UK- Regulator questions higher life expectancy reinsurance
Friday, 02 19 2016, Category: Insurance and Reinsurance, Country: United Kingdom
Britain's insurers should not reinsure themselves against people living longer in the belief that it will directly reduce the amount of capital they are required to hold, the Bank of England said on Wednesday.
Life insurers often insure themselves against so-called longevity risk -- the risk of increasing life expectancy resulting in higher than expected pension pay outs.
New EU "Solvency II" rules introduced last month give insurers an extra incentive to mitigate longevity risk by way of reinsurance to lessen capital requirements, said Andrew Bulley, director of life insurance at the BoE's Prudential Regulation Authority.