Insurers adapt to soaring claims demand

 Many life insurance companies have made forecasts and thousands of scenarios to adapt to the skyrocketing demand for insurance claims due to Covid-19.

According to a report by insurance brokerage Howden on January 4, the global life insurance industry spent $5.5 billion in the first nine months of 2021 on claims. "We certainly paid out more than we anticipated at the beginning of last year," said insurance board member Hannover Re Klaus Miller.

The increase in claims is mainly due to the emergence of the Delta variant, which is twice as likely to transmit and cause hospitalization than the original coronavirus strain. Claims increased the most in the US, India and South Africa due to multiple variations in mortality or morbidity in unvaccinated groups.

Aegon (Netherlands) insurer, now two-thirds of its business in the US, said its claims in the Americas in the third quarter of 2021 were $111 million, up from $80 million compared to previous year. US insurers such as MetLife and Prudential Financial also reported an increase in life insurance claims.

The increased compensation will eat into the capital of insurance companies, the researchers say. "For the insurance industry, this number is not too large because we anticipate and always try to overcome," said Marianne Purushotham, LIMRA expert.

The impact on insurers has softened as deaths have mostly been among the elderly, a group that is not normally covered by life insurance.

As the Omicron variant emerges, insurers, reinsurers and specialist risk modeling firms are aiming for a new future. "We can't specifically share which path we'll take but we're trying to come up with possible scopes to narrow down possible future compensation," said Narges Dorratoltaj, Scientist at AIR. future".

Reinsurance company Swiss Re says it has more than 20,000 pandemic response scenarios. These scenarios are regularly updated with data on testing, vaccination, infection, hospitalization, and mortality rates.

With the arrival of Omicron, Covid-19 vaccine maker Pfizer said it does not expect the epidemic situation to subside globally until 2024. Meanwhile, AIR predicts the Covid-19 pandemic could last 5 years. five.

Insurance risk experts also cite the risk of virus transmission between humans and animals, high levels of global mobility, increased urbanization and the impact of climate change... making a pandemic possible. become more popular.

"A new coronavirus outbreak is really likely in the near future, about 10 years," said Brice Jabo, risk analyst at RMS. He also mentioned acute respiratory syndrome (SARS) and Middle East respiratory syndrome (MERS) outbreaks in the past two decades.

Meanwhile, Bruno Latourrette, professional director of reinsurance company SCOR Global Life, expressed that he did not expect the Covid-19 pandemic to be so devastating.

"Covid-19 is the perfect storm with the ability to spread before symptoms, leaving patients with weakened immunity and high transmissibility," said Bruno.