Using the experiences of other countries in order to better understand the annuity products and their options and guarantees, to examine the potential role these products play in reducing risks for the individuals, and to establish the frameworks for developing and delivering these products, is beneficial for both policymakers and the insurers. Given the significance of this issue, Annuity Insurances Desk of IRC has prepared and released a research report titled “Life Annuity Products: Their Risks, Options, and Guarantees in Selected OECD Member States”, according to Public Relations Office of IRC.
Prepared by Dr. Mahboobeh Alaee, Research Fellow of IRC, the report is originally based on a project conducted by the Organization for Economic Co-operation and Development (OECD) on the life annuity products and their guarantees and serves the purpose of better understanding such products and their features.
The report lays out the criteria that define the further discussions on the annuity products. These criteria accompanied with the classification of various annuity products, provides a common language in order to discuss the annuity products and their associated markets. The report is ended with a discussion about the risks that the providers of such products face and how they manage them.
The annuity product is part of the payments arranged for the pensioners that the report attempts to present the criteria for defining them. Given these criteria and features, the available annuity products are classified into three categories including fixed payment annuity, index payment annuity, and retirement savings with guaranteed income option.
According to the findings of the study, two factors are the major drivers that expose annuity products to risks. The first one is that the product design and the assumptions made to price the product define the initial risks for the annuity provider. The second factor is the potential deviation in the future usage of these assumptions that will lead to the inadequacy of the assets for the liabilities assumed. The management of such risks requires strategies to adjust and reduce them in a proper manner.
Those interested to access and download the Persian full text of the aforementioned research report, please take a visit to https://www.irc.ac.ir/fa-IR/Irc/4946/Articles/view/14643/1575.