Too early to tell how coronavirus impacts disability insurance

Global reinsurers are at the forefront of initiatives to better understand the impact of coronavirus on global morbidity and mortality rates. Their understanding of the disease, its transmission mechanisms, and the outlook for coronavirus therapies, treatments, and vaccines is growing with each passing month; but while the first wave offers clear insights into mortality outcomes, we may have to wait some time before the morbidity trends emerge. Dr Andreas Armuss, Chief Medical Officer of Asia, Pacific, Middle East, and Africa at Munich Re, updated a group of Munich Re clients on the latest findings during a webinar held 28 July 2020.

A rising tide of infection

Dr Armuss’ presentation started with a regional overview of the global epidemiological situation. According to the World Health Organisation (WHO) there have been more than 8000 confirmed coronavirus infections per million population in the Americas, followed by 3416 in Europe, and 1990 in the Eastern Mediterranean. The United States dominates the country infection tables, with more than four million confirmed cases to date, followed by Brazil (2.287 million); India (1.336 million); Russia (806 720); and South Africa (421 996). Most of these countries are at slightly different positions on the infection curve; but there is hope that South Africa is nearing the peak of the so-called first wave. Dr Armuss suggested we might see the peak of daily confirmed cases in the next week or two. 

There have been no significant new findings around the symptoms or comorbidities associated with the disease. Symptoms such as fever, dry cough, fatigue, sore throat, shortness of breath, and losing smell and taste have been repeated ad infinitum. And we already know that age, obesity, diabetes, heart disease, and hypertension, among others, are on a long list of conditions that place individuals at a higher risk of adverse coronavirus outcomes. An encouraging development is that scientists have a better understanding of how the disease presents in the general population. It is now thought that 80-90% of confirmed cases are mild, 5-15% severe, and 1-5% critical. A country’s total infection number could be as much as five to 10 times the confirmed case count. 

Addressing possible overstatements

“At the top of the pyramid [in the critical category] the mortality and morbidity would be high; at the bottom of the pyramid the mortality and morbidity experience will be low or non-existent,” said Dr Armuss. He cautioned that early reporting on the disease relied heavily on hospital reports and thus focused excessively on people who had been admitted to hospital with mild, severe, or critical cases. This focus on the worst-off segment of infected persons can result in the overestimation of certain statistical measures. In the same way the large number of asymptomatic or mild coronavirus infections that go undetected, means that the overall case fatality rate, measured by confirmed deaths over confirmed cases, would be overstated. “Our estimations are that a factor of five to 10 times the confirmed cases will give you an idea of the overall cases in a population,” he said. 

What does the future hold? Munich Re shared three infection scenarios that would play out until such time a vaccine is developed. The first is called ‘peaks and valleys’ which would see repeated waves of similar infection counts, persisting over a 12 to 24 month period. The second, referred to as ‘fall peak’, would exhibit as a first wave followed by a larger second wave and one or more subsequent waves through 2021. And finally, the third, referred to as ‘slow burn’, would see ongoing transmission and case occurrences after an initial wave, but without a clear pattern. “South Africa has not yet reached the first peak, whereas a lot of other countries have,” said Dr Armuss, before adding that variables such as mitigation measures, individual compliance behaviour, seasonality, and availability of vaccine would affect how scenarios played out. 

Impact on life and health insurance

Insurance and reinsurance businesses must consider both the direct and indirect impacts of coronavirus on their expected morbidity and mortality experiences. “There is a direct medical impact from the infection  which is particularly relevant for critical illness and mortality covers,” said Dr Armuss. “And then we have the indirect impact on our business, when we talk about morbidity products such as disability insurance, where we must consider the impact of mitigation measures”. Questions that concern the industry include: How will lockdown impact on mental health? How has lockdown affected screening and treatment protocols for various dread diseases. And how will the long term economic impact, including factors such as rising unemployment, affect disability insurance claims? 

Munich Re concluded that the impact on life and health business due to mortality and critical illness events would depend on future epidemiologic development and the specific critical illnesses on cover. They did not expect COVID-19 to significantly impact the life risk business given the impact on mortality observed to date. An interesting aside is that insured populations exhibit better mortality than the general population, due to factors such as socioeconomic status and fewer health-related risks. But it is not possible to make accurate disability claims projections at this stage. “There are so many variables to consider,” concluded Dr Armuss. “There many dependencies and uncertainties involved when we talk about the impact of COVID-19 on disability”. 

Writer’s thoughts:
The statistics and trends discussed by Munich Re are of interest to financial advisers who structure death, critical illness, and disability solutions for their clients. It would appear, from this early assessment, that critical illness and disability premiums could come under pressure in the next two years. Are you happy with the communication you have received from your life product providers regarding the possible impact of COVID-19 on premium? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

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