RGA’s Actuarial Validation of Milliman Irix® Risk Score 3.0 with Credit
The reinsurer found that adding Credit Data to Risk Score helped capture exposure with lower mortality risks in less-risky deciles and further segment exposure at higher risks.
Working from a very large data set, RGA performed a mortality study with 236M exposure years and 1.7 million deaths. The reinsurer established a baseline for Risk Score 3.0 with Prescription Data only, then looked at the impact of adding Credit Data (with or without Medical Data). The authors concluded that:
- Risk Score with Credit Data is more effective at finding people with lower mortality risks in lower deciles.
- Adding Credit Data to Risk Score (with Prescription Data and Medical Data) increased hit rates and significantly improved risk segmentation.
- Among people with prescription histories that indicate poor risk, adding Credit Data can further segment mortality risks.
The implication of RGA’s report is that by incorporating Credit Data, Risk Score clients may find that they can issue or accelerate more quality business.
This effect is most noticeable at either end of the risk spectrum. Carriers who incorporate Credit Data may identify additional applicants who represent exceptionally good risks. Applicants who, based on prescription histories alone, might otherwise appear to present unacceptable risks could also benefit from the improved segmentation made possible by Credit Data.
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