Life Insurance Underwriters Wary Of 'Long COVID' Patients

By Martin Croucher
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Law360, London (April 23, 2021, 3:34 PM BST) -- European life insurers did not see major losses last year despite the high death toll from COVID-19, a ratings agency says, but worries about the virus' long-term impact mean many companies are reluctant to sell policies to recovering patients.

Fitch Ratings said that companies' balance sheets were so far relatively unaffected, as older people were more likely to die from COVID-19 and life insurance is more prevalent among the younger generation.

But the company said on Thursday that some companies were taking a wary approach when offering life insurance for customers who previously had COVID-19. In some people, the virus can have an abiding effect, known as "long COVID."

"A more cautious approach to life insurance underwriting may vary from a minimum 30-day waiting period to postponing or rejecting recovered COVID-19 patients," Fitch said.

"Although it is hard to predict the extent of the long-term consequences of the infection, life insurers worry these could last for decades," the company added in a report.

Fitch said that average weekly deaths in Europe spiked twice last year above prior year figures, both in the spring and the fall when the first and second waves of the virus hit, respectively.

The agency said that those deaths were "skewed" toward elderly groups, while insurers typically had more younger people on their books.

While some insurers offered life cover to customers up to their mid-70s, Fitch said policies were often more expensive and that would offset losses from COVID-19 deaths.

The ratings agency said the biggest pressure on European life insurers last year were low interest rates, introduced by governments at the start of the pandemic to encourage lending to businesses.

"Ultra-low interest rates in the eurozone will exert significant pressure on European life insurers' earnings, reducing investment margins and making it increasingly difficult for insurers to finance policyholders' liabilities," Fitch said. "Interest rates in the eurozone had been declining for several years, and the coronavirus pandemic has further aggravated this trend."

A spokeswoman for the Association of British Insurers, the sector's trade body, denied that insurers in the U.K. at least had excluded cover for those who had previously suffered from COVID-19.

"Neither a diagnosis of COVID-19 nor use of a COVID-19 vaccine will have an impact on your existing insurance cover," the spokeswoman said. "There have been no exclusions for COVID-19 from ABI members in life insurance policies."

She said though that individuals who had COVID-19 may have to wait until recovered in order to make an application for insurance cover, she added it was the same situation with any other condition. 

A spokesman for trade body Insurance Europe declined to comment on the report. 

--Editing by Joe Millis.

--This story has been updated with a comment from the Association of British Insurers.

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