COVID’s Effect On Insurance Pricing Has Still Not Appeared: For Now
Life expectancy dropped by over a full year in the US due to the pandemic. The question is whether it was a blip. If not, then the likelihood for the base case is to pass away sooner, making insurance prices…higher.
What Has Changed
The average life expectancy has declined. That means the “high point” of all three graphs in image has shifted.
Importantly, the volatility (the number of scenarios and their frequency) has increased due to COVID. So the average is lower and we have moved from the blue line to the red or yellow line.