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The COVID-19 pandemic has caused approximately 1 million deaths in the United States and continues to impact our daily life. Since the beginning of the COVID-19 pandemic in early 2020, we now have much more insight into COVID-19 deaths in the US, including hopes for how the pandemic may wind down because of widespread vaccinations and protection generated from prior infections. While the media has reported how COVID-19 impacts the elderly the most, the data provided by the Centers for Disease Control and Prevention (CDC) may be telling us a more insightful story for middle-aged and younger individuals on the relative to expected mortality rate basis. As such, the experience over the past two years may be instructive for the life insurance industry going forward.
To determine the excess mortality during the COVID-19 pandemic, we utilized the general population data provided by the CDC for our analysis. Currently, the CDC has provided the final official data for 20201 and the provisional data for 20212.
Mortality data used in our analysis are based on all causes of death (not just COVID-19), as the COVID-19 pandemic is impacting the population both directly and indirectly. Though some of these extra deaths were not directly linked to COVID-19 (i.e., not coded as COVID-19 deaths), they may be ascribed to the broader effects of the pandemic, including the societal stress from lockdowns and unemployment, and the pandemic stress both on hospitals’ ability to serve and on sick people’s willingness to go to the hospital.
For our analysis, we define “normal” mortality to be the average mortality of 2017-2019. The following graphs show the excess mortality in 2020 and 2021 versus the “normal” mortality by age group. We first show the deaths with COVID-19 listed as the underlying cause on the death certificate as a percentage of the normal mortality, and then remaining excess deaths are shown as non-COVID deaths.
The press may have reported that the majority of COVID-19 deaths were among the elderly (which is certainly true on an absolute count basis), but there has been limited discussion about the increased mortality risk relative to the expected level of mortality at all adult ages. Obviously, these relative increases are particularly important for insurers, which price for and hold reserves based on mortality rates that vary by age.
While the overall percentages of total mortality increase (vs. “normal”) were near 18% for 2020 and 20% for 2021, the percentage of total mortality increase for different age groups could be significantly different depending on the time elapsed since the pandemic, with a wide range of 4% to 54%. As shown in the above graphs, in both 2020 and 2021, the total relative mortality increase peaks in the 35-44 age group for both males and females. In general, smaller total relative mortality increases were experienced in the older age groups.
In 2020, the relative increase in mortality attributable to COVID-19 was fairly consistent for middle-aged people and the elderly. However, the relative increase in mortality attributable to COVID-19 in 2021 was materially higher for middle-aged people compared to the elderly.
While COVID-19 was one of the main medical causes of increased mortality during the pandemic, the impact of societal changes as a response to the pandemic (e.g., societal stress, delayed healthcare) should also be considered when evaluating the overall mortality impact from the pandemic. These deaths attributable to these societal changes have caused a significant relative increase in the mortality rates of the younger age groups. For example, deaths caused by drug overdose increased by more than 35% during the pandemic for the age group of 35-44.
While slightly higher for younger age groups, in 2020 the total relative mortality increase per age group is relatively steady across age groups. We suspect that there were fewer societal differences between the age groups contributing to the excess levels of mortality in 2020. However, in 2021, the differential is much higher. While the virus may have been similarly lethal by calendar year, there were significant societal differences.
While COVID-19 has not yet finished running its course, we now have more experience to assess the impact of the COVID-19 pandemic on the life insurance industry. There is no doubt that the COVID-19 pandemic has been impacting the insurance industry in many ways (e.g., product development, assumption setting, economic capital). It’s important to consider and understand the potential implications of the COVID-19 pandemic to the industry and the changes life insurers need to consider as a result of the COVID-19 pandemic.
While the media has reported that the COVID-19 pandemic mostly affected older aged people, the data shows that there was an elevated level of relative mortality increase across all age groups, including the main age groups that own life insurance. As we look back on the last couple of years, we collectively have learned a lot about disease, pandemics, and the implications on society. Though insurers may have different experiences from the general population, it is important for the life insurance industry to learn from the experience and make sound decisions for the many implications of how COVID-19 will affect the industry going forward.
1 CDC. Multiple Cause of Death, 1999-2020 Request. Retrieved March 6, 2022, from https://wonder.cdc.gov/mcd-icd10.html.
2 CDC. Provisional Mortality Statistics, 2018 Through Last Month Request. Retrieved March 6, 2022, from https://wonder.cdc.gov/mcd-icd10-provisional.html.
3 LIMRA (March 23, 2022). LIMRA: Challenges Brought On by the Pandemic Highlight the Importance of Family. Retrieved May 19, 2022, from https://www.limra.com/en/newsroom/industry-trends/2022/limra-challenges-brought-on-by-the-pandemic-highlight-the-importance-of-family/#:~:text=According%20to%20LIMRA's%20and%20Life,highest%20growth%20recorded%20since%201983.
How does our experience with COVID-19 impact the life insurance industry going forward?
Insurers need to understand the potential implications of an ongoing COVID-19 pandemic and consider appropriate changes in product, assumptions and capital.