Conning Research: Potential for Antiselection and Arbitrage in the Life Industry is on the Rise

Hartford, CT, January 22, 2007 – The life insurance industry is facing a change in the way investors, agents and individuals respond to the increasing availability of financial and medical information, according to a new study by Conning Research & Consulting, Inc. New advances in medical technology and the availability of medical, genetic, and lifestyle information increase the threats of antiselection and arbitrage in life insurance, but also present opportunities for insurance companies.

“The threats of information being exploited by investors, agents and individuals against insurers have been around forever, but until recently, the insurance industry viewed them as merely nuisances. Now we see a renewed threat to life insurers due to increases in product complexity and broad dissemination of information that previously had been available only to the insurer,” said Terence Martin, analyst at Conning Research & Consulting. “The emergence of investor-owned insurance, like Life Settlements, may be the tip of the iceberg. However, new product choices and broader availability of information present opportunities for insurers to improve their underwriting, and to create new product features that will be rewarded in the marketplace.”

The Conning Research study, “Arbitrage and Antiselection in Life Insurance: The Information Opportunity,” identifies specific threats and opportunities to the industry, quantifies the possible impact, and analyzes what companies can do to prosper in this new environment.

“Our study looks at the increased number and possible combinations of riders and guarantees, and the resulting inevitable inconsistencies that increase the number of arbitrage opportunities,” said Stephan Christiansen, director of research at Conning Research. “We also analyzed the changes in information availability that may be shifting the information advantage, and quantified a possible 20 percent profit swing for life insurers. This represents a sizeable threat or opportunity depending on the company’s product offerings, and its response to this changing information landscape.”

Arbitrage and Antiselection in Life Insurance: The Information Opportunity is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company’s web site at

About Conning Research & Consulting, Inc.

Conning provides insurance industry analysis to insurers and industry stakeholders. The Conning name has represented excellence in independent insurance industry research for 50 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth insights and analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.