Milliman has performed a series of policyholder behavior experience studies on variable annuities using predictive analytics, starting with an industry lapse study. The goal of our Milliman VALUESTM series is to evaluate and improve common assumptions using advanced analytics, and to provide implementable suggestions.
We recently completed a study looking at GLWB utilization. Our 2016 Milliman VALUES GLWB Utilization study included two million policyholders from seven large VA writers, representing roughly $220 billion of account value (based on initial purchase amounts) and covering a range of GLWB product designs as well as demographic attributes. Our experience spanned from 2007 through 2015. Along with lapse, a company’s utilization assumption is a key driver of VA business value, so this study represents a logical next step in understanding policyholder behavior. We studied both when the policyholders chose to begin taking lifetime withdrawals, as well as how efficiently they continued to take them thereafter. We were able to confirm and, more importantly, quantify many intuitive assumptions about these behaviors and what drives them, and discovered new insights as well.