, and future mortality trends in these countries. “Actuaries represent a quarter of subscriptions to the HMD database, Dr. Barbieri specifies. That’s actually how Marine Habart, AXA Group Life, Savings & Health Chief Risk Officer, who is leading the project on AXA’s side, had the idea for the project in the first place. Mexico and Hong Kong were identified as the best candidates for a case study, because both countries offered interesting and complementary characteristics, both academically and business-wise. Hong Kong has excellent mortality data, while Mexico, on the other hand, has a challenging statistics system”.

As Dr. Barbieri points out, the future of human longevity is largely predicated on what will happen in Asia, Latin America and Africa over the next few decades, as the population of these regions increasingly dwarves that of Europe, North America and Oceania. Reliable mortality estimates for countries in these regions are thus crucial in many aspects, including but not limited to insurance policy design. By providing such insight in open access, the present project would make a considerable contribution to some of these countries’ political strategies, for instance, notably with regard to resource allocation and health policy.