This segment of the industry has found itself having to make important changes due to new trends.
The global life insurance industry has experienced a sudden and substantial shift in its trends since 2020 due to the pandemic. As a new wave continues with an even more transmissible variant, insurers in this industry are experiencing notable claims increases, causing them to have to pivot just as businesses in many other industries have had to do.
Claims in 2021 jumped much higher than expected based on predictions regarding COVID-19.
The first 9 months of last year brought the global life insurance industry reported claims relating to COVID-19 of $5.5 billion. Comparatively, the figure during the entire year of 2020 had claims relating to the pandemic closer to $3.5 billion. This, according to the Howden insurance broker in a report released earlier this year. The industry had anticipated notably lower payouts in 2021 than it had in 2021 because of the availability of vaccines.
“We definitely paid out more than I had anticipated at the beginning of last year,” said Klaus Miller, Hannover Re board member, as quoted in a Reuters report.
The rise in claim totals was associated mainly with the spread of the Delta variant. That variant has twice the transmissibility of the original virus and a greater likelihood to cause hospitalization than the original strain. As a result, while insurers had expected claims to fall, they rose sharply, particularly in the United States, India, and South Africa. Those countries were most affected due to the spread of more deadly variants, and an increase in illness and fatalities among younger groups and among the unvaccinated, said the report.
The life insurance claims in the Americas were multiple times greater in 2021 than in 2020.
According to Aegon, the Dutch insurer, which does two thirds of its business in the US, its claims in the Americas in last year’s third quarter hit $111 million. The same quarter in 2020 saw $31 million in claims.
MetLife and Prudential Financial, insurers from the US, also said that their claims in this category had risen. Old Mutual, a South African insurer, said that it directed more of its pandemic provisions into claims payments. Munich Re, the reinsurance giant, increased its 2021 estimate for COVID-19 life insurance and health plan claims to €600 million (about USD$684 million), from having been €400 million (about USD$456 million).