Fatal COVID-19 infections & questions over a possible increase in mortality during quarantine arise in Q1 life insurance earnings

Anecdotal evidence suggesting that the outbreak of the virus that causes COVID-19 infections in people has increased mortality from other causes is now emerging.

But increased U.S. death rates could possibly be arising not only from the initial onslaught of the virus itself but for those who have delayed or suspended medical care for other ailments due to sweeping stay-at-home orders and fear of contracting COVID-19 while seeking care, according to some analysis of a life insurer reporting first quarter earnings May 5.

The Reinsurance Group of America reported excess U.S. claims of $54 million, with mortality concentrated in ages 70 and above, a population in which COVID-19 fatality rates are higher. As a result of the higher mortality claims in the U.S. market, the global insurer’s first quarter operating earnings came in below analysts’ expectations. The variable investment income played a part as well, the Chesterfield, Mo.-based insurer said.

RGA cautioned against drawing any decisive conclusions based of the ultimate effects of COVID-19 on its claims experience from these first quarter results. “A range of stress scenarios have been considered and we believe them to be manageable,” the company stated.

Delays in reporting and incomplete pictures as to the cause of death in policyholders make it hard for the insurer to say how much Covid-19 is driving the higher mortality and claims experience. 

However, one equity analyst noted that RGA’s citation of anecdotal evidence of elevated “all-cause population mortality” happening alongside the pandemic’s outbreak could mean that more people are dying during quarantine from a lack of medical care than they would otherwise have.

The indication from the flagging of RGA’s U.S. mortality experience in its slide presentation is that “quarantine measures have actually led to increased mortality as access to care has diminished,” wrote Thomas Gallagher, CFA, and his analyst team from Evercore ISI

This could lend credence to a scenario that some healthcare professionals have feared: those who would ordinarily seek medical care aren’t going to take care of new or existing problems, leading to higher mortality claims in the industry or among those insurers with a higher percentage of older policyholders. 

According to a poll released in late April by the American College of Emergency Physicians and Morning Consult, some people are actively avoiding emergency room and other needed medical care due to COVID-19 concerns.

According to the results of the survey, four in five adults report they are concerned about contracting COVID-19 from another patient or visitor if they need to go to the emergency room while 29% of respondents said they have actively delayed or even avoided seeking medical care due to worries about contracting the virus. When it comes to potentially making a trip to the local emergency department, 73% said they were concerned about “overstressing the health care system,” the poll found.

Genworth Financial reported higher mortality in universal and term life insurance products during its first quarter earnings. Although the overall mortality in term and universal life was “significantly unfavorable versus the prior quarter and prior year,” Genworth officials do not have evidence these deaths are related to COVID, leaving other causes on the table, according to comments from officials during the first quarter conference call to discuss earnings May 6.

Only three claims have been identified as COVID-19-related in the first quarter, totaling just under $300,000 in benefit payments, according to Genworth CFO Kelly Groh. She said the company will continue to monitor its mortality experience as well as any impacts from COVID-19.

In contrast, Toronto-based Sun Life Financial Inc. reported May 5th that its mortality and morbidity claims experience from COVID-19 has been small, totaling under 5% of its monthly average for mortality and disability claims paid. In addition, the claims that have come in have been countered by lower claims experience elsewhere, the company stated in first quarter earnings report May 5. 

Like other insurers, Sun Life said has been active in supporting those fighting the virus — it donated 600,000 surgical masks to hospitals, over $2 million to support affected communities and in various Asian countries, where it has deep ties, provided food and hand sanitizer as well “digital life insurance coverage” donations to doctors, nurses, and other medical support staff. 

RGA’s own foundation, has committed $1.5 million in grants to support COVID-19 relief and response efforts worldwide, the company stated. 

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