Pricing Risk Analysis Of Life Insurance Products In The Dynamic Mortality

For insurance companies, pricing is the foundation of risk management, and how to forecast the future death rate is a key point during pricing. It is now well known that the human mortality is declining during recent years. Because the uncertainty of future mortality is not considered in the traditional pricing method, the improvement poses a great challenge for life insurance, and will make the companies face great risks.As the dynamic mortality is not embedded in current pricing method, this paper analyzes the pricing risk of life insurance products quantitatively. The main content is as follows. Using Lee-Carter model to simulate the mortality, and predict the development of the urban Chinese population. Afterwards, use the predicted mortality to calculate the actuarial present value and risk measure index under dynamic and static life table separately, and get the impact of mortality improvement. Meanwhile, the sensitive parameter is also considered. The objective of this paper is to apply the stochastic model to predicting mortality, and enhance the effectiveness of pricing, so that insurance companies can develop healthily and stably.