Insurers may need to adapt their underwriting philosophies, risk appetite, and mortality assumptions in pricing and reserving to account for an ongoing increase in mortality rates in the UK and US since the start of the pandemic.
This is according to Swiss Re Institute’s report The future of excess mortality after Covid-19 which concludes that if the fallout from the pandemic is not curtailed, excess mortality rates in the general population may remain up to 3% higher than pre-pandemic levels in the US and 2.5% in the UK by 2033.
The report explains 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.
It adds fluctuations in excess mortality tend to be short-term, reflecting developments such as a large-scale medical breakthrough or the negative impact of a large epidemic.
But the report’s authors point out that while societies tend to absorb these events, with excess mortality reverting to the baseline, this has not proven the case with Covid and all-cause excess mortality is still above the pre-pandemic baseline.
In 2021, excess mortality spiked to 23% above the 2019 baseline in the US, and 11% in the UK.
As Swiss Re Institute’s report estimates, in 2023, it remained significantly elevated in the range of 3–7% for the US, and 5–8% for the UK.
Excess mortality may remain high
Should underlying drivers of current excess mortality continue, Swiss Re Institute’s analysis estimates that excess mortality may remain as high as 3% for the US and 2.5% for the UK by 2033.
It adds the primary driving factor of both current and future excess mortality is respiratory disease – including Covid-19 and influenza, with other causes including cardiovascular disease, cancer and metabolic illnesses.
The cause of death split varies by a country’s reporting mechanism.
The report examines an optimistic scenario where excess mortality rates return to pre-pandemic levels as early as 2028.
In this scenario, medical advances, such as weight loss injectables and cancer developments such as personalised MRNA vaccines, combine with a drop in the impact of Covid-19 and healthier lifestyle choices.
Indirect impact of CVD mortality
The report explains the interplay between Covid-19 and cardiovascular death rates is seen as significant for excess mortality.
The virus itself has a direct impact because it contributes to causes of death such as heart failure.
Furthermore, the report’s authors point out Covid-19 has had an indirect impact via the disruption to healthcare systems – a factor which emerged in the pandemic years.
This disruption has led to a backlog of essential cardiac tests and surgeries, meaning that conditions such as hypertension have been underdiagnosed and therefore not treated.
Implications for UK and US insurers
While the report’s authors consider current levels of excess mortality an area of concern, they add a range of tools are available for insurers and reinsurers to manage this trend.
Specific actions include adapting the underwriting philosophy, risk appetite, and mortality assumptions in pricing and reserving.
They also say insurers can be proactive in targeting prevention programmes for policyholders, helping them in the joint effort to support longer, healthier lives.
Getting Covid under control is key
Paul Murray, CEO life and health reinsurance at Swiss Re, said: “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.
“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.”