Longevity Risk for Pension Insurers and Schemes
According to Ash Williams, risk settlement partner at XPS Group, insurers are better equipped to manage longevity risk than pension schemes.
Williams, speaking at the XPS Group's 2025 Pensions Conference, identified three key tools insurers use to manage this risk: reinsurance, natural hedges, and risk pooling.
"[Insurers] have the way they have built their liability from the outset. They can write insurance products that provide some natural hedges,"
He noted that each individual insurer approaches risk management differently, but overall, insurers tend to manage longevity risk more effectively than pension schemes.
Longevity risk refers to the possibility that life expectancies and survival rates exceed expectations, resulting in increased cash flow needs for insurance companies or pension funds.
Ash Williams: Insurers manage longevity risk better.