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Life Health > Life Insurance

SOA: Industry Could Survive Flu Pandemic

By Jim Connolly

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The U.S. life insurance industry could handle a severe influenza pandemic reasonably well.

Actuaries at the Society of Actuaries, Schaumburg, Ill., have published that prediction in a new report on efforts to model the effects of a pandemic.

Tom Ewalds, an SOA representative, briefed regulators on the report here during the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo.

A “moderate” pandemic might lead to a $2.8 billion net effect on claims, and a “severe” pandemic might lead to a $64 billion net effect and also have hard-to-predict effects on the general economy, Ewalds said.

Those predictions compare with total 2005 life claims volume of $108 billion.

The report authors came up with the “net claims” figures by subtracting anticipated reserve releases, tax savings and reinsurance credits from gross claims.

Although suffering $64 billion in extra net claims would hurt insurers, the industry should be able to absorb that “unpleasant and uncomfortable” tab, Ewalds said.

The projected tab for a severe pandemic would include $34 billion in individual life net claims and $30 billion in group life net claims.

Individual life gross claims would surge to $79 billion, and group life gross claims would grow to $47 billion, the authors of the SOA report predict.

The projected tab for the moderate pandemic includes $1.5 billion in individual net claims and $1.5 billion in group net claims. Gross individual claims might reach $4.5 billion, and gross group claims might total about $2.3 billion, the report authors predict.

The severe pandemic used in the forecasts would be similar to the 1918 pandemic and might lead to 1.9 million U.S. deaths.

The moderate pandemic, similar to the 1957 pandemic, would lead to about 200,000 deaths.

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