"Is it just me, or are annuity experience studies actuaries walking a little taller these days? More spring in their step? Maybe even making eye contact?
Perhaps that’s because of the exalted importance of understanding policyholder behavior to principles-based reserves and capital and the continued importance of that knowledge to product development in order to set appropriate charges and create accurate financial projections. To the font of this wisdom, the experience studies actuary, all hail!
But with increased importance comes increased difficulty. Policyholder behavior is key to the actual cost of guarantees commonly offered on both variable and fixed index annuities. It is hard to measure and predict because of its many dimensions, the possibility of either false or missed positives, and the difficulty of knowing the mindset of these sometimes very human contract owners."