Once longevity risk can be priced, transferred and reflected in capital decisions, it can no longer be treated as a technical assumption that sits mainly with the actuarial function.
For a long time, many insurers accepted longevity risk as a natural consequence of writing pension and annuity business. Market risks are usually managed through clear limits, hedging policies and risk appetites. Longevity risk has received less explicit strategic attention, even though it is central to the economics of life insurance. Insurers need a clear view on the longevity exposure they want to take on, retain or transfer. That calls for an integrated view across pricing, reserving, reinsurance, strategy and governance: Integral Longevity Risk Management.
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