Known Unknowns in Mortality: Decoding Future Pandemic Risks in Life Reinsurance

Known Unknowns in Mortality: Decoding Future Pandemic Risks in Life Reinsurance

In an ever-evolving world marked by rapid technological advances, shifting geopolitical landscapes, and unprecedented health challenges, understanding mortality risks has become more complex than ever.

This complexity is particularly true in life reinsurance, where actuaries must navigate a growing array of “known unknowns” — risks that are recognized but difficult to quantify or predict with certainty.

Sara Goldberg, Vice President and Actuary at Reinsurance Group of America (RGA), sheds light on this topic by exploring two critical areas that are currently reshaping mortality risk assessment: post-pandemic excess mortality and mental health-related mortality.

Their research and insights offer invaluable guidance for insurers and reinsurers aiming to better understand and manage these emerging challenges.

The Expanding Horizon of Known Unknowns in Mortality Risk

Historically, some risks were deemed too uncertain or rare to be factored into best-estimate mortality pricing models. For example, war and terrorism were often isolated to specialized pricing or group exposures rather than integrated into everyday actuarial assumptions.

However, the landscape of mortality risk is shifting dramatically. The list of known unknowns now includes a diverse and expanding set of factors such as geopolitical instability, the rise of artificial intelligence, climate change, novel medical treatments like GLP-1 drugs, and much more.

These factors introduce new layers of uncertainty and complexity to mortality modeling. At RGA, we are committed to deepening our clients’ understanding of these unknowns through rigorous research and data analysis.

This commitment ensures that life reinsurers can anticipate and adapt to emerging risks, rather than merely react to them after they manifest.

Post-COVID-19 Excess Mortality: What Lies Ahead?

The COVID-19 pandemic has left an indelible mark on global mortality patterns. Although its immediate impact is well documented, the long-term trajectory of mortality rates in the post-pandemic world remains an important question.

Understanding where excess mortality is headed following such a disruptive event is essential for life insurers and reinsurers alike.

Our latest research indicates some encouraging trends. While COVID-19 deaths may continue to occur sporadically in the coming years, overall all-cause excess mortality in 2024 for certain age and sex groups may actually fall below levels seen in 2019.

In fact, for some demographics, mortality rates could return to pre-pandemic expectations, signaling a potential normalization of mortality trends.

This finding is significant because it challenges assumptions that mortality rates will remain elevated indefinitely due to lingering effects of the pandemic or new variants.

Instead, it suggests a possible reversion to historical baselines, although the path to this outcome will likely be uneven and influenced by many factors including vaccination rates, healthcare access, and viral mutation.

Reevaluating Pandemic Risk in Light of Experience

Beyond the immediate numbers, the pandemic has fundamentally reshaped how the insurance industry understands 1-in-100 events and pandemic risk.

The experience has underscored the importance of incorporating zoonotic spillover risks—the transmission of diseases from animals to humans—into actuarial models, especially as globalization accelerates the spread of pathogens.

Additionally, the pandemic highlighted vulnerabilities in newly underwritten liabilities, prompting reinsurers to revisit their assumptions around pandemic severity and frequency.

This recalibration is crucial for building more resilient insurance products and portfolios that can withstand future global health crises.

Mental Health and Mortality: An Emerging Frontier

Amid widespread attention on mental health, there exists a pressing need to understand its multifaceted impact on mortality.

Mental health conditions, such as anxiety, depression, and bipolar disorder, not only affect quality of life but also contribute to physical health complications, claim causes, and mortality risks.

Despite growing awareness and improved diagnosis, capturing mental health’s true contribution to mortality remains a challenge.

The complexity arises because mental health conditions often coexist with other health issues, creating intertwined risk factors that complicate mortality modeling.

Insights from Large-Scale Data Analysis

Leveraging a dataset of 9.2 million individuals, RGA’s research measured the increased mortality risk among people diagnosed with anxiety, depression, or bipolar disorder.

The findings reveal that these mental health conditions are associated with elevated mortality risk, particularly when coexisting with other health conditions.

Interestingly, the risk factors are especially pronounced among younger populations, underscoring the need for targeted interventions and support mechanisms.

This insight has profound implications for underwriting, claims management, and the development of coverage options that address the holistic health needs of policyholders.

To support the industry’s evolving understanding, RGA has created a dedicated mental health hub featuring articles, analytical tools, and training resources designed to improve coverage, treatment, and support strategies for mental health-related mortality risks.

Monitoring a Broad Spectrum of Unknowns

While post-pandemic mortality trends and mental health impacts are two critical focus areas, they represent only a fraction of the known unknowns that actuaries and reinsurers are grappling with today.

Emerging risks related to climate change, technological disruptions, medical innovation, and geopolitical instability continue to challenge traditional mortality assumptions.

At RGA, we are actively monitoring these evolving risks, mining data, and conducting research to uncover insights that can help our clients anticipate future trends.

This proactive approach enables insurers to design products that are both responsive to current realities and resilient to future uncertainties.

Partnering for a More Informed Future

Addressing the known unknowns in mortality risk requires collaboration, innovation, and a commitment to continuous learning. By partnering with RGA, insurers can leverage cutting-edge research and analytics that illuminate the complexities of modern mortality risk.

Our goal is simple yet ambitious: to empower our clients to move their businesses forward with confidence, armed with a deeper understanding of the risks that lie ahead.

Whether it’s decoding the aftermath of COVID-19, unraveling the impacts of mental health, or exploring other emerging threats, RGA stands ready to guide the insurance industry through uncertainty toward more informed decision-making.

The landscape of mortality risk is no longer defined solely by traditional factors. Instead, it is shaped by a dynamic interplay of pandemics, mental health, technological advancements, and global changes.

As actuaries, insurers, and reinsurers confront these known unknowns, the need for robust research and innovative approaches has never been greater.

RGA’s commitment to understanding these complexities provides a vital resource for the industry.

By integrating insights on post-pandemic mortality trends, mental health-related risks, and other emerging factors, life reinsurance can evolve to meet the challenges of the future head-on.

For those seeking to deepen their understanding of these critical issues and enhance their risk management strategies, engaging with RGA’s research and expertise is an essential step.

Together, we can navigate the uncertainties of mortality risk and build a more resilient insurance ecosystem for years to come.

By: Michel Carvajal

More information: Reinsurance Group of America