COVID-19 and its impact on mortality rates

We are living longer. The fact that our society is ageing is no longer news. It is therefore unsurprising that Wien has gone from being the federal state with the oldest population to the one with the lowest average age. The populations of the other eight federal states have aged steadily in recent decades, pushing the federal capital to the bottom of the ranking.

However, significant changes are evident not only in the age structure but also in mortality rates. The COVID-19 pandemic in particular has given rise to new statistical trends that are relevant to actuarial reports. In 2021, the number of deaths was significantly above average:  “In 2021, more people died in Austria than the average for the five years preceding the outbreak of the pandemic, and more than would have been expected as a result of population ageing […]”, explains Tobias Thomas, Director General of Statistik Austria.¹

A country's life expectancy is generally considered a good indicator of the health of its population. It is therefore noteworthy that life expectancy has declined visibly in many countries over the past decade. This trend has been further exacerbated worldwide by the Covid-19 pandemic.²

From an actuarial perspective, it is crucial to account for the distortions caused by COVID-19 in mortality tables when valuing employee benefit provisions. Without adequate adjustments, elevated mortality rates in a particular year can lead to an understatement or overstatement of liabilities recognised in the balance sheet. Companies should therefore reflect pandemic effects in their biometric assumptions to ensure that long-term liabilities are represented realistically.

It remains to be seen what challenges will arise from ageing populations and the aftermath of the pandemic. One thing is certain, however: actuarial science, like our society, continues to evolve and will be equipped to address these new circumstances. 

¹https://www.statistik.at/fileadmin/announcement/2022/05/20220114Sterbefaelle2021.pdf

² https://www.medrxiv.org/content/10.1101/2022.02.23.22271380v2

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