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Actuarial study helps payment predictions

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  • 04/12/2001
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A study conducted by the Actuarial Profession, the actuaries' trade body, has revealed how insurance...

A study conducted by the Actuarial Profession, the actuaries’ trade body, has revealed how insurance industry techniques can assist mortgage lenders to measure and predict pre-payment behaviour and manage its impact more effectively.

The six-month study focusing on fixed rate mortgages is the first in the UK to look at pre-payment risk across the banking industry and shows methods of predicting life and motor insurance are applicable to mortgage pre-payment risk. The study involved eight of the country’s top lenders, and was commissioned in order to raise the profile of the actuarial profession in this sector.

David Prosser, group chief executive of Legal & General, said: ‘By illustrating the techniques that may be applied in the context of pre-payment risk on mortgages, this report may encourage others to include actuaries in their own management teams.’


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