Experience Studies Enter a New Era for Life Insurance

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Author

Marianne Purushotham, FSA, MAAA
Corporate Vice President, LIMRA Research Data Services
LIMRA and LOMA

August 2025

In the ever-evolving landscape of the insurance industry, experience studies play a crucial role in pricing and reserving products. These studies provide companies with the tools they need to assess the financial health of their products and allow regulators to do the same for the industry as a whole. Some of these studies rely on data that dates back more than a decade; however, experience for key risk factors such as consumer behavior has changed dramatically, especially following the peak of the pandemic. To address this, the Society of Actuaries (SOA) and LIMRA created a new model for experience studies.

Experience Studies

To provide some context, experience studies are systematic analyses of historical insurance data, focused on specific blocks of business to understand patterns, trends and deviations from expected financial outcomes. Data are gathered from policy administration systems, claims databases and financial systems. Actuaries define the exposure period or timeframe during which the insureds are exposed to risk and then assess the frequency and severity of events such as claims, lapses, or deaths during that period.

The data are segmented across several dimensions such as age, gender, policy type, geography, risk classification, distribution channel, and policy size. The goal is to develop rates, or probabilities, based on the collected data to plan, valuate and price products.

This is done by comparing actual events (e.g., deaths, lapses, disability incidences) with expected figures to calculate the actual-to-expected ratio (A/E ratio). In this manner, they provide a reality check and help insurers understand key drivers of financial results.

Regulator Dynamics

Industry-level experience studies are also fundamental for regulators to determine regulatory requirements. Therefore, regulators want to ensure that the data used in these studies are accurate, complete and reliable. The methods used to conduct the studies must be robust and transparent. As the industry evolves, regulators want to ensure that experience studies adapt to new risks and emerging trends.

In recent years, concerns have been raised about the age of experience data for some products and risk factors. Several experience studies that carriers and regulators rely on for guidance are based on data that are more than 10 years old. This has led to regulators moving toward mandatory data calls to ensure that regulatory work could be supported by current and credible data.

A Strategic Partnership: SOA & LIMRA

In late 2021, the SOA Research Institute and LIMRA entered a partnership to address the industry challenges related to the studies. The two nonprofit organizations aimed to provide current, credible experience data for various life, annuity and health insurance products with strong industrywide participation. Through the collaboration, the goal was to satisfy both insurer and regulatory data needs and hopefully minimize the need for additional mandatory data calls in the future. The partnership also would provide a mechanism to respond to regulatory questions regarding study results and underlying data.

Progress

We are pleased with the progress made to date. In 2023, SOA and LIMRA released results for four industry studies, followed by five studies in 2024. This continuing momentum helps us ensure that data for these important industry benchmarks are relevant and current.

In 2024, a volunteer group of chief actuaries provided feedback on our approach, leading to recommendations for changes in 2025. The main changes include moving toward more frequent data tool updates for key products and experience factors, transitioning to a subscription funding model and establishing a feedback mechanism that includes both industry advisory groups and regulatory input.

A New Approach

The new subscription model replaces the current pay-as-you-go model, allowing the focus to shift from the administrative tasks around offering the studies individually to conducting more experience studies. Subscribers will have access to all studies released each year, with pricing based directly on the cost to produce the studies. This approach aims to reduce costs over time as efficiency improves.

We aim to achieve a level where six to eight studies can be released annually, ensuring that no study data is older than five years. This will improve the cadence of studies and maintain up-to-date data. The advisory groups will guide the frequency of updates and supply ongoing feedback to improve the process.

The goal is to create a sustainable model that allows as much of the industry as possible to participate in the studies, including some of the smaller companies that may not have had access to this kind of data historically. Currently, we have over 30 carriers committed to providing their data, which — for many studies — represents nearly 80 percent of the in-force market.

Regulators are also providing feedback to ensure their needs are met. To date, the LIMRA-SOA partnership has been beneficial, with regulators already using the data and receiving custom views and answers to their questions.

The insurance industry is on the brink of a new era in experience studies. With the partnership between SOA and LIMRA, the industry is poised to benefit from more current and accurate data. This will ultimately lead to better decision making, improved product health assessments, and a more robust basis to support the regulatory framework.

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