by Jon-Paul Hale
One thing appears clear, with the reduction in life expectancy reported in the last 12 months and the 30% of Covid cases having long Covid, disability cover will come under more pressure.
Will this mean that the vaccinated have better rates? We don't know that yet.
It will likely be a consideration for life cover sooner rather than later, but the disability risk isn't quite as clear.
The science on this is lacking as we don't have the data or the time to collect and analyse that data.
A couple of points that I am working from:
- We know vaccines reduce hospitalisations and deaths
- We also know that initial reports suggest that long Covid is reduced too. But for how long?
- We also have conflicting reports that vaccine protection wains
- And there are both breakthrough infections as well as potential mutations to consider
New South Wales has just announced that their vaccine passport will only continue to be valid if you get six-monthly boosters.
We haven't reached that point here, yet (the boosters bit, not the expiry of vaccine passports) but I expect we will see that too.
We'll stick to the science and the insurance bit, not delving into the political or ideological aspects of this here.
So what are we going to see?
On the most part, the ones who already have income protection and disability insurance are also vaccinated. I have a few insured for disabilities that are not getting the vaccine, but they are a small minority.
So it is likely that the insurers won't see a substantial increase in unvaccinated long Covid disability claims that would concern us.
The people likely impacted are earlier claims than what might have otherwise transpired.
We need to keep in mind that Covid may precipitate disabilities with existing conditions and substantially increase claims.
Though I expect we will see some increases in claims over time, this will flow through to increased premiums. Notwithstanding that the overseas experience with reinsurers is likely to have a premium increase for us as well. But that's not necessarily the local influence.
I expect to see changes, and I wrote about this in an earlier article about the underwriting process.
We have already seen the additional requirements on Covid exposure and financial impacts with underwriting; I expect some will ease as we put lockdowns behind us, while others will become more of a hassle.
What I anticipate coming from this are:
- Family history investigations to assess links to long Covid within families; this is medical research yet to be discussed and done.
- Consideration with product development to have Covid limitations. Possibly discounts if you are vaccinated and maintain vaccinations with boosters.
- Or loadings if you are not vaccinated. Though we are hearing that vaccinating the unvaccinated with long Covid appears to be helping cure long Covid symptoms but more medical research is needed.
- Maybe exclusions around certain things, like vaccination status.
- Or payment term limitations like we already have with mental health on some products.
One thing that is not being discussed is the mental health impact from overseas.
- Families and communities losing people.
- PTSD from the situation people have been exposed to.
- The reality that life isn't so simple and easy after all.
It has been and continues to be very confronting to people everywhere, and we are just getting started here.
We are starting to see it here with what we have seen on social media and the news - we have significant pressure on the health system too.
Long story short, we need to be prepared for more impact on underwriting, and this won't be clear until we get down the track with cases across New Zealand and at lower levels of restriction.
I expect what was already a difficult area of insurance will become more difficult in the near future.
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