David Rains, FSA, MAAA, Managing Director and Practice Leader — Life, Accident & Health Specialty
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The lethality of the H1N1 swine flu outbreak has declined over the past month. As of May 6, 2009, H1N1 had a lethality rate of 1.98 percent. This has fallen to 0.61 percent as of June 3, 2009.
David Rains, FSA, MAAA, Managing Director and Practice Leader — Life, Accident & Health Specialty
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The recent H1N1 swine flu outbreak has garnered considerable attention, but evidence that the outbreak will become a statistically significant pandemic event remains sparse. As of May 6, 2009, there have been 1,516 cases confirmed globally by the World Health Organization (WHO), with 30 fatalities. Consequently, H1N1 has shown a lethality rate of only 1.98 percent. While any loss of life is tragic, the implications of swine flu have not reached pandemic proportions.
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As of May 6, 2009, there have been 1,516 cases confirmed globally by the World Health Organization (WHO), with 30 fatalities. Consequently, H1N1 has shown a lethality rate of only 1.98 percent. While any loss of life is tragic, the implications of swine flu have not reached pandemic proportions.
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To date, most cases of H1N1 swine flu have been confirmed in Mexico; 29 deaths have resulted from 822 WHO-confirmed cases. The United States and Canada have reported 403 and 165 cases of H1N1 respectively, with one fatality in the former and none in the latter. Overall, there have been 1,516 confirmed cases of H1N1 and 30 fatalities. Outside Mexico and the United States, there have been no confirmed deaths related to H1N1 swine flu.
Meanwhile, speculation is spreading much faster than the disease. Wikipedia lists nearly 3,000 suspected cases of H1N1 swine flu in Mexico, with 101 suspected deaths.
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A deadly outbreak of a swine flu virus first detected in Mexico continues to cause global concern, as the number of cases detected worldwide rises. On April 29, 2009, the World Health Organization (WHO) raised its flu alert level from four to five, just one stage below a full-blown pandemic in which there is widespread human to human transmission. The WHO said the upgrade signaled that a “pandemic is imminent” and prompted the organization to advise countries to activate their pandemic plans, including heightened surveillance and infection-control measures. The WHO’s level five alert indicates “human to human transmission in at least two countries.”
A deadly outbreak of a swine flu virus first detected in Mexico has sparked global concern, as a rising number of cases have been detected worldwide. The World Health Organization (WHO) yesterday raised its flu pandemic alert level from three to four, two steps short of declaring a full pandemic. The WHO said the upgrade signalled a “significant increase in risk of a pandemic,” and prompted the organization to advise countries to now focus on mitigating the effects of the virus rather than containing it. The WHO’s level four alert means the virus is showing a sustained ability to pass from human to human, and is able to cause community-level outbreaks. However, the organization stressed that “a pandemic is not considered inevitable” at this stage.
Cat Risk Comes Out of Hiding: advances in casualty catastrophe modeling may help protect you from “hidden” portfolio exposures.
Sidecars Have a Specific Role to Play: low overhead and an inherent exit strategy are likely to help these vehicles regain prominence in the next hard market.
FHCF Bonding Capacity Update: new estimates reflect the changes in the economic climate and emphasize the heavy dependence of the FHCF on post-event financing to meet its obligations.
Push Pandemic Out of Insurance: the depth and flexibility of capital markets may provide a robust alternative to traditional reinsurance.
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Capital Markets Provide Necessary Depth
David Rains, Managing Director
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Life carriers struggle with the notion of hedging pandemic risk. The probability of an event occurring in any particular year is low. Even if an outbreak does occur, the process for estimating losses and determining reserves is unclear. Capital approaches do not consider probabilistic tail scenario risks. Quite simply, managing pandemic risk is an effort mired in doubt, though the potential for a devastating, multibillion dollar, worldwide outbreak is real. Traditional risk transfer tools have only limited utility in covering pandemic exposure. However, the depth and flexibility of capital markets may provide a robust alternative to traditional reinsurance.
Mortality bonds may be increasing in popularity, but the market is still in its infancy. Six mortality bonds in 20 tranches have been issued over the past four and a half years. Currently, there is USD1.8 billion in total limits outstanding. One mortality bond (Vita III Ltd.) was sponsored in 2007, generating more than USD500 million of risk capital. While it is clear that the mortality bond market is still young, it does show considerable promise.
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