Life Insurance Valuation under Pandemic Risks: Covid-19


Yavrum C., Kestel A. S.

26th International Congress on Insurance: Mathematics and Economics, Edinburgh, England, 4 - 07 July 2023, pp.144

  • Publication Type: Conference Paper / Summary Text
  • City: Edinburgh
  • Country: England
  • Page Numbers: pp.144
  • Middle East Technical University Affiliated: Yes

Abstract

The Covid-19 pandemic has changed the world, affecting almost every industry, including the insurance sector. Since health and life products considering epidemic risk will gain prominence in the future, insurance companies need to consider pandemic dynamics on their products to minimize the effect of the epidemic. From a life insurance perspective, traditional actuarial models and mortality tables lack the flexibility to model infectious diseases which are significantly different from natural cases of death. In this study, the implementation of epidemiological models on the valuation of life insurance premiums is considered. Covid-19 cases are utilized to illustrate the efficiency of a modified risk scheme based on an epidemic cause. Subsequently, the reserve of some life insurance products is examined. The expected outcome of the study is to determine how costly the pandemic risk is on life insurance.