Post-COVID 19 ‘excess mortality’ rates could remain high for another decade

COVID-19 might seem like a distant memory but for life insurance executives unexpectedly high mortality rates remain a stubborn reminder.

And it’s starting to look like it might not correct itself anytime soon.

During recent third-quarter earnings calls, life insurance executives conceded that mortality assumptions might need to be reconsidered in light of new data.

In particular, a recent Swiss Re Research Institute report concluded that excess mortality is likely to persist for as long as another decade. Excess mortality is a data point that insurers watch very closely.

“Under an optimistic scenario, we find that U.S. and U.K. pandemic-linked excess mortality would disappear by 2028, reverting to pre-pandemic mortality expectations,” Swiss Re concluded. Under a pessimistic scenario, we expect excess mortality to remain elevated until 2033, above pre-pandemic expectations.”

Yanela Frias is executive vice president and chief financial officer for Prudential. During a recent call with Wall Street analysts, she confirmed that the insurer is now taking the long view of mortality.

Accurate and conservative mortality assumptions are a pillar of the life insurance paradigm because they guide financial planning.

“The observations and the expectations from the report are consistent with our internal view and with the approach that we have taken our mortality assumptions,” Frias said. “We have experienced mortality that is broadly in line with expectations since updating our mortality-based table assumptions in 2022.”

The individual life insured population is less impacted by COVID-19 than the general population, Frias explained. But Prudential’s PRT mortality experience “has trended heavier in 2023 that is consistent with continued excess mortality,” she added.

Variety of COVID-related causes

In a report titled “The Future of Excess Mortality After COVID-19,” Swiss Re researchers developed methodology for cross-country comparison of pandemic-era excess mortality.

The data revealed four key patterns: in the United States, excess mortality peaked early and declined rapidly. In contrast, the United Kingdom’s early peak was followed by a slower decline. Australia delayed its peak by close to two years and achieved a quick decline. Canada reported very low excess mortality in 2020, with a gradual increase peaking in 2022 and 2023, “reflecting a late peak and slow decline,” the report said.

“These patterns correlate with countries’ responses to COVID-19, specifically the timing and effectiveness of preventive measures and the rate at which mortality returned to expected levels,” researchers wrote.

The pandemic “significantly altered” the causes of excess deaths, the report concluded. Respiratory mortality accounts for the largest share of excess deaths each year since 2020, researcher wrote.

“However, we find evidence of inconsistency in the causes of death recorded over this period, with signs that other causes of death were misclassified as COVID-19,” the report said.

Both the U.K. and U.S. saw a “large, unexplained jump in deaths attributed to cardiovascular disease” since 2020. Some countries also reported excess mortality for other major causes of death, such as cancer, the report stated.

“Based on current medical trends and expected advancements, we conclude that COVID-19 is still driving excess mortality both directly and indirectly,” the report concluded. “In the long term, lifestyle factors that contribute to poor metabolic health and lead to obesity and diabetes may become another compounding factor in population excess mortality.”

Regulators baffled

Regulators and actuaries continue to work on mortality improvement projections for the National Association of Insurance Commissioners. And the data continues to evade straightforward analysis, said Marianne Purushotham, corporate vice president for statistical analysis and modeling for LIMRA.

“We've always run into the issue of the fact that when you're measuring the change in mortality over time, the industry data has a lot of what we as a subgroup call ‘noise,’” she said, “but what it really is is changes in the industry over time, and so we don't want those changes in the industry … to be measured as mortality improvement.”

Examples include things like underwriting definitions, changes in the risk class structure, changes in markets and distribution in the marketplace over time, she added.

Purushotham presented historical mortality improvement and future mortality improvement data to the Life Actuarial Task Force at the NAIC fall meeting last month. She is chair of the NAIC Mortality Improvement Life Working Group.

The group is using predictive modeling to help better analyze mortality data, Purushotham said. Three models were created, she explained: one for the term business, one for post-level term business, and one for permanent products.

The five primary industry change factors identified across all products were face amount, risk class, issue age, risk class, and face amount. A tool was created to normalize these factors, but all five cannot be normalized at the same time, Purushotham said.

‘All seem reasonable’

With the available data they have, actuaries are still finding oddities in long-term mortality rates. For example, ages 50-70 reveals a dip in the mortality rate, something that has “been appearing over decades,” Purushotham said, without any viable reason.

“There's a lot of people making guesses, and they all seem reasonable,” she said. “Things like, maybe as you get closer to 65 you're not yet on Medicare. Maybe Medicare helps improve it. As you hit those Medicare ages, you get your health coverage increased, and you start to see improvements. But all these are all just educated guesses.”

There will be ongoing adjustments for COVID-19 based on new data that is collected, Purushotham said.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.