All Too Real: The Pandemic’s Curious Impact on Society – and Life Insurance

All Too Real: The Pandemic’s Curious Impact on Society – and Life Insurance

If you could speak to my friends in the States, you’d think the coronavirus pandemic was history. Far from it.

A pal of mine in Cambodia, working for a mine-clearing trust that trains rats to ferret out underground explosives in exchange for treats – this is completely true – said that until the ‘community event’ of February 20, 2021, that spread the disease there, the nation had recorded only about 400 covid cases, with no deaths. As of now, Cambodia has suffered 73,000 cases, with 1,300 deaths.

The inoculation campaign is ahead of schedule, he says, but the disease’s spread is far from contained, with the Delta variant starting to appear. The government describes the situation as “a catastrophe.”

No, it ain’t over yet – not even in the US. I am not disparaging nonchalant bravery, which is what I am seeing now, stateside and elsewhere. But there are still lessons to learn, some of which have not even gelled.

When the pandemic first broke, most people I knew didn’t seem to believe it. Then, when it was undeniable – I can’t say that all, or I, took it seriously enough – there was even excitement, like during a surprise fire drill in grammar school. We should have heeded the smoke.

One particular booby of my acquaintance – all right, it was my editor Rebecca; let’s see how much she redacts – said she’d never wear a mask. What do you do in public, I queried? “Oh, I pull my Hermes scarf up over my mouth.”

You should wear it that way habitually, I snapped. Her reply would defy the most delicate editing. But I cannot prove that my own follow-the-rules response was any more effective.

Then, the bodies started piling up. In New York, Eric, our communications firm’s CFO, downed tools and volunteered as an EMT. Each evening, we heard his too-realistic report: “I’m exhausted. We’ve been pulling corpses out of Hoboken all day.” Rebecca started wearing an N95 mask, suddenly the only designer label of import. Eric suffered a two-week bout of Covid as thanks for his civic mindedness.

The pandemic has slowed, but its long grim march continues. It has swept away so many lives: in the US, 596,740 as of July 7, including 177,322 among those 85 or older. Life expectancy dropped by one-point-five years in 2020. Nothing so dramatically lethal has happened to our country since World War Two.

The Centers for Disease Control and Prevention report that in the first six months of 2020, life expectancy at birth for the overall population was 77.8 years, down one year on 2019. Male life expectancy was 75.1, a 1.2 year decline versus 2019. Female life expectancy dipped to 80.5 years, down 0.9 years on the 2019 figure.

Hispanic Americans, who enjoy higher life expectancy rates than their African American or Caucasian compatriots, suffered a drop averaging three years. African American life expectancy fell to its lowest recorded level in 20 years. White life expectancy declined by 14 months to a low not seen since 2002. And so we Americans were dealing with our own catastrophe.

In the midst of this storm, how fares the life insurance industry? Insurers seem to have weathered the pandemic well. We feel good that our industry, already stressed, somehow did its job, came out on top. Or are we mistaken in that last assessment, figuratively taking our masks off too soon?

Interest rates are down and equity market volatility is rising, spearing the stability of insurers’ balance sheets and earnings. All at a time of tightening regulation – and compliance is costly.

I wrote recently about private equity funds buying up insurance companies (link). They see insurers as fine targets: those regular premiums and fees are tempting – good assets to invest in during stretched times. But why do insurers want out of the game? The sellers all say: it’s too costly to maintain; the returns are too paltry. Let someone else try their hand.

This could be good for the insurance industry: fresh hands at the wheel, new ideas to boost profitability and stability. Despite the turmoil, the pandemic is driving new trends that may take the industry off life support.

The pandemic made underwriting easier. Insurers were already trending towards making it simpler for new customers to apply. In the last year, there has been less form filling, fewer face-to-face medical exams, and more reliance on digital health records. It makes perfect sense, and a staid industry has been forced to leave port and hew to a new, truer heading.

My father used to visit the Leahy Clinic for a regular cardiac checkup. One time, when the doctor sent him for his blood work, dad led a one-man rebellion: he refused to ‘fill in the forms’. You know the sort: name, address, social security number, what is your ailment, who is your doctor. Dad filled one out every time he got jabbed, dozens if not hundreds of times. What an old bore – the process, I mean.

So it was ‘no’ – you already have my info ten-times-over, said dad. “Take my blood, but don’t waste my time,” quote-unquote the old goat.

He must have sounded like Pacino, if standing two or three heads taller. The nurse replied, deadpan: in that case, no service. Go tell the doctor, says dad; he could just as well have said ‘Spartans’, for the sympathy a non-blood-drawing nurse could expect. He got his full-needle service, that grumpy old father o’ mine. Why shouldn’t this be the model for all that we do?

Indeed, look at those young people, usually so resistant to buying life insurance. In response to a fatal pandemic, they started buying the stuff up: last year, there was an 8% year-on-year rise in life policy applications from people under 44 – yes, that now qualifies as ‘young’.

Many of them were attracted by new, less-expensive policies on offer from life insurers, who saw a hungry if rather cash-poor niche of new customers. When the pandemic hangover wears off, these young customers will find themselves holding a wonderful product – why hadn’t they thought of it sooner?

The insurers, meanwhile, will have addressed their concentration of risk issues: more clients means less risk – and lower overall premiums for these customers. Could a virtuous circle be forming? I can say this to finish: it seems that today, under stress, not only young folk can learn brash new ways.

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