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  • September 2021
  • 5 minutes

COVID-19 Brief: Expect the Unexpected

Q&A on the drop in U.S. life expectancy and what it means for insurers

Mortality hourglass
In Brief

In July 2021, the CDC grabbed headlines when it announced that life expectancy in the U.S. had fallen from 78.8 years in 2019 to 77.3 years in 2020, the largest one-year drop since World War II. But what does that mean for life insurers? 

But what does that mean for life insurers? With our client partners still fielding questions about this statistic from a range of stakeholders, we asked RGA’s Lisa Renetzky, Senior Vice President and Chief Actuary, U.S. Markets, to weigh in:

What does “life expectancy” measure?

The stat generally referred to as life expectancy is more completely stated as “life expectancy at birth.” It measures the average number of years a newborn would be expected to live if mortality trends at the time of his or her birth were to remain constant moving forward. Basically, it provides a mortality snapshot for a given year based on the number of people of various ages dying that year.

What does the CDC’s newly released life expectancy statistic tell us?

The CDC’s life expectancy measure went down by 1.5 years, from 78.8 to 77.3. When you boil it down to what actually caused the drop, this statistic mostly tells us just one thing: Tragically, there was great loss of life due to COVID-19 in 2020. As the pandemic hopefully recedes, this statistic in coming years will no longer reflect the COVID-19 deaths in 2020. The life expectancy calculations assume the current year mortality remains constant in future years.

What are the implications of this statistic for insurers in modeling future scenarios?

As previously noted, life expectancy, despite its name, is not a forward-looking statistic but rather a snapshot of the past year. We rely on longer-term trends to model future mortality.

What are some pandemic-related developments to watch that may provide more meaningful insights into future mortality?

We need to continue to watch mortality trends as we go forward, along with movement in cause of death. Several factors, such as long COVID-19, emerging variants, delays in non-COVID healthcare, impacts on seasonal flu, and mortality implications of economic uncertainty, among many others, may have negative impacts on health and longevity. On the other hand, medical innovations that were accelerated by the pandemic could have significant positive impacts beyond COVID-19 – mRNA technology may demonstrate new potential for addressing conditions such as HIV infection, malaria, and cystic fibrosis, for example.

As the largest dip in life expectancy since World War II, this has garnered a lot of attention. How should insurers talk about it to customers, employees, and other stakeholders?

I think the insurance industry as a whole should be proud of the role we have played in meeting the challenge of COVID-19. Together we have provided financial support for hundreds of thousands of families around the world during a very difficult time in their lives. This is the fundamental purpose of insurance, after all: to be there when an unexpected event such as a pandemic occurs. We need to let people know that our industry has fulfilled its noble purpose throughout this crisis and that we will continue to issue policies and be there for all those who have placed their trust in us.

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Meet the Authors & Experts

Lisa Renetzky
Lisa Renetzky
Senior Vice President, Chief Actuary, U.S. Individual Life