Life Insurance underwriters are reporting mortality concerns…An August 2023 update.

https://www.lifehealth.com/mortality-trends-raise-underwriting-questions-life-insurers/

One thing we know for certain: if anyone has a perfected algorithm for how many people will die in a given year, it is life insurance companies. They are in the business of making money, not losing money. However, since 2021, their numbers are no longer making sense and payouts are up more than 30%.

“Still, the latest data on mortality isn’t good news for the industry or society.

The Society of Actuaries said through 2020 the overall age-adjusted mortality rate for all causes was 16.8%, which marked the highest increase dating to 1900. For comparison, during the 1918 Spanish influenza pandemic, population mortality in the United States increased 11.7%. About 12% of the group life claims filed during the pandemic period involved COVID-19, and group life claim incidence rates were up 17.6% on a seasonally adjusted basis compared to 2017-2019 rates, the SOA found.

“Excess mortality has down-shifted toward the younger and middle adult ages during 2021, which has a higher intersection with group life mortality,” the SOA said in an email. “Group life mortality was lower in the start of the pandemic, and it now has higher excess mortality.”

Porcelli said the companies he speaks with are keenly watching their mortality statistics. He commonly hears questions over how much of the increase can be solely attributable to the virus and what level of danger that poses from a business perspective. “However, the industry went into this crisis pretty well capitalized and is coming out of it even better capitalized, including a lot of new capital coming in,” he said. Looking ahead, OneAmerica’s Bischof said the company needs time to figure out whether trends revert to historical levels or any changes to underwriting are warranted. He said the larger industry needs to understand what they think will happen from a mortality experience and whether changes are warranted, such as modifications to group coverage pricing or becoming more selective in selecting individual risks.

“To some extent, it’s following the playbook but we definitely need to modify the playbook a bit,” he said.

They go to great lengths to claim that covid deaths are the driver here, and that “perhaps someone had covid a year ago and died a year later and we missed that as the cause”. Uh huh. Sure. Covid is not mowing down the age 0-44 age group. Something else is.

I believe we are inching closer and closer to life insurance policies asking a few key questions before granting coverage: have you ever received a covid vaccine, how many, and when? Have you had covid and when? They will dig deep into your healthcare to decide if they want to cover you or not. Historically, life insurance covered younger people with ease and very cheap. They are not a high risk group of dying. That landscape is changing. Insurance companies are not going to take the financial loss, they will pass it on via higher premiums and more stringent requirements to be approved for life insurance.