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The impact of COVID-19 on life expectancy — what can we expect in Large Loss claims?

We examine the wider implications of COVID-19 on life expectancy and look at what this could mean for Large Loss claims.

According to the latest national life tables, produced annually by the Office for National Statistics (“ONS”), life expectancy in men in the UK has fallen for the first time in 40 years. This article will consider how far the COVID-19 pandemic is responsible for that, examine the wider implications of COVID-19 on life expectancy and look at what this could mean for Large Loss claims.

Life expectancy is the average number of additional years a person would expect to live if age-specific mortality rates continue. The life tables already factor in the impact on the life expectancy of occurrences such as seasonal flu. However, it is the particularly high number of deaths attributed to COVID-19 and a comparatively higher rate of deaths in 2020 than in recent years, affecting men more than women, which has led to a decline in male life expectancy, to age 79 years. This level was last reported for the period 2012-2014. The ONS says the COVID-19 pandemic has not shortened life span on average, nor can it be assumed that life expectancy will improve in the future. Much depends on the aftermath of this extraordinary event. It seems, therefore, that the indirect effects of COVID-19 may well have a more significant bearing on life expectancy than the virus itself.

In July 2020, a paper prepared by the Department of Health and Social Care, the ONS, the Government Actuary’s Department and the Home Office summarised research and analysis carried out into excess deaths and morbidity, collectively referred to as ‘health impacts’, caused by COVID-19. The research suggests these health impacts could last long after the pandemic has ended.

Numerous factors were identified as arising indirectly from COVID-19. These ranged from the cancellation of non-urgent surgical procedures, whereby the surgery later became urgent but past the point of an optimum outcome, to lower physical activity in lockdowns increasing musculoskeletal conditions, to lockdown-induced recession thought to lead to an increase in deaths caused by cardiovascular disease.

The true effects on life expectancy of these and other indirect factors are impossible to predict. However, there may well be certain instances in the Large Loss claims arena where the indirect effects of COVID-19 can have a tangible bearing on the outcome of a case. In the same way that the life multiplier will be adjusted for a claimant with a pre-incident life-limiting condition, the argument will also be relevant where a claimant’s longevity has been compromised by ongoing effects or complications caused by COVID-19. Hypothetically, if a claimant, who had recovered from COVID-19, was left with compromised lung function, this may warrant an adjustment to the life multiplier in the same way that an adjustment is made in cases involving claimants affected by other respiratory conditions, such as asthma, COPD, pulmonary hypertension, etc.

Of more practical note, in an anonymised case in which Weightmans acted for the defendant’s insurer, a staged lump sum settlement was approved in a claim involving a severely brain-injured child a year ago on the basis that the claimant was at high risk of COVID-19 due to his vulnerability, and he lived in what was, at the time, a high-risk COVID area. The settlement provided for a quarter of the lump sum to be paid within 21 days of the approved settlement and the remainder to be paid a year later if the claimant survived. This case is likely to be of limited application now, since we are probably past the acute phase of the virus and this sort of scenario is limited to claims involving maximum severity injuries. It does illustrate, nevertheless, the potential impact of COVID-19 on claims outcomes.

Overall, whilst there is a huge amount of uncertainty around the long-term implications of COVID-19 on health and life expectancy there will be, almost certainly, arguments to raise in Large Loss claims and a watchful eye should remain on this issue as it unfolds.

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