We have had one tax related increase in life premiums and we've had a couple of other minor realignments to adjust overall pricing to better reflect experience across different ages, sexes, and smoking status.
But will the earthquake affect life insurance rates?
I've been asked several times by people looking at the scale of the claims on the general insurance side, and they naturally assume that the catastrophe affects life insurers to a similar scale.In fact, the scale is far, far, smaller.So the answer is that no direct impact is likely.
As I write the death toll is 165. That's 165 too many as far as I am concerned, and each individual represents a terrible tragedy. The actual amount of life insurance is likely, sadly, to be small. A little while ago an insurer talked about the average sum insured being roughly $80,000 - it varies, a lot, but that's about right.
What's more, that's amongst those actually insured.
Many will have had no cover at all. But even if you apply that average to each of the dead, the total is not much: $13.2 million. Double it, and it's still not much. Not nearly enough you might argue, but this is not the time for such thoughts. In a risk sense, this event occurred against a backdrop of continuous gradual improvements in mortality. It must also be remembered that it is an extraordinary event, at least partly incorporated in pricing, and from a risk perspective it is possible to look through it.
The damage to physical infrastructure runs to billions. The actual insurance impact depends on the level of cover from the Earthquake commission and top-up cover from general insurers, and cover for events such as business interruption. That will certainly run to billions.
There are some things which will affect life insurance pricing, perhaps even the surprising ruling from the EU that insurers may no long discriminate on the basis of gender, but more on that in another post.