For mortality analysis in life insurance, Actual/Expected(A/E) is generally greater than 100 percent in first policy year. Can someone give any kind of explanation for this kind of trend?
Basically, at the time of product designing, we are using older IALM tables, 2006-08 or 1994-96, which causes us to expect deaths according to those tables. But, actual deaths are not according to any table. They are what they are. So this makes the actual deaths more than the expected ones, which makes A/E greater than 100%. This is my understanding. In case you have any other logic or explanation, please do share. Regards, Shyam
