What's Happening?
Mortality rates in the United States appear to be returning to pre-COVID-19 pandemic expectations, according to an analysis by RGA. This trend suggests that the temporary effects of the pandemic on mortality are subsiding, leading to a clearer picture
for actuarial models. The analysis indicates that male mortality rates in the U.S. returned to pre-pandemic levels in 2023 and have remained consistent since. Female mortality rates have been broadly parallel to pre-pandemic expectations, though slightly higher between 2023 and 2025, with projections suggesting they could soon fall below pre-pandemic levels if 2026 data aligns with current estimates. This development is significant for insurers who rely on accurate mortality projections for their longevity models and assumption setting. The study emphasizes that while the acute phase of the pandemic required fitting mortality models based on philosophical views due to uncertainty, current data allows for more concrete assumptions.
Why It's Important?
The return of U.S. mortality rates to pre-pandemic levels has substantial implications for the insurance industry and financial planning. Insurers use mortality models to calculate premiums, reserves, and annuity payments. A shift from a 'change in direction' view, which assumed a lasting impact of the pandemic on mortality, to a 'return to pre-pandemic' view can lead to an increase in life expectancies by approximately 1% at age 65. This seemingly small percentage can have material financial consequences, affecting the profitability and risk management strategies of life insurance and annuity providers. Accurate mortality projections are crucial for maintaining solvency and ensuring fair pricing for policyholders. The analysis highlights the importance of continuously updating models with emerging data to avoid significant errors in financial planning and to reflect the true state of population health.
What's Next?
Insurers in the U.S. are expected to adjust their best-estimate mortality assumptions to align with the emerging data indicating a return to pre-pandemic levels. This will involve updating their CMI (Continuous Mortality Investigation) models and other actuarial tools to reflect the latest trends. The focus will be on ensuring that these models adequately incorporate the recent experience, moving away from more pessimistic long-term views that might have been adopted during the height of the pandemic. While the U.S. picture is becoming clearer, other regions, such as the Netherlands, still present a more complex and uncertain mortality landscape, requiring extra caution in assumption setting. The ongoing monitoring of mortality data and continuous refinement of models will be critical for the insurance industry to adapt to post-pandemic realities.
Beyond the Headlines
The observed return to pre-pandemic mortality rates in the U.S. could signify a broader resilience in public health systems and population health, despite the severe impact of the COVID-19 pandemic. This trend might suggest that the long-term health consequences of the pandemic, while significant for individuals, may not have fundamentally altered population-level mortality trajectories as initially feared. However, it's crucial to acknowledge that 'underlying mortality' rates, which strip out temporary COVID-19 effects, are the focus here. The analysis does not delve into other non-COVID-19 factors that may have influenced mortality since 2019, such as changes in lifestyle, healthcare access, or other public health challenges. The ability of the U.S. to revert to pre-pandemic mortality patterns could also reflect the effectiveness of vaccination campaigns, improved medical treatments, and public health interventions, offering valuable lessons for future health crises.
