Corona Pandemic: Insights for life insurance providers

The pandemic is disrupting historical mortality rates and complicating future projections. In a recently published study¹, the Swiss Re Institute found that life insurance providers are particularly affected by mortality factors and longer-term health consequences that are still poorly understood.

The studies published to date show that men are more likely than women to die from a coronavirus infection. There are also clear correlations between age and the death rate. According to the Swiss Re Institute, people who are overweight, come from poorer backgrounds and suffer from a number of pre-existing conditions also have a higher risk of becoming severely ill or dying as a result of the coronavirus.

Prevalence in nursing homes
The Swiss Re Institute study, like others, identifies the spread of the virus in nursing homes as one of the main reasons for high mortality rates. In the US alone, 30% to 40% of deaths occurred in nursing homes. A similar pattern has been observed in other Western countries, although with large variations in mortality in nursing homes due to the coronavirus.

In Switzerland, around 49% of the people who died due to the coronavirus did so in a nursing home. However, the proportion of people who died in hospitals after living in a nursing or retirement home cannot be determined. Therefore, the total number of residents of nursing and retirement homes who died in connection with the coronavirus remains unknown. According to the Swiss Federal Office of Public Health, more people died in nursing and retirement homes (2,686 deaths) than in hospitals (2,138) during the second wave.

Effective protective measures in retirement and nursing homes were often introduced too late. According to the Swiss Re Institute, the coronavirus shortened the lives of many nursing and retirement home residents by a few months to several years.

Significant excess mortality
The Swiss Re Institute based its assertions on excess mortality on a study by EuroMOMO (European Mortality Monitoring), which compared excess mortality during the last five years (June 2015 to 12 June 2020) in European countries. According to this evidence, the coronavirus caused significant excess mortality.

More people died than can be attributed to the coronavirus. This is for the following reasons: deaths in nursing homes and other locations were related to the coronavirus, but were not counted as deaths caused by the virus. Premature deaths also occurred because treatments for other diseases such as cancer were interrupted due to the pandemic.

In Switzerland, according to a review by the Swiss Federal Statistical Office, more than 400 additional deaths occurred within one week in mid-April 2020 compared to the normal mortality level. Only the age group over 65 was affected. The coronavirus did not have a statistically significant effect on mortality in younger people.

From mid-October and the onset of the second wave, mortality among those over 65 years of age again rose above the long-term average. Mortality among younger age groups remained within the normal range.

Impact on underwriting
Although the pandemic is not yet over, and more time will be needed before its consequences are fully understood, some important insights are already discernible for life insurance providers. The long-term effects of the infectious disease are of particular interest because they have an impact on current insurance policies and will also influence medical underwriting in the future. Changes in methods to improve the quality of underwriting and revaluations of risks are already underway.

Age
As age plays an important role in relation to coronavirus deaths, the age mix of persons insured in a portfolio may encompass highly varying mortality rates. The Swiss Re Institute also sees evidence of a significant increase in the mortality percentage among younger people – especially those with pre-existing conditions.

Gender
Men infected with the coronavirus suffer a higher rate of death than women. Portfolios with a significantly higher proportion of men are likely to be more heavily affected than those with a more balanced gender ratio.

Health factors
Persons who wish to take out life insurance must usually undergo a health check. Experience has shown that this group enjoys better health than the general population. As pre-existing conditions are an important factor in deaths related to the virus, coronavirus mortality rates are expected to be lower in insurance portfolios than in the general population. Nevertheless, the mortality rate of the insured population will also be higher than the previous average due to the pandemic. Underwriting processes will have to be adapted so that the risks associated with coronavirus illnesses can be assessed more accurately and in greater detail in the future.

Urban versus rural populations 
In a comparison of age-adjusted mortality rates due to coronavirus illnesses based on geographical areas, the Swiss Re Institute has found many indications that large metropolitan areas – in particular international transport hubs – have much higher mortality rates than non-metropolitan areas.

Long-term effects 
Even though we are gaining new knowledge about the infection process on a daily basis, research into the long-term effects of the coronavirus has only just begun. At present, there is little relevant data on significant damage to the health of organs or the consequences for mental illness. As a life insurance provider, we can already incorporate the preliminary insights into our underwriting activities. Key indications of the long-term impact on our business have yet to be established.

Source:
¹Swiss Re Institute, «Unravelling the true death toll of COVID-19», by Priya Dwarakanath and Hengchang Pan, 2020