Report finds 'mitigating factors’ for gap between insurance company experience and population at large
As devastating as the COVID-19 pandemic crisis has been for Canada in general, a new report from the Canadian Institute of Actuaries suggests that the disease’s impact on life insurance claims experience hasn’t been too severe.
In an interim study of Canadian individual life experience going up to the second quarter of 2020, the institute analyzed data submitted by four insurance companies – Canada Life, Industrial-Alliance, Manulife, and Sun Life – covering individual life policy experience from policy anniversaries in 2019 to the corresponding 2020 anniversaries or June 30, 2020, whichever is earlier.
“Because the heaviest impact of COVID-19 was in the fourth quarter of 2020, this study will leave some questions unanswered,” wrote Bob Howard, FCIA, who was the paper’s author.
The interpretation of the data was also hindered by the fact that one of the four companies was unable to submit cause of death, while the remaining three did not have a cause for all deaths.
“Overall, experience to June 30, 2020 suggests that the actual-to-expected ratio for the full year of experience will be similar to what was reported in the last annual mortality study,” the report said.
Looking at how the experiences broke down based on cause of death, the report found that for the period up to Q2 2020, COVID-19 deaths represented 3.9% of those with a cause reported. In contrast, Statistics Canada reported that for the whole year 2020, COVID-19 deaths made up 6% of the total number of deaths in the country.
“However, because only about 18% of deaths in the study are expected in the second quarter of 2020, and because there were very few COVID-19 deaths in the first quarter, our COVID-19 proportion is likely higher than that of the population,” the report said.
Focusing on the second quarter, the report said COVID-19 deaths reported by insurers made up 18.2% of those with causes by count – markedly higher than the 10.7% of all deaths in the population reported by Statistics Canada for the same period – and 11.1% by claim amount.
The gap between COVID-19 deaths among insured lives and the Canadian population the report suggested, might be explained by a few factors. The average age of Canadians in the 2016 census was 41, compared to 51 for the average age for exposure by count in the study. The reported proportion for the Canadian population is relative to all deaths, without allowance for “unknown”; furthermore, the report noted that in cases of insured lives, the likelihood of declaring a cause of death is greater if the cause of death is COVID-19.
“A more accurate comparison between insured lives and the population will have to wait until more detailed information is available on the population,” the report said.
The 2020 Q2 data also indicated that COVID-19 deaths represented a larger proportion of deaths for females than for males. That could be explained, the report said, by the fact that COVID-19 has caused the most deaths at the highest ages, where there tend to be more females than males.
“[A]fter adjusting for differences in the distribution by sex and age for insured lives compared to the population and after taking into account the distribution of claims by amount, the impact may be somewhat less than for the population,” the report said.
