The COVID-19 pandemic is unprecedented for most people today, but not historically.
Tragically, in the United States, between 500,000 to 675,000 people died from the 1918 Spanish Flu, with about 28% of the population being infected.
Hopefully, responses like social distancing blunt COVID-19’s human impact, but it has already caused tremendous economic pain.
For those looking to the past for clues about the future, you might ask, how did life insurers fare during and after the Spanish Flu?
In a 1919 speech, the president of the Columbian National Life Insurance Company described how insurers performed during the deadliest pandemic in modern times:
“Throughout this world upheaval, insurance in all its varied branches has steadfastly performed its mission. It has not once faltered. It has grown until today [and] is a great tower of strength and importance to the business world and to the public in general.”
He continued:
“1918 has been referred to by insurance historians as ‘the incomparable year.’ It is the combination of events such as in all human probability can never happen again. Throughout it all, and under most adverse conditions, our insurance institutions have endured and developed.”
Financial planning for high impact, low frequency disasters, such as the Spanish Flu and the COVID-19 pandemic, is how life insurers rise to these challenges.
In fact, 139 U.S. life insurers currently in business can trace their origins to before the Spanish Flu. These companies not only weathered the Spanish Flu, they also successfully navigated the Great Depression, World Wars I & II, 9/11, and the Great Recession. Impressively, these 139 companies represent most of the life insurance industry today — 68.4% of total industry assets; 67.5% of all life insurance in-force; and 61.3% of all annuity reserves.
In a time of upheaval and uncertainty, it’s comforting to know that the U.S. life insurance industry has steadfastly navigated so many extraordinary events. Indeed, life insurers have been a source of strength and support to American families and individuals for more than 175 years. And they’ll continue to provide that support – through the current pandemic and beyond.
Andrew Melnyk is Vice President, Research and Chief Economist at the American Council of Life Insurers (ACLI). He holds a doctorate in economics and is a Certified Business Economist. His functions at ACLI include authoring white papers; managing the production of statistical publications; and managing ACLI’s Research Department. Prior to joining ACLI in 2005, he held positions in academia, government, and the private sector, both in the U.S. and abroad.
