The first few months of 2015 exhibited exceptionally high mortality experience in several countries, including the U.S., Japan, and the U.K. This experience was noted by insurance investment analysts, and research was carried out during the first half of 2015 to further develop an understanding of the underlying causes. The new research built on the 2012 seasonality research conducted by RGA1. The 2012 study had highlighted how a variety of demographic, socioeconomic, and geographic factors influence the degree and direction of seasonal mortality. The 2015 research focused on global seasonality, and how flu and pneumonia (F&P) mortality correlates with other causes of death. These findings were used to monitor the 2016 season, which turned out to be less severe than the 2014-15 season, when flu vaccine effectiveness was especially poor. This article focuses on understanding how seasonality varies by country and region, and how F&P mortality correlates with other causes of death.
Seasonality refers to a trend pattern that repeats every 12 months. In insurance, knowledge of seasonality’s impact on mortality is not new. Life insurers sometimes experience poor financial results stemming from large fluctuations of claims in colder months. The ability to understand the main drivers of seasonal mortality, and therefore why certain years have higher seasonal mortality than expected, can be vital for insurer reporting and planning.
Although higher mortality is expected in winter months, the magnitude of seasonality can vary by year and is unpredictable. One method of assessing the degree of seasonality by year is via the winter-to-summer ratio. This ratio is defined as shown below.
Note that the ratio’s values would be inverted for southern hemisphere countries (i.e., the winter months would be defined as June, July and August, and the summer months as December, January and February).
While all years demonstrate increased seasonal mortality, Figure 1 also shows that some years have had exceptionally high seasonal mortality.
Geographic location is one of the most important drivers of the degree and direction of seasonal mortality. A company’s distribution of business by location could have a significant impact on their exposure to seasonality.
Read More +