Interview with Matthew Edwards
Director, Insurance Consulting & Technology, Willis Towers Watson
Why is this outbreak seem so much worse than previous influenza outbreaks?
The problem is a combination of much greater contagiousness and greater lethality: in other words, it is spreading to more people, and when people catch it, it is more dangerous than normal influenza.
Part of the contagion problem relates to asymptomatic spreaders: with most diseases, you have symptoms when you’re at risk of spreading, so you and others would know there’s a problem. With this type of Coronavirus, there seems to be a window of a few days where you can spread the disease before realising you have it.
What can individuals do to better protect themselves and others?
Voluntary isolation is key, and an important point of this is to protect others: if you can’t know whether or not you are infected at an early stage, then the only way to be sure of not passing it on is to self-isolate. If you do need to be out for essential reasons, wearing gloves will help reduce transmission. If you need to visit elderly relatives, ensure you keep your distance and clean any surfaces you come into contact with.
What is the future like for Italy?
So far the spread of Coronavirus has been exponential, and the early attempts at voluntary isolation had little effect on this growth. However, the measures announced over 7-9th March do seem to have reduced the growth substantially. In early March cases were growing by around 30% every day; that growth is (at time of writing) down to around 10%. We have seen the success so far of the severe restrictions put in place in China, and that would be a great success if replicated in Italy.
There is also the hope that the warmer weather of the next few months will help to reduce the spread. This has generally happened with other influenzas but of course cannot be guaranteed.
What can insurers do to manage their business better?
The problem has shown the value of reinsurance, and life insurers with good reinsurance cover should feel relatively well prepared as far as their claims experience is concerned. Insurers will be thinking very carefully about next year’s cover, although the cost of such cover will clearly be much higher if new terms need to be negotiated.
However, the epidemic has also shown how vulnerable and inter-connected firms are. Thus, an insurer will need to consider not just the obvious point of likely bad claims experience, but asset value reductions, the need to perhaps reconsider the investment strategy, and also operational aspects – for instance, how to ensure that the claims department can manage given a sharp increase in claims, or how financial reporting departments can function with key staff members unavailable because of the illness. This is all in addition to planning for as many staff as possible to work from home.
Finally, problems also offer possible solutions – insurers can offer new products designed to cover individuals and/or employers in respect of outbreaks such as this. For instance, Generali has already launched such a product.
Is there a ‘silver lining’?
There are two silver linings. One is that the disease seems not to be having a significant mortality impact on children, although some have been tested positive for Coronavirus so far. This will be very reassuring to parents.
The other is the pace of research and scientific effort being applied to come up with a vaccine, with much greater knowledge and expertise than we had at the time of outbreaks such as SARS.
Matthew Edwards is an actuary based in London, where he leads the demographic risk and analytics team at Willis Towers Watson. He previously worked for Aviva, where he was Life Director in the Milan office for several years. He leads the UK actuarial profession’s mortality tables and projections group (CMI) and co-leads the new COVID-19 actuaries’ response group