Island Life

(Nov 10, 2009)

We have written extensively about the use of postcodes and geodemographics for mortality modelling.  Two peer-reviewed papers recently presented to the Institute of Actuaries in London have testified to the power of geodemographics when applied to pensioner mortality: Richards (2008) and Madrigal et al (2009).

One feature of standard U.K. postcode profilers is that they typically exclude the crown dependencies, which are not legally part of the United Kingdom.  This makes it impossible to assign a geodemographic type, despite the fact that crown dependencies often have a postcode system which follows the same hierarchical structure as that of the UK.  Postcodes for crown dependencies are therefore…

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Tags: postcodes, geodemographics, Mosaic, Acorn, Guernsey, Jersey, Isle of Man

How wrong could it be?

(Apr 23, 2009)

We have written previously about the importance of the independence assumption when modelling mortality for annuities and pensions. In a recent presentation to the Royal Statistical Society I showed the audience how life insurers deduplicate their annuity data and how they use postcodes to identify socio-economic status.

When I pointed out the strong link between income, status and multiple policies, a member of the audience asked about the impact of failing to deduplicate. This is an interesting question, since getting mortality assumptions correct for annuity pricing is particularly important due to the great sensitivity of profitability on reserve levels.

We therefore fitted a simple Perks model…

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Tags: deduplication, mortality, annuities, geodemographics, Mosaic

Self-prophesying models

(Sep 2, 2008)

A phenomenon to watch for is that of the "self-prophesying model".  It occurs when a variable is too specific to the mortality experience of a reference portfolio to have wider application.  It has been claimed that the risk of this increases for smaller data sets and more lifestyle categories. In fact, the error is actually most likely where there is a small number of lives in each sub-group prior to grouping.  This is simply because the impact of random variation is largest in very small groups.

As an illustration of this, consider the apparently reasonable alternative of using postcode sector instead of a geodemographic type.  The postcode sector is basically everything except the last two characters…

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Tags: postcodes, profiling, geodemographics, Mosaic, Acorn, CAMEO, postcode sector

More on postcodes

(Aug 8, 2008)

Following my entry on postcode profiling, I have been asked two further questions. The first is whether you have to use Experian's Mosaic system. The answer is no, and there are other profiling systems which also work well in the United Kingdom. There are equivalent systems such as Acorn (from CACI Ltd) and CAMEO (from Eurodirect), and these work as well as Mosaic.

The second question was what do you do if you want to analyse non-UK data where there is no postcode. The answer is that you can still use a geodemographic profiler, but you need to use the whole address. Both Mosaic and CAMEO are available in countries outside the UK, including USA, Canada, the Netherlands, France and Germany (and many more). By using the…

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Tags: postcodes, profiling, geodemographics, Mosaic, Acorn, CAMEO


(Aug 1, 2008)

There is some degree of confusion over what people mean by "postcode" when applied to modelling mortality in the United Kingdom. There are varying ways of using postcodes, depending how much of the full postcode is actually used. To illustrate, we will use the postcode of our office here in Edinburgh, which is EH11 2AS.

The EH part of our postcode is called the postcode region, of which there are 124 in the UK. This if often what people think of when they talk about postcodes and mortality, as the UK has large differences in mortality and longevity around the regions. However, with an estimated population of 60.6 million in mid-2006 according to the Office for National Statistics, there are hundreds of…

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Tags: postcodes, profiling, geodemographics, Mosaic

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