FORT WASHINGTON, PA — A recent internal review conducted by Coventry, a leading figure in the life settlement industry, has shone a spotlight on potentially misleading life expectancy estimates provided by Lapetus Solutions, Inc. The findings indicate that these estimates are significantly shorter than those issued by other prominent life expectancy providers, raising questions about the valuation of life insurance policies and the possible financial repercussions for investors.
According to Coventry’s analysis, which encompassed thousands of life expectancy evaluations, estimates from Lapetus were found to be shorter 85% of the time when comparing identical cases against other top providers. This discrepancy is attributed to Lapetus’ reliance on general population mortality tables rather than those based on the insured population, which is the standard practice for life settlement underwriting. Given that individuals over 65 typically exhibit longer life expectancies than the broader population—by more than three years—the use of a general population mortality table could lead to significantly undervalued life expectancies.
The implications of these findings are far-reaching for the life settlement market. Life expectancy assessments play a crucial role in determining the worth of a life insurance policy in a settlement transaction. If these estimates are inaccurately short, the resulting overvaluation can lead to liquidity challenges and potential financial losses for investors—a scenario that has already unfolded in various instances within the industry.
Alan Buerger, Executive Chairman of Coventry, emphasized the importance of accuracy and reliability in life expectancy projections for the market’s health and investor protection. “It is essential for the integrity of the market and the welfare of investors that life expectancy providers use best practices and issue reliable estimates,” Buerger stated. He further affirmed Coventry’s dedication to adhering to industry regulations and guidelines to safeguard the interests of all stakeholders involved.
This development highlights a need for stringent oversight and adherence to best practices in life expectancy estimation within the life settlement sector. Investors, policyholders, and regulatory bodies will likely watch closely how Lapetus Solutions, Inc. responds to these findings and what measures will be implemented to ensure accurate and reliable valuations moving forward.
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