Long Covid: Insurers May Need to Fine Tune Products

A new report by Moody’s takes a look at the potential impact of the `Long Covid’ medical condition on Life and Health claims. The good news is that in many developed economies, government agencies will pick up most of the tab, but there are long term adjustments that may need to be made by Life insurers in the wake of the pandemic and the particular effects of covid on a specific number of inviduals, many of whom will have pre-existing conditions. Interestingly the report make no mention of the increased risk of stroke or heart attack after having multiple Covid vaccines.

Here’s an extract from the long covid report.

“Most costs of COVID-19 – including hospitalizations, ICU stays, intubations, medications, doctors’ fees, etc. – are medical, and
depending on the country, will be picked up primarily by health insurance schemes, whether predominantly national (for example,
Canada, EMEA, Southeast Asia, China), predominantly private (US 13), or a combination of both.”

This is also true for long COVID, whose expenses include supplemental visits to doctors and specialists, additional testing and
procedures, and medications after the virus itself is gone.

However, global life insurers are also exposed to long COVID through a number of their morbidity-based products, particularly longterm income replacement-type insurance (such as individual and group long-term DI; “permanent health insurance” group protection
in the UK), limited medical/hospital indemnity coverage, and critical illness policies, etc.

In some Asian countries, for example, some limited indemnity medical policies have seen a small uptick in claims, although more likely
for COVID than long COVID, with overall infection rates relatively speaking, very low (for example, China; South Korea; Japan).
In North America and EMEA, individual and group long-term DI insurance are most exposed. In the US, for example, a number of
short-term group DI providers have experienced more elevated claims recently – again, mostly for COVID, but with a trickle of claims
identified as long COVID in the US. Very few of these claims have translated into long-term DI claims yet, given waiting long periods.

However, that may happen, as a number of short-term COVID absences from work – for illness or COVID quarantines – stretch into long COVID claims over time.

Better identification of long COVID may also help. In the US, for example, the Centers for Disease Control and Prevention recently
issued a new diagnosis code specifically for long COVID 16 which should also make long COVID easier to quantify and bill for. The code
is the finalized US version of the code, which was first introduced by the WHO earlier in 2021 for global use.

Product design will help keep claim costs down

In most global DI markets, having a private DI policy is not, in and of itself, a guarantee of qualification for benefit usage, particularly for
long-term DI. Policyholders must meet stringent criteria to qualify, and then wait typically 30, 90 or up to 365 days, before coverage
begins.

The long waiting or “deferment” periods, in particular, should help limit the number of potential DI claims, since some people will
recover spontaneously from their long COVID symptoms in the interim. However, certain insurers in some markets (such as Aviva in the UK) are starting to cover individuals incapacitated to work past the deferment period. Some long-term claims for treatment under critical illness policies, for example, for cancer, are also at risk of more elevated long COVID claims that emerge with the illnesses over time.

The report also notes that medical research advances might help resolve the long covid condition in the future, which would obviously limit claims exposure. More reports and insights at Moody’s here.