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COVID-19 Is Increasing Individual Life Claims, Too: Analysis

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What You Need to Know

  • The increase in the number of individual life claims was lower than for group life claims in some quarters but higher in others.
  • The analysts emphasize that the numbers are incomplete and subject to change.
  • Early results show that the number of claims was higher in the fall than in the summer both for individual life and group life.

Early figures suggest that the COVID-19 pandemic has caused a big increase in individual life insurance claims as well as in group life insurance claims, according to a new analysis.

The number of individual life claims was probably at least 7% higher than the historic average in the third quarter of 2021, the analysts report.

From the second quarter of 2020 through the second quarter of 2021, the number of individual life claims was probably at least 17% higher than the historic average.

A team working through the Society of Actuaries — the Individual Life COVID-19 Project Work Group — has published those figures in a review of very early life claim data.

The team included actuaries from the SOA, LIMRA, Reinsurance Group of America and TAI.

The analysts used data from 32 insurers that accounted for 72% of the life insurance in force during the period included in the analysis.

The analysts emphasize that finalizing life claims can take nine months or more.

“The Individual Life COVID-19 Project Work Group would like to stress that, due to delays in the reporting and recording of claim information in the insured data, the more recent data submitted for this research is considered preliminary and will change with subsequent data submissions,” the analysts write in a section on the analysis limitations.

Why It Matters

In typical years, life insurers’ mortality forecasts are close to the actual experience.

The COVID-19 pandemic has led to a sharp increase in group life claims. OneAmerica suggested that, in the fall of 2021, group life mortality was running about 40% higher than normal. The odds that any given insured worker would die were still low, but much higher than in the period from 2017 through 2019, before the COVID-19 pandemic began.

One open question has been whether the pandemic has affected people with individual life insurance, who tend to have a higher average income and go through a medical underwriting process, nearly as much as it has affected group life insureds.

The authors of the new analysis have produced figures suggesting that the pandemic-driven increase in the number of individual life claims has been lower than the increase than the number of group life claims in some quarters but higher in other quarters.

The Numbers

Here’s what happened to the number of group life and individual life claims in the data the work group analyzed, when compared with the averages for the period from 2017 through 2019:

 x Group Life Individual Life
Q1 2020 111% 117%
Q2 2020 114% 117%
Q3 2020 122% 125%
Q1 2021 129% 121%
Q2 2021 110% 102%
Q3 2021 120% 107%

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(Photo: Shutterstock)