Category Life Insurance

Seven mortality accelerators to rule them all

15 September 2021 Gareth Stokes

The impact of the Covid-19 pandemic on mortality trends will vary from one population to the next, with a general population likely to have a slightly worse experience than an insured population. Looking specifically at data from the US, UK and South Africa, Chris Falkous, VP, Senior Biometric Insights Actuary at RGA UK, shared his observations during a ‘Covid-19 versus the world’ webinar that explored changes in mortality under the pandemic. He identified seven key mortality drivers that life insurers and reinsurers will be watching closely over the coming years. This article offers some brief insights under each of the seven factors mentioned.

  1. Acceleration of death

During the early stages of the pandemic, it was suggested that as many as two thirds of people who had succumbed to the disease would have died within the next year or two anyway. However, findings were presented that show acceleration of deaths is not likely to have a significant impact on future mortality rates for most of the general population. The possible exception being those older individuals in care homes, since a significant proportion of care home residents who died from COVID-19 would have been expected to die in the near term from other causes. 

  1. Impact on survivors

The impact of Covid-19 on survivors is difficult to calculate given that the exact number of survivors remains unknown. Falkous said that confirmed infections offered a good starting point, with the United Kingdom (UK) and United States (US) leading the way at around 10% of their respective populations. Canada and South Africa show around 4% of total populations as having a confirmed infection; but the actual infection rates will be much higher. It is, for example, estimated that as many as 36% of US citizens of all ages have been infected and 30% in the UK. Most of these infections resulted in mild cases of Covid-19 that required no hospitalisation… Even so, there are growing concerns about the longer term impact of the disease.

Recent studies show that one in three infected persons still have at least one symptom of the illness up to seven months post infection. And for those who have been hospitalised, things are much worse. According to a research paper published in the British Medical Journal, hospitalised patients are up to 3.5 times more likely to be readmitted to hospital; 27 times more likely to have a new onset of  respiratory disease; five times more likely to have a new onset of a major cardiovascular event; and eight times more likely to die compared to people who have not had Covid-19 but are similar in terms of age, demographic profile and socioeconomic status. “There will be an ongoing [and significant] impact on the mortality curve for the people who have been hospitalised with Covid-19,” predicted Falkous. 

However, while survivors of COVID-19 who had been hospitalised see a significant impact on their mortality, most survivors will have had mild disease. Due to the relatively small proportion of the population that has been hospitalised with COVID-19, the mortality impact is not expected to be as significant for the population as a whole. 

  1. Impact on non-Covid healthcare

Global in-country responses to pandemic have had a huge impact on the provision of non-Covid healthcare. National Health Service (NHS) statistics from the UK confirm that thousands of GP referrals did not take place during hard lockdown, with the healthcare system struggling to make up for these ‘missed appointments’ since. A recent study published in the British Medical Journal concluded that a four week delay in surgery for certain types of cancers could increase the risk of death by 6-8%. “The National Cancer Institute in the US [has also] estimated that delays related to breast and colorectal cancers could increase deaths by 1%, which estimate could be too low because it does not allow for additional morbidity from cancers being diagnosed at later stages due to delays in testing,” said Falkous. RGA concluded that delays in diagnosis and treatment caused by pandemic and lockdown would become one of the most significant factors causing higher mortality rates over the next few years. 

  1. Seasonal flu

The various interventions put in place to stop the spread of Covid-19 have had a huge impact on flu infections, due to flu being less transmissible by comparison. Scientists are now debating whether the low occurrence of seasonal flu during pandemic will leave populations more susceptible to future flu infections. “There are concerns that populations might be more susceptible to seasonal flu because we have disrupted the natural immunity process,” said Falkous. He used statistics from the US CDC to illustrate. In that country, seasonal flu causes around 40000 deaths per year, with a bad year topping 60000 deaths. There were a few takeaways from this section of the presentation, including that the Covid-19 mortality experience was way worse than that of seasonal flu and that the general population might face “milder ‘mild’ flu seasons and more extreme ‘bad’ flu seasons” in coming years. It is unlikely, however, that seasonal flu will have a big impact on future mortality. 

