Increasing longevity rates will cause problems for life insurers in the future, a Swiss Re report warns.

The report, “A window into the future: Understanding and predicting longevity”, has found the traditional method of forecasting longevity have not taken into account emerging trends in healthcare.

The researchers say historical medical trends provide indicators to mortality rates for today, but they might not be an indicator for the future.

They looked at lung cancer incidence in UK males since 1948 and saw the participation rate of smoking fall from about 65% of the population in 1948 fall to 20% in 2009.

The lung cancer incidence rate per 100,000 males fell from almost 120 individuals in 1975 to 60 in 2009.

But the researchers say that while public health initiatives played a role in the fall in the number of smokers, future success in improving life expectancy relating to smoking might not be so successful.

“This means new drivers are needed to continue historical trends – a fact often overlooked by standard projection models,” the report says.

“Models failing to consider the importance of historical and emerging information run a greater risk in [wrongly] estimating future trends, producing projections that cannot be readily explained or justified.”

Swiss Re Head of Life and Health Products Alison Martin says the failure to consider the future drivers of mortality in historical predictions will result in under-reserving of longevity risk.

“An improved approach to assessing future longevity is one of the essential components in creating an overall solution to the financial effects of ageing societies,” she said.

“It is only through public and private bodies working together that the wider issue of a sustainable infrastructure for long-term retirement provision can be created.”

The report says an important element of managing longevity risk will be the development of robust, predictive approaches and a disease-centred model.

“The significant investment and the expertise required to develop such an approach would mean that close relationships between insurer and reinsurer are vital,” it says.

“Reinsurers and insurers should also work individually and together to educate potential investors and create demand for capital market solutions. This could address concerns over the finite longevity risk capacity in the insurance industry.”