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japie said..
Interesting responses! For me science has always been about curiosity. How does something work? Why does such and such happen?... Time advances and I begin reading reports of excess mortality. Quite significant reports of excess mortality. Very significant actually. Like 40% in some areas and we are talking about millennials. To put it in perspective a 10% rise is equivalent to a 200 year flood.
The data came from the insurance business. This data is rock solid. Insurance companies do not get it wrong.
Yes, insurance companies no not get it wrong.
[NOTE: Belgium started the roll-out of its COVID-19 vaccination campaign on 28 December 2020, initially targeting nursing homes residents and personnel]
COVID-19 and Excess Mortality: An Actuarial Studyby .
Risks 2024, 12(4), 61;
doi.org/10.3390/risks12040061Published: 30 March 2024
(This article belongs to the Special Issue Extreme Events:
Mortality Modelling and Insurance)
Introduction
The recent SARS-CoV health crisis shows clear evidence that we are not immune to pandemics and their economic effects despite medical advances and robust health systems. Indeed, the Institute and Faculty of Actuaries indicate that the 1918 Spanish flu, which was responsible for the deaths of more than 50 million people, had a cost of around GBP 13 billion to insurance companies. Pandemics are also becoming more likely, see, e.g., the H2N2 flu from 1957-1958, the H3N2 1968 flu, the H1N1 flu from 2009-2010, and, more recently, the Ebola epidemic from 2014-2016.
The increasing frequency and severity of pandemics call for an in-depth actuarial analysis of mortality and its effect on pricing and reserving. In particular, pandemics have a heterogenous effect on populations. Indeed, certain socio-economic groups are more susceptible than others to becoming sick and dying, making basic life tables unsuitable for pricing and risk management. It becomes natural to consider a model that incorporates epidemiological insights and dependence.
The study of mortality is an ever-active field of research, and new methods or combinations of methods are constantly being developed.
In the actuarial domain, the study of phenomena disrupting mortality and leading to excess mortality, as in the case of COVID-19, is of great interest. Investigating the extent to which an epidemiological model can be integrated into an actuarial approach in the context of mortality is, hence, relevant. The aim of this project is to establish a method for the study of excess mortality due to an epidemic and to quantify these effects in the context of the insurance world to anticipate certain possible short-term financial instabilities.
In this paper, we consider the epidemic caused by the SARS-CoV-2 in Belgium during the year 2020. For this, we used the daily COVID mortality data from the national health data of Sciensano.
After capturing COVID-19-specific mortality using an extended version of a susceptible-infectious-recovered-death compartmental model from Franco (2021), we studied overall mortality using data from the Human Mortality Database (2021) and the Cairns, Blake, and Dowd. Feng et al. also used a compartmental model to study the effect of COVID-19 in order to price epidemic insurance plans to finance medical costs during infection. Contrary to their work,
we focus on the effect of COVID-19 excess of death on classical pre-existing life insurance policies. We focus on older age patients in our study, as these were most affected by the pandemic from a mortality viewpoint.
Combining these two models allowed us to perform an actuarial study on two life insurance products: whole life insurance and lifetime immediate annuities. We study these products in two settings: an old contract underwritten in 2000 and a recent contract underwritten in 2019, a year before the pandemic. We calculated their expected value and variance. We observe that the variance increases more importantly for recent contracts despite the insured being younger. For older contracts with older insured users, the variance is reduced. We hypothesize that this could be due to a different distribution of mortalities in the COVID vs. no-COVID scenario. Indeed, the uncertainty would be greater for younger individuals who still have a long period remaining in the contract. However, for older individuals, the presence of COVID-19 renders the event of death more "certain".