The insurance sector expected that as vaccination rates increased, COVID-19 deaths would begin to decline in 2021, but that did not happen. Instead, mortality rates rose sharply, and many insurance companies are recalibrating their actuarial projects. That’s coming from InsuranceNewsNet Magazine (February 2022).
One insurance company CEO said his company is seeing the highest death rates ever seen in the history of the insurance business. Life insurance companies projected a certain higher level of losses during the pandemic, but even they were surprised by the latest mortality data from the CDC, which shows a 40% increase in death rates in the third quarter of 2021, compared to the same period in 2019.
How does COVID-19 death and life insurance impact your disability claim?
The same insurance company that wrote your policy also writes life insurance coverage. Their goal has gone from attempting to minimize losses to battling to protect their companies from taking a financial bloodbath.
The optics of denying life insurance payouts to families and surviving spouses during a pandemic are not good, but the money has to come from somewhere.
We anticipate the next year will become even worse for long-term disability claimants in several situations:
Filing new disability claims.
Reaching the policy stage where disability coverage shifts from “own occupation” to “any occupation” –expect stronger pushback through flawed vocational analyses and overlooked medical reports.
Any disability claim where the monthly benefit is more than $10,000.
Frankly, the money needed to pay life insurance benefits when the national mortality rate has climbed to unprecedented levels becomes problematic, even for insurance companies valued in the billions.
Not all insurance companies are going to be forthright about the impact on their financials, but unless they only sell homeowners and auto insurance, it would be hard to find an insurance company not feeling the impact.
Disability insurance coverage is also feeling the impact of the “Great Resignation.” With millions of American workers quitting their jobs, benefits premiums are not being paid. Did the same actuaries who failed to anticipate the mortality rates also fail to anticipate this income loss for the insurance companies?
The double whammy of paying out billions in life insurance policies paired with less income for benefits has placed the insurance industry in a challenging position. The sector has more than enough assets to come through these challenges, but in our experience, the disability insurance policy claimants are the ones who feel the impact first, as they are the low-hanging fruit.
If you are concerned about your claim, we recommend calling our office to discuss your own disability claim situation. You can reach us at 877-583-2524 to learn more about your claim and how we can help.