After living through COVID-19, many survivors continue to suffer from the virus’ physical,
neurological, and cognitive effects, known collectively as “long COVID-19”, or “long-haul
COVID-19,” long after the virus itself recedes.
Elevated death benefits aside, most of the costs of COVID are medical and will be picked up by health insurers, Moody’s Investors Service said in a new report. However, Moody’s added, some
long COVID-19 claims are starting to pop up in certain life insurance morbidity product claims,
particularly disability income in the US, with more widespread claims likely to follow.
Although the study of long COVID-19 is still in its early days, the virus’ credit impact on global
life insurers it likely to be limited, given the insurers’ good business diversity and the flexibility
embedded in the products themselves. Here are some key takeaways from the Moody’s analysis:
- Diversified business profiles’ strong capital will limit long COVID-19’s credit impact.
Most global insurers have performed relatively well through the pandemic, despite
elevated mortality, maintaining strong balance sheets and good capitalization. Good
business diversity along with the protective features of the products themselves should
limit the potential financial and credit impact of long COVID-19 claims.
- Long COVID-19 affects many survivors, pointing to higher claims ahead. Rising long COVID-19 claims are likely in the coming quarters, Moody’s said, given early estimates of incidence as high as 50% among survivors, with “long haulers” estimated in the millions. For some individuals, severe symptoms prevent normal functioning or the return to work.
- Certain morbidity products are exposed to long COVID-19 claims. National and private
health insurance will continue to bear the brunt of long COVID-19’s ongoing costs, which are
largely medical. However, long COVID-19 claims are also starting to pop up in life insurers’
short-term DI, particularly in North America, and short-term indemnity medical policies
in Asia. Delayed medical treatment of other serious illnesses (for example, cancer) during
shutdowns may result in higher mortality or morbidity in individual and group long-term
DI in the future.
- Product design will help control claim costs. Features that allow for frequent
repricing, and long (up to a year) customary waiting periods before DI coverage can begin
should help limit the flow of new claims. Expanded remote work regimes post pandemic
should also help cap incidence. Medical advances, including COVID-19-specific vaccines
and new therapies for long COVID-19, may also prevent or diminish the virus’ effects in the
Life Insurance Coverage Also May Be Affected Indirectly
Delayed diagnoses and long-term organ damage – for example, to the lungs, heart, kidneys, etc. – from any combination of COVID-19, long COVID-19 or preexisting medical conditions (for example, diabetes or heart problems) could also result in more elevated mortality losses for group and individual life insurance providers in the future, Moody’s said.
However, these losses may be partly offset by higher claims for insurers with longevity products (such as annuities and long-term care insurance), and growth in life insurance products. The acceleration of deaths of individuals who had been living with other serious health conditions (diabetes, cancer, heart disease, etc.) and succumbed to COVID-19 may also mitigate higher net mortality figures, when all factors are considered. At this point, it is too early to tell.
Moody’s said it also is too early to estimate potential claims for long COVID-19. The mixed and often offsetting effects of COVID-19, the potential for new variants and new pandemics, and the endemic nature of COVID-19 and long COVID-19, all add uncertainty for actuaries making long-term assumptions.
Long COVID-19 is one of a number of uncertainties arising from the pandemic that could affect the pricing and profitability of both in-force and new life insurance products in the future, Moody’s said.