Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Global life insurers impose restrictions, worried about long-term pandemic risks

EconomyJan 25, 2021 06:05
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Medical workers bring a patient out of an ambulance, amid the spread of the coronavirus disease (COVID-19) pandemic, outside Royal London Hospital, in London

By Suzanne Barlyn, Carolyn Cohn and Noor Zainab Hussain

(Reuters) - Global life insurers are taking steps to curb payouts stemming from the coronavirus pandemic, including long-term health consequences that are not fully understood, industry sources told Reuters.

Life insurers, including Prudential Financial Inc (NYSE:PRU), and Aviva (LON:AV) PLC, are now imposing waiting periods before COVID-19 patients, including those who have recovered, can apply for coverage, executives and spokespeople said. Some are also limiting coverage for certain age groups.

These changes come as some reinsurers demand new safeguards from life insurers they backstop, and as the industry struggles to ascertain the extent of problems caused by the novel coronavirus.

COVID-19 has killed over 2.1 million people globally and infected nearly 100 million, according to a Reuters tally. (https://tmsnrt.rs/39Qa1d2)

Some victims suffer long-term consequences including severe respiratory problems, organ damage, circulatory impairment and chronic fatigue. Three weeks after recovery, 10% of COVID-19 patients are still unwell and up to 5% feel sick for months, according to scientists at King's College London.

The pandemic has also caused a mental-health crisis for those who could not say goodbye to loved ones or have been isolated for months, while exacerbating substance-abuse issues for others.

It is too early to know how many people will file claims for death, long-term illness or disability as a result, but insurers worry the consequences could last for decades.

"We have attempted as a company to strategize about modeling this and have made some headway but are far from the crystal ball that is able to predict this," said Dr. Paulo Bandeira Pinho, chief medical director of Optimum Re Insurance Co.

Optimum has met with life-insurer customers, including Prudential Financial, to map out long-term risks and possible financial impacts.

Prudential (LON:PRU) now imposes a minimum 30-day waiting period for recovered COVID-19 patients.

"Ultimately, many of the long-term implications of the pandemic are still unknown," said Prudential's Vice President of Operations Keith Bexell. "As the long-tail effects become better understood, our approach to underwriting may adjust as necessary."

Since April, British life insurer LV= has postponed applications from anyone who was diagnosed with COVID-19, experienced symptoms or lived with someone who got sick, according to an underwriting policy on its website.

Aviva PLC also imposes a "short" delay for those who had COVID-19 or similar symptoms during the past 30 days, a spokesperson said.

VACCINE HOPES

Life insurers are in the business of hedging risks decades in advance. Since the start of the pandemic, the industry has said it would probably not cause major financial damage, partly because they were not seeing a swell of claims.

Global data are not available for 2020. In the United States, 8% of reported group life insurance claims from April to August attributed the cause of death to COVID-19, according to the U.S. Society of Actuaries.

Companies told Reuters the impact so far has been minimal – with LV= seeing COVID-19 affect just 2% of applications and Aviva still covering more than 9 in 10 customers – but they are taking precautionary steps anyway because of long-term risks.

Apart from those who had the disease, Optimum Re’s Pinho worries about a "wave of widows and widowers, children and parents" with shortened lifespans.

Plus, the pandemic reduced preventative health screenings, causing another set of risks, said Chris Behling, SwissRe's head of life and health underwriting for the Americas.

However, it is not all doom and gloom. Insurers expect vaccines to dramatically improve assumptions.

Some also pointed to better mortality statistics in countries that imposed tight restrictions on travel and socializing, as well as a study from Britain's Institute and Faculty of Actuaries that suggested surviving populations may have a higher life expectancy.

And, if insurers become too stingy with coverage, they may lose valuable customers.

For instance, LV= is excluding mental-health issues from some policies that cover critical illness and income protection for up to 12 months, said Justin Harper, the company's head of marketing.

"It's probably the appropriate decision to make, given we're trying to balance the access but also the risk management," Harper said.

Global life insurers impose restrictions, worried about long-term pandemic risks
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email