Discussion Paper WP1905

Abstract
Since 2011 ongoing improvements in life expectancy and the mortality rate have been interrupted leading to the failure of actuarial models and higher than expected life insurance pay-outs. This has occurred to varying degrees across all the developed countries. This study presents evidence that deaths follow a curious pattern of on/off switching which can be demonstrated to occur in the 126 countries where monthly deaths data is available for analysis. This on/off switching can be documented to occur from the 1980’s to the present. At switch-on monthly deaths suddenly jump to a new and higher level, remain high for around 12-months, and then suddenly revert to the former baseline where they stay until the next switch-on event arrives. Switch-on can seemingly occur in any month of the year, i.e. factors such as season and temperature can be excluded as causes for the behaviour, with the magnitude of the increase diminishing as the spatial area increases. On average, switch-on occurs around once evert three years. At an international level switch-on appears to cluster in time. Attempts to investigate period and cohort effect using calendar year data will therefore be hindered since a calendar year can contain a mix of on/off behaviour. Artefactual outputs from the method were excluded by analysis of monthly temperature and sunspot numbers.  
Key Words
On/off switching; deaths; actuarial models; period and cohort effects; life insurance costs  

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