The SOA Explores the Role of Actuaries in the Face of the COVID-19 Situation
R. Dale Hall, FSA, CERA, MAAA, CFA managing director of Research for the Society of Actuaries (SOA) explains the many roles actuaries can have as COVID-19 spreads around the world.
Schaumburg, Ill., March 10, 2020 – The past few weeks have seen the emergence and spread of a novel coronavirus named “SARS-CoV2” that causes the respiratory disease named “coronavirus disease 2019” (COVID-19). While original detection occurred in China, the U.S. Centers for Disease Control and Prevention (CDC) note that the disease is now detected in 60 locations internationally, including the United States.
The Importance of Risk Management
As actuaries, we’ve seen a wide variety of impact from our risk management perspective, and it’s a reminder to us that emerging risk scenarios affect our work in many ways:
- Clearly, many of us are monitoring the direct impact of COVID-19 on insurance claims, such as the increased cost and utilization of health care services, and the potential mortality risk on both general and insured populations.
- We’ve also seen the strong impact of COVID-19 on financial markets, with declines and volatility across all international markets. This strain on the asset side of balance sheet affects many different programs within the actuarial profession. The funding of retirement plans, the capital of insurance companies and the reinvestment of maturing assets at low investment yields are all being impacted by COVID-19.
- The spread of COVID-19 has also highlighted how interconnected our international markets are, and the impact on an enterprise’s operational risks. When international travel, shipping and commerce slow down or cease, new operational risks begin to emerge and impact virtually all industries. Supply chains are disrupted, and companies look for and implement new ways to mitigate their business interruption.
These factors emphasize the need for risk management strategies and analysis that the actuarial profession can provide. It’s been helpful to talk to our members in recent weeks to identify ways to contend and advise their employers and clients on these risks. It’s a fast-paced environment, with new information entering every day, and a prime opportunity for the actuarial profession to continue to provide value. We have new information coming this week to help you with your work as an actuary, including research briefs detailing key statistics and emerging risks. The SOA Health Section and our Research Insights Podcast will also be releasing new episodes that highlight COVID-19 with helpful discussions and interviews.
Valuable Research from the SOA
I’d like to additionally highlight the following reports stemming from past SOA research. They can help to give more information on ways outbreaks may impact our work as actuaries, as well as spur additional conversation for future research:
- The report series on “Potential Impact of Pandemic Influenza on the U.S. Life Insurance Industry” gives guidance through several reports on the potential impact of a disease outbreak on population and insured mortality in the United States, and additionally has information on the potential impact on financial markets, corporate bond spreads, monetary policy and economic output.
- The report series “Potential Impact of Pandemic Influenza on the U.S. Health Insurance Industry Report” highlights the potential impact of an outbreak on health care costs, including information on how costs may vary by the site of care, and the impact on operational risks to health care providers.
We also are committed to updating these reports with the new and emerging evidence from what we’re seeing from the spread of COVID-19 around the world. It will be helpful to further generate this type of research for use by the actuarial profession.
Share Your Thoughts
Finally, we’d like to hear your thoughts and observations on the evolving COVID-19 situation. What are you seeing happen in your work? What claims trends or operational risks are occurring? What risks are emerging that you may not have expected? What additional research topics would you encourage the SOA pursue for the future? Please feel free to send us your comments to firstname.lastname@example.org, or note your observations through social media using the hashtag #ActuaryResearch. Your real-time observations can help give us a better sense of how to highlight emerging risks and consider new research projects.