This paper has been prepared by the IFoA’s Collective Defined Contribution (CDC) working party. The purpose is to raise awareness within the actuarial community and pensions industry on the wide range of design options and considerations for CDC solutions, together with a set of principles for the design work, which we believe should apply in most cases. This should also aid understanding of why different designs are better in different circumstances, and why some designs might have certain features that others would avoid.

Distribution channels such as bancassurance, brokers, agents, direct online sales, and insurance aggregators have been key to ensuring premium growth for both life and non-life insurers. However in recent years, an emerging channel known as embedded insurance has started to provide insurers with a brand-new growth driver. In this paper, we first present an introduction to embedded insurance – what it is and how it will shape insurance distribution in the industry. We then introduce a framework to classify embedded insurance recommendation system. Finally, we propose a novel insurance recommendation system using supervised learning algorithms that can be applied to e-commerce platforms. This needs-based collaborative filtering technique recommends one of three insurance products that would be most appropriate for each buyer on the Olist e-commerce platform based on order-level data. Our work is relevant for actuaries in this field interested in the pricing of embedded insurance risk as well as insurers seeking to improve insurance penetration on such platforms.

As the population ages, the provision of adult long-term care (LTC) is one of the major challenges facing the UK and other developed nations. LTC funding for the elderly is complex, reflecting the range and level of services provided, with the total cost depending on the duration of LTC required. Institutional care settings (e.g., nursing/residential care homes) represent the most expensive form of LTC. Planning and funding for institutional LTC requires an understanding of the factors affecting the mortality (and hence duration and cost of care) of such LTC recipients. Using data provided by Bupa, one of the largest LTC providers in Britain, this paper investigates factors affecting the mortality of residents of institutional LTC facilities over the period 2016-2019. Consistent with existing research, most residents were female and had a higher average age profile compared with male residents. For those residents who died during the investigation period, the average length of stay was approximately 1.6 times longer for females relative to males. For both males and females, new residents experienced higher mortality in the first-year post admission compared to existing residents. Variations in the mortality of the residents were analysed by condition, funding status and care type on admission.

This paper provides practical guidance to UK-based financial institutions (UKFIs) that are subject to the “operational resilience” guideline requirements of the Bank of England (BoE), Prudential Regulatory Authority and Financial Conduct Authority, issued in 2021, and fully effective for 31 March 2025. It contains practical suggestions and recommendations to assist UKFIs in implementing the guidelines. The scope of the paper covers issues related to (a) overviewing the latest equivalent operational resilience guidance in other countries and internationally (b) identifying key issues related to risk culture, risk appetite, information technology, tolerance setting, risk modelling, scenario planning and customer oriented operational resilience (c) identifying a framework for operational resilience based on a thorough understanding of these parameters and (d) designing and implementing an operational resilience maturity dashboard based on a sample of large UKIFs. The study also contains recommendations for further action, including enhanced controls and operational risk management frameworks. It concludes by identifying imperative policy actions to ensure that the implementation of the guidelines is more effective.

Governments all over the world are struggling to control the spiralling costs of healthcare – the UK government is no exception. Its long-term strategy includes a much greater focus on prevention: to keep people as healthy and productive as possible for longer. This paper asks whether a greater focus on prevention is a possible lifeline for the National Health Service (NHS) as is often claimed, but it also examines other benefits to society. After considering various examples of prevention and the metrics used to measure their effectiveness, we use tobacco consumption as a case study to evaluate the costs to the public purse and to wider society. We give further examples, including obesity, but in less depth. We find that whilst there are significant benefits to public expenditure, including the NHS, in both cases, these are dwarfed by wider benefits to society both in terms of tangible economic benefits and improved well-being. We offer several suggestions for improving our understanding of the effectiveness of prevention policies in general and how the Actuarial profession can contribute to this debate.

Disclosing transition plans to meet future net zero climate targets requires organisations to fundamentally move beyond traditional historical-oriented stewardship reporting towards forward-looking accountability to meet their obligations to their future shareholders and stakeholders. However, despite a range of varying requirements concerning disclosure of climate-related targets to meet the Paris Agreement, confusion remains over the appropriate form, content and standard of transition plan disclosure that are required to implement these targets. The former UK based Transition Plan Taskforce set out globally leading requirements for transition plan reporting in 2023, however the extent to which these recommendations have since been implemented has not yet been comprehensively analysed. This paper summarises the key differences between UK, European and International guidelines for transition plans and then discusses the results of an analysis of variations in transition plan reporting practices by a sample of globally large financial and industrial organisations. It is predicted that a combination of both firm-level climate risk and country-level institutional factors are associated with the propensity to produce public transition plans. The empirical results are largely supportive of these predictions. Firms with greater levels of engagement with climate risk (as proxied by the CDP score), and UK and-or EU based firms, are more likely to produce climate transition plans. The empirical results are corroborated by qualitative analysis, which compares examples of good practice transition plan reporting by a sub-sample of firms within each industry sector. It is concluded that the resulting lack of clarity by regulatory authorities, and diversity in transition plan reporting practices by globally large financial and industrial firms, may potentially result in confusion and a lack of informed decision-making by their stakeholders and policymakers concerning climate-related resilience and risk mitigation actions.

