A moderate influenza pandemic might use up about 27% of the major life reinsurers’ capital and surplus, and a severe pandemic could use up about 107% of their capital and surplus.
Analysts at Moody’s Investors Service, New York, have published that forecast in a comment on the possible effects of a pandemic on insurers.
“In general, catastrophic mortality events that impact the insurance industry widely and result in losses of less than 10% of an insurer’s surplus are not likely to have a ratings impact, unless they cause a change in the industry’s risk profile or result in further disruption to financial markets more broadly,” the analysts write.
Although actuaries and public health experts worry about a pandemic similar to the devastating 1918 pandemic, which killed about 0.6% of U.S. residents, including many the life insurance company employees who were trying to help with the avalanche of death claims, some researchers believe that the 1918 pandemic was a “1-in-500-year” event that is not likely to repeat any time soon, the analysts write.
It is hard to know whether medical technology and public health practices have improved enough to offset expansion in travel rates and weaknesses in health care system capacity, the analysts write.