New research measures COVID-19’s unexpected impact on future life expectancy of senior citizens

COVID-19 has created the worst global pandemic since the 1918 Spanish flu, impacting communities and economies around the world. For pension funds and insurers, who help ensure the financial stability of retirees and their families, the pandemic has caused uncertainty around the future of mortality rates, particularly at higher ages where the impact of the virus has been most acute.

Now, new research from leading experts on longevity risk from around the globe—including representation from the industry and academia—will help pension funds and insurers properly assess liabilities in a post-pandemic world.

“The Impact of COVID-19 on Future Higher-Age Mortality” is a new research paper authored by Professor Andrew Cairns, Department of Actuarial Mathematics and Statistics, Heriot-Watt University; Professor David Blake, Cass Business School and director of the Pensions Institute; Amy Kessler, head of Longevity Risk Transfer, Prudential Retirement; and Marsha Kessler, CEO of M Kessler Group.

Blake, Cairns and Amy Kessler, who together bring the brightest minds from Europe, North America and Asia each September to the annual International Longevity Risk and Capital Markets Solutions Conference, have used the lockdown to quickly assess the implications COVID-19 has for pension funds, insurance companies and academics who model and measure longevity risk.

“This body of work is crucial for mortality modeling as the pandemic progresses and in its aftermath,” Amy Kessler said. “The key finding that COVID-19 seems to increase each cohort’s short-term mortality risk by a common multiplicative factor will help pension funds and insurers to properly assess liabilities now and in the future.”

The researchers also examined how socioeconomic differences impact COVID-19 mortality.

“We have also looked at variation in mortality by socioeconomic group using data from England and Wales,” Blake said. “Once we control for regional differences in mortality rates, COVID-19 deaths in both the most and least deprived groups are proportional to the all-cause mortality of these groups. However, the groups in between have lower COVID-19 deaths compared with their all-cause mortality. The reason for this is not clear, although it might be because they were better able to adapt to lockdown and maintain more effective social distancing than the other groups.”

The new paper also explores current behavioral responses to the pandemic, the lockdown measures governments around the world are using to contain it, and some of the indirect consequences for future mortality.

The research team found, for example, there is evidence that some surviving patients at all ages who needed intensive care could end up with a new impairment, such as kidney damage, which will reduce their life expectancy.

There is also evidence that many people in lockdown did not seek a timely medical assessment for a potential new illness such as cancer, or deferred seeking treatment for an existing serious illness, meaning the consequence that non-COVID-19-related mortality rates could increase in future.

Other indirect consequences include self-isolation during lockdown leading to an increase in alcohol and drug consumption by some people, which might reduce their life expectancy. The researchers noted if there is long-term unemployment as a result of the pandemic, this could lead to so-called “deaths of despair” in the future.

Other people, by contrast, might permanently change their social behavior or seek treatments that delay the impact or onset of age-related diseases, one of the primary factors that make people more susceptible to the virus—both of which could have the effect of increasing their life expectancy.

“It is too early to quantify these possibilities, although it is conceivable that these indirect consequences could have a bigger impact on future life expectancy than the immediate consequences of the pandemic,” Amy Kessler said.

“Assuming COVID-19 mortality in England and Wales between 75,000 and 85,000, we expect the impact on the mortality rates of the surviving population to be very modest,” Cairns concluded. “The impact on mortality rates post-pandemic is not expected to be material unless deaths turn out to be a multiple of these levels. We will, of course, continue to update this work as additional data become available, but wanted to share early findings as soon as possible.”

To watch a replay of Cairns, Blake and Kessler discussing their findings, click here. Feedback on the paper from the academic community or industry professionals should be sent to Marilyn Parris-Bell.