Insurers feel the COVID-19 pandemic comes with too many uncertainties to offer cover.
Life insurance policy sales have been spiking since the start of the COVID-19 pandemic, but the availability of this coverage may not continue as it has been.
Insurers have been faced with a sudden and dramatic amount of unknown coverage data.
Life insurance policy sales are based on the answers to several questions and the use of actuarial tables to determine each applicant’s rates. However, with the addition of the coronavirus pandemic, the factors influencing what an applicant’s rates should be have become unknown. This is not a place of confidence for insurers.
“Now because of this black swan event, there are no actuarial tables for this,” said Jenny Life co-founder, Chirag Pancholi as quoted in a Forbes report.
Attempting to calculate accurate factors regarding mortality risk from COVID-19 requires data that simply is not yet available. Currently, total case numbers are quite likely to be under-reported. The reason is that individuals with mild cases often do not seek medical care. Moreover, due to test shortages, many countries are testing only individuals with more severe symptoms, skewing the data because mild cases are not being recorded.
Many additional factors may also influence risk associated with coronavirus for life insurance policy customers.
Socioeconomic factors, pre-existing health conditions, health care access and even climate conditions may have an impact on mortality rates.
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“The ultimate rate of mortality from COVID-19 will evolve over time,” said a Society of Actuaries report published on March 16, 2020.
Insurers are already suffering from low interest rates and the direction of financial market, as they are heavily invested in them.
As a result, many insurers are looking into ways to help to mitigate their own risks. Increasingly, it looks as though they are considering pausing the sale of policies while the coronavirus pandemic is still underway, and cases continue to grow.
Other factors holding back life insurance policy sales throughout the pandemic include the fact that many applications require medical records from doctors. As doctors’ offices are already typically slow in providing these records, this process is only slower now that many offices have sent home non-essential staff in order to keep up social distancing efforts.