Matt Fletcher, Associate Partner, Aon
After four years where the direct and indirect impacts of the COVID-19 pandemic have seen elevated levels of mortality in England & Wales, deaths in 2024 have been much more in line with 2019, the last pre-pandemic year.
What might happen in the winter months?
Given experience to date, it might appear reasonable to assume that deaths over the next few months will continue to be similar to what was seen in 2019. However, deaths in the winter months tend to be more variable than in other seasons, and the eventual outcome will depend on the level at which infectious diseases are circulating. Based on weekly deaths data from the Office for National Statistics (ONS), the numbers of deaths involving flu and pneumonia are significantly higher than those involving COVID-19, so (as was the case pre-pandemic) we consider that flu is likely to be the main driver of variability in deaths over the winter months.
We have some early signs of how the 2024/5 flu season might impact the UK – data up to the start of November suggests that experience so far has been between 2022/3 (which saw very high levels of infection) and 2023/4 (which peaked much lower). We can also look at the Australian flu season, which occurs during the European summer and can often provide an early indication of what might happen in the Northern hemisphere. Indications from here are mixed, with infections in the 2024 season peaking higher than 2023, and at a similar level to (but somewhat later than) 2022.
Based on this, we might tentatively expect the end of 2024 to see slightly elevated overall mortality compared to 2019 – but we still anticipate a strong improvement over 2023's overall experience.
Differences between age groups
This overall mortality experience for 2024 masks some differences by age – for ages below 65, deaths have been significantly higher than 2019 (the year with the lowest mortality on record) and roughly in line with the average over the last 10 years, whilst for ages over 75 mortality has been at its lowest ever.
It's not yet clear exactly what's driving this divergence in mortality experience between older and younger people, which was also seen in 2022 and 2023. There is some evidence from cause of death data that suggests a large part of the explanation could be higher excess mortality from circulatory disease amongst the younger population, which was not seen to the same extent at older ages. Understanding the causes of this will be important, both in terms of healthcare policy and when forming a view on likely future trends in mortality.
What might the future look like?
It is important for pension schemes and the insurance industry to reach a view on the likely level of longevity improvements in the future. This will influence insurer pricing when schemes are ready to transact.
A recent survey of insurance market participants carried out by the Continuous Mortality Investigation (CMI) indicated an average fall of almost 2% in projections of life expectancy due to the specific impact of the COVID-19 pandemic. This figure is higher than the average from CMI's 2022 survey, but has not changed compared to the 2023 survey.
The same survey suggests that insurers' views on the longer-term rate of mortality improvement have not changed significantly over recent times, and that overall views on the future of mortality across the insurance industry in 2024 are similar to those in 2023.
Predicting mortality trends
Each year, the CMI produce a mortality projections model which is calibrated using England and Wales population mortality data. The latest version was published in April 2024. The model makes
• No allowance for 2020 and 2021's mortality data, which were elevated due to the COVID-19 pandemic, and unlikely to be indicative of future trends, and
• Partial allowance for 2022 and 2023's mortality data, reflecting an underlying assumption that experience in these years is at least partially indicative of a new trend of higher mortality rates.
Looking ahead, the next version of the model (‘CMI_2024') is likely to be published in March 2025 and will include 2024's mortality data. The CMI has announced that there will be a consultation on this model starting in November 2024, with various potential changes to the structure of the model being considered in light of the COVID-19 pandemic.
We await the CMI_2024 consultation with interest. CMI will need to ensure the new model structure adequately reflects the latest data and remains robust to future mortality trends. On the basis that mortality in 2024 is likely to be slightly lower than projected within the previous version of the model, we don't expect CMI_2024 will have a material impact on liabilities compared to the most recent versions of the model.
