The outbreak of the novel coronavirus originating in Wuhan China has gripped the world in an apocalyptic frenzy. Facemasks and hand sanitizer sold out across Australia in days, kids are being kept home from school, and a man died of a suspected cardiac arrest as bystanders allegedly failed to perform CPR, fearing he had the coronavirus. The virus is yet to claim a single life in Australia, but fear of it has potentially claimed at least one.
How did we get here?
Perhaps part of the answer is Public Relations. The exotic name ‘Corona’, which has launched a multitude of memes (based on the beer). Born in an exotic location – who’s heard of Wuhan? Mixed in with the threat of rapid world-wide spreading – jumping from highly mobile human to human. Surely life insurers are bunkering down for the onslaught of claims from this deadly killer?
Not at all.
One of the common errors in our industry’s thought-process is to focus on short term occurrences, and to pay too much attention to media hype. The underwriter needs to consider – ‘is the applicant/scenario being presented to me a risk which is going to abnormally affect my insured pool because of the specific characteristics of the risk’. Therefore, focusing on hyper-exaggerated reporting can drive decisions on underwriting which don’t consider whether the insured pool are even likely to be impacted. We need to think about the long-term outlook.
As a comparison, it is estimated that the common influenza virus kills 3,000 Australians a year and currently poses a far greater threat to people around the world than the coronavirus from Wuhan. But it barely makes the headlines or drives such panicked behaviour.
“When we think about the relative danger of this new coronavirus and influenza, there’s just no comparison,” said Dr. William Schaffner, a professor of preventive medicine and health policy at Vanderbilt University Medical Centre. “Coronavirus will be a blip on the horizon in comparison. The risk is trivial.”
Worldwide, influenza causes up to 5 million cases of severe illness worldwide and kills up to 650,000 people every year, according to the World Health Organization.
Maybe we should rename the ‘common’ influenza virus and get it the media attention it deserves?
So, what is an official pandemic and how / why is one declared? The World Health Organisation says it needs to meet a number of criteria:
- Is the public health impact of the event serious?
- Is the event unusual or unexpected?
- Is there a significant risk of international spread?
- Is there a significant risk of international travel or trade restrictions?
If you look at these criteria you can see that there is an economic overlay as well as a basic need to prevent the ongoing spread of the actual virus. Medical risk and economic risk. Because people are now highly mobile (compared to only a few decades ago) in 24 hours you can be almost anywhere on Earth. So, you can see why a ‘pandemic’ is sometimes declared. It mitigates the risk, controls the movement of people, limits the spread – but can cause unnecessary panic.