Observed competitive market profit margins in property and casualty insurance have typically been higher than the capital assets pricing model adjustment for risky loss cashflows would suggest. Explanations for this difference include frictions from operating an insurance business and capital risks that are not adequately recognised and rewarded by the theory. It is proposed that the difference may instead be related to the consumption of insurance services and claim fulfilment with an additional fair profit margin evaluated using marginal utility pricing principles.

This research presents the design, pricing, and consumer testing results of a potential private financial product that integrates retirement savings with social care funding through contributions to a supplemental defined contribution pension scheme. With this product, some contributions will be earmarked specifically to cover social care expenses if needed post-retirement. Our research indicates that offering benefits that address both retirement income supplementation and social care funding in a combined approach is appealing to consumers and could help overcome behavioural barriers to planning for social care. As with established defined contribution schemes, this product is designed for distribution in the workplace. Employees can contribute a portion of their earnings to their pension accounts. Employers may partially or fully match these contributions, further incentivising participation. In addition to financial support, participants will gain access to social care coordination services designed to facilitate ageing at home. These services will help retirees navigate care options, coordinate necessary support, and optimise the use of their allocated social care funds, ultimately promoting independence and well-being in later life.

This paper presents a comprehensive analysis of the frequency and severity of accidents involving electric vehicles (EVs) in comparison to internal combustion engine vehicles (ICEVs). It draws on extensive data from Norway from 2020 to 2023, a period characterised by significant EV adoption. We examine over two million registered EVs that collectively account for 28 billion kilometres of travel. In total we have analysed 139 billion kilometres of travel and close to 14,0000 accidents across all fuel types. We supplement this data with data from the Highway Loss Data Institute in the US and Association of British Insurers data in the UK as well as information from the Guy Carpenter large loss motor database.

A thorough analysis comparing accident frequency and severity of EVs with ICEVs in the literature to date has yet to be conducted, which this paper aims to address. This research will assist actuaries and analysts across various domains, including pricing, reserving and reinsurance considerations.

Our findings reveal a notable reduction in the frequency of accidents across all fuel types over time. Specifically, EVs demonstrate a lower accident frequency compared to ICEVs, a trend that may be attributed more to advancements in technology rather than the inherent characteristics of the fuel type, even when adjusted for COVID. Furthermore, our analysis indicates that EVs experience fewer accidents involving single units relative to non-EV and suggests a decrease in driver error and superior performance on regular road types.

Reduction in EV accident frequency of 17% and a change in the distribution of average severity with higher damage costs and lower injury costs leading to an overall reduction of 11%

However, it is important to note that when accidents do occur, the number of units involved as a proxy for severity involving EVs is marginally higher than those involving ICEVs. The average claim cost profile for EVs changes significantly with property damage claims being more expensive and bodily injury claims being less expensive for EVs.

Overall, our research concludes that EVs present a lower risk profile compared to their ICEV counterparts, highlighting the evolving landscape of vehicle safety in the context of increasing EV utilisation.

Fitting loss distributions in insurance is sometimes a dilemma: either you get a good fit for the small/medium losses or for the very large losses. To be able to get both at the same time, this paper studies generalisations and extensions of the Pareto model that initially look like, for example, the Lognormal distribution but have a Pareto or GPD tail. We design a classification of such spliced distributions, which embraces and generalises various existing approaches. Special attention is paid to the geometry of distribution functions and to intuitive interpretations of the parameters, which can ease parameter inference from scarce data. The developed framework gives also new insights into the old Riebesell (power curve) exposure rating method.

Inequality is an inherent quality of society. This paper provides actuarial insights into the recognition, measurement, and consequences of inequality. Key underlying concepts are discussed, with an emphasis on the distinction between inequality of opportunity and inequality of outcome. To better design and maintain approaches and programmes that mitigate its adverse effects, it is important to understand its contributing causes. The paper outlines strategies for reflecting on and addressing inequality in actuarial practice. Actuaries are encouraged to work with policymakers, employers, providers, regulators, and individuals in the design and management of sustainable programmes to address some of the critical issues associated with inequality. These programmes can encourage more equal opportunities and protect against the adverse financial effects of outcomes.