Extended mortality risks loom for insurers

Insurers will need reassessment of mortality portfolios.

Concerns loom for the insurance industry as all-cause excess mortality remains elevated four years after the peak of the COVID-19 pandemic, Swiss Re said.

Excess mortality is a measure of the number of deaths above an expected level in a given population. Typically, all-cause excess mortality should be around zero, as the major causes of death remain relatively stable over the long-term baseline assumption.

In the US, excess mortality rates are projected to stay up to 3% higher than pre-pandemic levels by 2033, whilst the UK may see rates 2.5% higher. 

"COVID-19 is far from over. The US reported an average of 1,500 COVID-19 deaths a week for 2023 – comparable to fentanyl or firearm deaths. If this continues, our analysis suggests a potential scenario of elevated excess mortality extending over the next decade,” Paul Murray, CEO L&H Reinsurance at Swiss Re said.

“However, excess mortality can return to pre-pandemic levels much sooner. The first step is to get COVID under control, with measures such as vaccinations for the vulnerable. Over the longer term, medical advancements, a return to regular healthcare services, and the adoption of healthier lifestyle choices will be key,” Murray added.

These figures are driven primarily by respiratory diseases, including COVID-19 and influenza, as well as cardiovascular conditions. 

For insurers, this trend poses significant risks. Elevated excess mortality requires a reassessment of mortality portfolios. 

Insurers may need to adjust underwriting, pricing, and reserving practices to accommodate the increased risk. Prevention programs targeting policyholders could also play a role in mitigating this trend, helping to stabilise mortality rates and improve overall health outcomes.