  1. Vaccines and variants

The discussion about the potential impact of vaccines and variants on future population mortality rates was too complex to unpack in this newsletter… Suffice to say that the attainment of population immunity, which is held up as the holy grail of improved mortality outcomes, is way more difficult to achieve than initially thought. Although vaccines are widely available and extremely effective, there are countless in-country risks such as insufficient vaccine supply; vaccine hesitancy and the emergence of new, highly transmissible strains. By way of example, the so-called delta variant of Covid-19 proved to be around 60% more transmissible than the alpha strain, and up to three times more severe. 

For the US to achieve population immunity, it is estimated that it would require around 80% of the population to have developed protection from either the vaccine or prior infection. But not everyone is eligible for the vaccine and the vaccine does not provide perfect protection. An example in the presentation demonstrated that, on the assumptions adopted, if 80% of the eligible population is vaccinated it would not be sufficient to achieve the estimated herd immunity threshold for the current delta variant. 

Actuaries are already running complex models with a range of assumptions to estimate the number of deaths that would ensue from different vaccination levels; but it is far from an exact science. “It will be quite a challenge to reach population immunity, even for a country like the US which is doing reasonably well [in terms of vaccinations],” commented Falkous. To further complicate things, the protection from vaccinations could wane over time and may prove less effective against new strains. 

  1. Recession

There have been many pre-pandemic studies on the impact of economic recession on mortality rates. “There are arguments that mortality can both decrease and increase within a declining economy,” said Falkous. Economic hardship could, for example, force individuals to abandon alcohol and cigarettes due to cost… They might also travel less and thereby reduce motor vehicle accidents and deaths. Unfortunately, initial studies out of the US suggest that all three of these mortality factors were headed in the wrong direction through lockdown. 

Alcohol consumption was up, cigarette sales were flat (meaning that the recent annual declines in sales had stalled) and quit attempts were down, and motor vehicle fatalities per million miles travelled were also up. “The arguments linking recessions and mortality do not necessarily hold in the pandemic context,” he said. There are, however, studies that show a close link to excess mortality and recession-related job losses. US studies point to a 2.4% rise in mortality rates due to high unemployment following the Great Recession, which initially equated to 840000 excess deaths in the current scenario. The good news is that US employment figures rebounded quickly following the pandemic recession, making such a severe mortality experience unlikely. 

  1. RNA therapeutics

The final of seven factors considered during the presentation, was the possible impact of mRNA therapies in reducing mortality experiences due to other diseases. There are many mRNA vaccines in various phases of development; but none are seen as viable mortality influencers in the near term. “The pandemic has probably slowed some of these vaccine developments down as the focus shifted to Covid-19; but there is a renewed interest in new vaccines and a huge amount of money now being poured into the industry,” said Falkous. 

He added that while developing successful vaccines for certain cancers or HIV would be huge news, some of the mRNA vaccines in development would not necessarily move the needle in terms of global mortality trends. While a successful HIV vaccine may not significantly affect mortality trends in the US, it could have a significant impact on mortality in South Africa. 

After assessing the seven mortality accelerators, the conclusion is that the Covid-19 pandemic will have a negative impact on the mortality experience of both general and insured populations, though the insured population experience will be markedly better in comparison. And the reinsurer says that although the impact of pandemic on mortality rates among insured populations is noteworthy, it is likely to be less severe than initially feared.

Writer’s thoughts:
The Reinsurance Group of America, Incorporated (RGA) ‘Covid-19 versus the world’ webinar illustrated the monumental task facing actuaries in calculating the future impact of the disease and pricing risk policies to reflect that new reality. Local life insurers are already reporting significant divergences from expected mortality during the first, second and third waves of infection. And claims pay-outs due to death have increased in line with this experience. Do you expect life insurance premiums to increase sharply as insurers and reinsurers realise the true impact of this disease? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts






Added by Lidia, 15 Sep 2021
Yes, I do expect life insurance premiums to increase sharply as insurers and reinsurers realise the true impact of this disease. In fact we have seen increases in the region of 30 - 45% at recent annual rate reviews, which is quite concerning.
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