When insurers set their longevity assumptions, it consists of two parts: the baseline assumption, which is essentially a current view of life expectancy today, and the projected future longevity assumption.
Both of those have become more challenging to predict due to the Covid-19 pandemic, so the only certainty for insurers performing mortality analysis in 2023 is that it won’t be easy, according to Mark Sharkey, Global Head of Pension Strategy, at longevity specialists, Club Vita.
“There is a wealth of data out there about the impact of the pandemic, but drawing useful insights from that data requires the industry to work with a scalpel as opposed to a sledgehammer,” he said.
Sharkey says that taking a broad-brush approach to mortality analysis could present difficulties for the industry. Club Vita offers longevity analysis in the US and Canada, as well as its home market of the UK, and Sharkey says the diverse range of outcomes of the pandemic on mortality is also reflected at a country level.
“That trend is not the same in the UK as it was in the US and Canada,” he says. “In both of those countries the effect was flipped around. So even looking at the most basic of demographic statistics, and if you’re looking at a global portfolio, you can’t simply use that one size fits all approach.”
S. Jay Olshansky, Co-Founder of longevity specialists Lapetus Solutions, adds that experts are unsure of the exact mortality rate of Covid-19 so far, let alone its future development.
“Excess mortality is the only statistic I would rely on, I would not call it Covid-19 mortality, because it’s not always directly caused by Covid-19. It can be indirectly influenced by it. The bottom line, for those of us that study mortality, is that we don’t really know what the death rate is from Covid. And I’m not sure we’re ever going to know, at least not accurately or quickly.”
Olshansky also says that Covid-19 is so unprecedented that even obvious historical pandemics do not offer a reliable guide to its future impact on life expectancy.
“We have never experienced anything quite like this before. This is not like the 1918 influenza pandemic, which saw a rebound in life expectancy about one to two years after it finished. We have not experienced that yet. And it is unclear whether we will.”
According to Nicola Oliver, Director of Life and Health at longevity consultancy, Medical Intelligence, although it may be a century since the last global pandemic that does not mean it’s a one in a hundred-year event. Instead, a combination of climate change and the loss of biodiversity means pandemics will occur with increasing frequency.
“There is another pandemic lurking around the corner, it’s not if but when and there are lots of factors which are driving that. It starts with the climate crisis and increased deforestation bringing people closer to animals. Roughly 65% of all infectious human diseases have come from animals and this process has accelerated in the last 20 years,” she says.
The likelihood of further pandemics may be increasing but Sharkey says that it is possible to learn some lessons already from Covid-19. He points to the current Club Vita longevity base tables used by UK defined benefit (DB) pension funds which are calibrated up to the end of 2020 – the first year of the pandemic.
These show that generally DB pensioners – a population cohort Sharkey says is analogous to life insurers’ clients – are more resilient to the pandemic than the general population.
Unlike excess deaths, this time the data from Canada and the US moves in lockstep with the UK. Sharkey says that Club Vita analysed a US state-wide pension fund and found that their excess mortality was lower than the state average itself.
Olshansky says that this difference is to be expected given that insured populations typically have higher income and education levels than the general population, two of the biggest indicators of life expectancy along with genetics and lifestyle.
“In all likelihood, Covid probably had less of an impact on the insured population relative to the uninsured population because of the known variation that exists in survival among those that are educated and have a higher income relative to those that don’t. That’s what happened in the United States; Covid had a disproportionately negative effect on minorities, who are more likely to be underinsured.”
Again, what is true for the UK may not be for the U.S. Data from the U.K.’s Office of Health Improvement and Disparities, which gives a breakdown of regional excess deaths in England for the period 21 March 2020 to 30 December 2022, shows a wide divergence of excess death during the pandemic in different regions.
The Northwest of England experienced 25,000 excess deaths over that period and a ratio of registered deaths to expected deaths of 1.13, whereas the Southwest, which was the least impacted region in the UK by the pandemic, saw 11,000 excess deaths and a ratio of 1.07. This was despite both regions having an almost identical median salary, according to Statista.
However, the Monthly Populations by Index of Multiple Deprivation (IMD) Decile, data published by the ONS, which buckets the UK population into five levels of separate socioeconomic groups, shows an obvious trend where higher socio economic groups have experienced fewer excess deaths than their lower income peers.
Sharkey says, however, that it is important not to assume that this is due purely to socioeconomic factors. For example, healthcare spending varies widely across the UK and partly explains some of the regional excess death differences.
“The real question is, ‘is the IMD data results part of a true socio-economic trend?”
The future mortality outlook may be uncertain, but Oliver says that that one aspect of the pandemic is the potential for it to lead to medical breakthroughs which could increase life expectancy.
“There are actually some positives that you can focus on. During the pandemic we were able to accelerate the rate of which drug approval processes could take place. Secondary to that is the renewed interest in mRNA technology which could result in better early-stage cancer treatment.”
