French motor mortality tables may be overstating life expectancy for the most severely injured road accident victims, new Howden Re analysis suggests
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A new report from Howden Re's From Research to Risk series, produced in collaboration with Stéphane Loisel of the Cnam (Conservatoire national des arts et métiers), examines whether the mortality tables currently used to capitalise and reserve for catastrophic road traffic injuries in France adequately reflect the elevated mortality risk faced by victims with traumatic brain injuries (TBI) and spinal cord injuries (SCI).
Drawing on international actuarial research from the UK, Australia and New Zealand, the report finds that standardised mortality ratios for these injury types are typically two to three times higher than the general population, with some severe cases showing ratios above five. The research also suggests these victims have not benefited from the same longevity improvements seen in the wider population in recent decades, meaning the use of recent or prospective general-population mortality tables, as is common practice on the French market, risks materially overstating life expectancy and, by extension, capital and reserve requirements for lifetime annuities.
The illustrative calculations show that for a 25-year-old man, doubling baseline mortality rates would reduce residual life expectancy by 13%; tripling them would reduce it by 22%. Given that severe corporal injury claims often sit at the heart of non-proportional motor liability reinsurance, even modest adjustments to mortality assumptions can have an outsized effect on ceded claims costs once they cross treaty priorities.
Importantly, the report cautions against simplistic fixes. Age shifts or flat multiplicative adjustments to mortality rates don't hold up well against the data: the appropriate adjustment factor varies by time since injury, sex, severity and injury type, and the surmortality effect itself tends to diminish the longer a victim survives past the initial post-accident period.
"The international evidence tells us is that this isn't a question that can be solved with a single multiplier," said Adrien de Tessières, Head of Analytics at Howden Re Paris. "The relationship between injury severity, time since accident and mortality is complex, and this kind of granular, evidence-based approach is exactly where we think we can add real value for our clients on the French market."
Thomas Kroely, Managing Director for France, Belgium and Luxemburg, Howden Re, added: "Work like this reflects the level of technical depth we want to bring to clients on these issues. The mortality assumptions underpinning severe bodily injury reserves and reinsurance pricing deserve this kind of rigorous, research-led scrutiny, and we're keen to keep engaging with clients who want to explore what it means for their own portfolios."
The report builds on earlier work by France Assureurs and the APREF, and points to the longer-term value of better-segmented mortality assumptions for provisioning, capitalisation and reinsurance pricing on the French market. Howden Re, working with Stéphane Loisel, continues to track developments in this area to better inform its clients thinking through these questions for their own portfolios.