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Life Tables for Assured Lives in Kenya

This document summarizes a research paper that re-thinks how to develop complete life tables for assured lives in Kenya. The paper was published in September 2020 by Joab Odhiambo from the University of Nairobi. It discusses how life tables published in Kenya in 2007 and 2015 can be improved. The author employs an alternative technique of graduating life tables by referencing a standard life table. Additionally, maximum likelihood estimation is used to estimate graduation parameters, rather than weighted least squares. The resulting life table provides a better fit to the data with lower bias.

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Angela Waithira
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113 views2 pages

Life Tables for Assured Lives in Kenya

This document summarizes a research paper that re-thinks how to develop complete life tables for assured lives in Kenya. The paper was published in September 2020 by Joab Odhiambo from the University of Nairobi. It discusses how life tables published in Kenya in 2007 and 2015 can be improved. The author employs an alternative technique of graduating life tables by referencing a standard life table. Additionally, maximum likelihood estimation is used to estimate graduation parameters, rather than weighted least squares. The resulting life table provides a better fit to the data with lower bias.

Uploaded by

Angela Waithira
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

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Re-thinking The Complete Life Table For Assured Lives In Kenya

Article · September 2020

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Joab O. Odhiambo
University of Nairobi
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Re-thinking The Life Tables For Assured Lives In Kenya
Joab Odhiambo, Bsc., MSc.,PhD (Actuarial Science).

University of Nairobi, University Way,

P.O. Box 30197-00100, Nairobi, Kenya.

Author’s Email: joabodhiambo2022@[Link]

September 27, 2020

Abstract
The Kenyan life insurance industry grew by 18.9% from 2017 to 2019. Ordinary life
insurance, the class that comprises all Individual Life policies, is considered in this study.
The cost of life insurance has been identified as a significant factor that affects the uptake
of life insurance. The premium to charge is based on the actuarial present value of the
sum assured. This value (per unit sum assured) is affected by the interest rate selected and
the life table used to portray the uncertainty regarding the time until the death of the life
insured. Kenyan life tables have been published twice (in 2007 and in 2015). The tables
published in 2007 were developed using data whose quality was questionable in part be-
cause the period of study was too short. The tables published in 2015 are based on better
quality data. However, the sample size is still relatively small. Parametric graduation and
graduation with reference to a standard life table are two standard actuarial techniques
used to produce life tables. Parametric graduation is the technique that is currently em-
ployed in developing the Kenyan life table. In this paper, graduation with reference to
a standard life table is employed as an alternative. Additionally, the graduation parame-
ters are estimated using the maximum likelihood technique as well as the more common
weighted least squares estimation technique. The resulting life table is found to provide a
better fit to the data with a lower degree of bias.
KEYWORDS: Mortality Risk, Systematic Longevity Risk, Graduation Methods,
Life tables, Life Assurance.

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