US bird flu outbreak could cost insurers $133 bln
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A U.S. avian flu pandemic on the scale of one that took place in 1918 could take the lives of an estimated 1.9 million people and cost the life insurance industry $133 billion in extra death claims, according to a study released on Tuesday.
A moderate influenza outbreak, based on similar events in 1957 and 1968, could cause 209,000 deaths, according to a report released by the Insurance Information Institute (I.I.I.), which cites data from U.S. Department of Health and Human Services. That compares with a typical year when 36,000 Americans die from the flu.
The moderate outbreak scenario could cost the life insurance industry $31 billion in extra death claims, the I.I.I. said.
Companies affected by an outbreak would include the largest U.S. life insurers as measured by revenues such as MetLife Inc., Prudential Financial Inc. and New York Life Insurance.
Some insurers have been preparing investors for potential bird flu outcomes.
For example, the world’s largest insurance company by market value and a major U.S. life insurer, American International Group Inc. said in its last quarterly earnings report that “an outbreak of a pandemic disease, such as the Avian Influenza A Virus (H5N1), could adversely affect AIG’s business and operating results…”
Using the HHS “severe” forecast of 1.9 million deaths, the I.I.I. estimates death claims from the flu would be $54 billion for group life insurance policies and $79 billion for individual life insurance policies.
For a moderate pandemic, estimated costs are $11 billion for group life insurance and $20 billion for individual life insurance, for a total of $31 billion.
If the next influenza pandemic follows the mortality pattern of the 1918 outbreak, with about one-half of the deaths in the 18 to 35 age range, many who die would be covered by both group and individual life insurance.
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