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Is longevity an insurable risk?
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Orientador(es)
Resumo(s)
In the 18th century, Benjamin Franklin said that "Nothing is certain but death and taxes". The 21st-century adaptation of this famous expression could be "nothing is certain but longevity and taxes." Longevity risk is a critical risk for institutions that provide life-long payments such as pension funds, annuity providers and public pension schemes. The amount of unfunded liabilities institutions face will be massive if their beneficiaries live considerably longer than expected. This paper addresses the problem of longevity risk and discusses the ways in which individuals, life assurers, annuity providers and pension plans can manage their exposure to this risk. We discuss whether the traditional insurance mechanism, involving risk transfer and pooling, can deal appropriately with longevity risk. We then review longevity risk management solutions, comprising both traditional insurance and reinsurance techniques and recently developed capital market instruments.
Descrição
Bravo, J. M., & Díaz-Giménez, J. (2014). Is longevity an insurable risk? Hedging the unhedgeable. (pp. 1). (Papers Mi Jubilación; No. 9). Instituto BBVA de Pensiones.
Palavras-chave
Public pensions Longevity risk Capital market instruments Insurance