The insurance Industry currently operates with A1949-52 mortality tables, which are rather outdated. Mortality and morbidity rates are used by insurance companies for pricing insurance products and for actuarial valuation of insurance business portfolios. Mortality data is also critical in pension design and valuation. A study on mortality and morbidity can also assist in obtaining data on the impact of HIV/AIDS on insurance. Data on mortality and morbidity is also important at a national level because it facilitates efficient and effective decisions in resource planning and utilization especially in provision of medical services. The main goal of this project was to strengthen the insurance industry in Kenya. The purpose and key output of the project was to develop updated tables on mortality and morbidity. The project commenced on 1st July 2005 .The project entailed an investigation of mortality and morbidity and was completed in September 2007.The project was funded by FIRST Initiative (FIRST is a multi donor grant facility providing technical assistance to promote financial sector deepening).It was conducted over a period of two years in four phases namely:
- Ordinary Assured Lives Mortality Experience
- Group lives Mortality Experience
- Annuitants Mortality Experience
- Morbidity Experience
The project consultant was Alexander Forbes Financial services. Project reports were peer reviewed by Qundiem Consulting of South Africa.
The KE 2001-2003 Tables for Assured Lives are published. One of the amendments in the National Budget for year 2011/2012 that took effect on 9th June 2011 is legal notice No. 51. The Seventh Schedule paragraph (1) of the Insurance (Amendment) Regulations 2010 was amended to adopt KE 2001 – 2003 Tables for Assured Lives mortality rates are now used in calculating theliability under life policies.
The initial study covered the period 2001 to 2003. While the study was a great success, the three year period covered by the study was too short. Concerns were raised by both the Actuarial team and the Peer Review team regarding the quality of data because this was the first time such an exercise was being carried out in Kenya. They recommended that the review should be done after a five year period as this would improve the data quality and subsequently impact on quality of the tables.
The AKI Board made a decision to carry out a review of the mortality tables to cover the period 2004 to 2010. This would ensure that the tables give a better understanding of emerging risks and trends in the market.
AKI has engaged Alexander Forbes to carry out the review exercise, which is currently on-going.