Filed Under:Markets, Personal Lines

Modeling Firm Sees Minimal Flu Impact For Insurers

NU Online News Service, May 15, 1:22 p.m. EDT

A modeling firm which has been projecting pandemic flu impact for the past three years says the current outbreak while growing is unlikely to cause big insurance losses.

And the disease will have less effect on countries with good health systems, said Newark, Calif.-based Risk Management Solutions.

The firm said it has been closely monitoring the New Variant Influenza A/H1N1, swine flu outbreak, which it said could be reasonably seen as having Category 2 severity on the 5-point Pandemic Severity Scale used by the U.S. Centers for Disease Control.

"The insurance industry will be impacted in a number of ways--there will be some increased mortality in life insurance portfolios, particularly in emerging markets, but our analyses show that there is only a small chance of this pandemic causing very substantial losses," explained Dr. Andrew Coburn, RMS vice president of life and health risk research.

RMS said the excess mortality bonds in the market have small, but not insignificant, probabilities of being triggered and the unfolding event is of more concern to health care insurers, who would be impacted by higher hospitalization loads.

Other lines of business, RMS found, may also see elevated losses, such as travel insurance, creditor and loan protection insurance, and liability lines. We expect that event cancellation covers could be triggered, if major sporting or entertainment events are cancelled due to public health measures.

Overall, the biggest impact is likely to be in general economic productivity, from absenteeism in the workforce and drop in consumer demand, which will compound the current economic crisis, RMS projected.

"The data and epidemiological studies now emerging suggest the virus' characteristics have similarities to those that caused the 1957 'Asian Flu' pandemic, which is estimated to have killed around 2 million worldwide," commented Dr. Coburn.

But he added that today's anti-viral drugs are likely to ensure the consequences of the current virus "will not be as severe--particularly in countries with good health care environments."

As of today, RMS said there were over 6,460 confirmed cases of New Variant Influenza A/H1N1 reported worldwide, and 65 directly attributable deaths.

The firm said the virus is being spread through communities in many countries, and is likely to continue to do so in coming months with a potential resurgence in the autumn.

According to RMS, the global caseload total is currently continuing to double every two to three days but is expected to slow over time.

It said cases have increased rapidly in the United States, which now accounts for more than half of all known cases, and Mexico continues to report hundreds of new cases a day, despite measures to control the spread.

In countries with good health care facilities, where flu sufferers are identified and quickly treated with the Tamiflu drug there are fatality rates of around 0.13 percent, said RMS. In Mexico, the modelers said case fatality rates appear to be multiples of this and similar higher fatality rates might be expected in places with less resourced health care environments.

Dr. Coburn added, "The emerging picture continues to reinforce the RMS view that this is a virus of moderate severity, spreading generally through the population.

RMS is continuing to monitor this rapidly developing situation.

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