Life insurers say drop clearly affected number of death claims
A COVID-19 pandemic easing might give customers more years of post-retirement life, posing a new longevity planning challenge for retirement planners.
In the second quarter ended on June 30, there were around 30,000 documented pandemic-related deaths, reported ThinkAdvisor. This is a decrease from roughly 158,000 in the first quarter.
The flow of death claims under U.S. life insurance has clearly been impacted by the decline, according to life insurers.
Daniel Fishbein, president of U.S. business at Sun Life Financial, told securities analysts last week: “Our COVID mortality experience actually declined by 90% from the first quarter to the second quarter.”
Group life mortality at MetLife, according to CEO Michel Khalaf, decreased to 85.8% in the second quarter from 94.3% in the second quarter of 2021 and 103.8% in the first quarter.
Those who are still in their working years may be more impacted by the mortality decline than clients who are retired. “The age demographics for mortality continue to shift away from the working-age population to the more elderly population,” said Steve Zabel, chief financial officer at Unum Group.
From 24% in the first quarter to 35% in the fourth quarter of 2021, the proportion of pandemic-related deaths involving people of working age decreased to 16% in the second quarter.
According to Zabel, the number of pandemic-related claims at Unum decreased from 1,400 in the first quarter to approximately 200 in the second quarter.
The epidemic first made headlines in January 2020. Since then, mortality has fluctuated drastically before surging back multiple times. An estimated 2,800 people are still dying from the pandemic every week, comparable to the weekly death toll from strokes.
Several executives from life insurance companies stressed that they are approaching COVID-19 mortality forecasting with caution.
Equitable Holdings' CFO, Robin Raju, stated that the company is keeping an eye on U.S. COVID-19 trends closely. Executives at Equitable, he said, are satisfied with how the company’s protection insurance arm performed in Q2, but "acknowledge the volatility around it with mortality."
Clients may enjoy a better quality of life as well as improved economic and portfolio performance if COVID-19 mortality continues to decline. However, a decline might also compel prudent clients to create planning and financial arrangements that could cover additional predicted years of life after age 65.