Estimating the Effects of a Modern-Day "Spanish Flu" Pandemic
To estimate the effects of a modern-day "1918 pandemic," AIR's epidemiologic model was run for a range of events using initial parameters consistent with the historical pandemic. These parameters included R0 values of 1.80-2.48, and a range of CFRs (0.90%-1.25%) that have been adjusted to account for medical and scientific advances since 1918. Other initial parameters included when and where the pandemic originated. The pandemic was then propagated through the AIR model to estimate mortality and life insurance losses.
It is important to note that the model explicitly incorporates the application of mitigation measures such as antivirals, vaccines, and travel restrictions, and makes realistic assumptions for each. For example, the model assumes that vaccine production and deployment takes about six months; in contrast, antivirals are assumed to be available immediately. In the model, the availability of both vaccines and antivirals varies according to each modeled country's stockpile size, resource levels, and distribution capabilities. The model also accounts for variation in the efficacy of these pharmaceutical interventions by patient age, with an average efficacy of 40%-60%. Finally, the model accounts for worldwide population movements through air travel and local commuting. Global air travel will likely decrease as the pandemic becomes more widespread because of government-mandated restrictions and because people are likely to avoid traveling due to concerns over contracting the virus.
The AIR Pandemic Flu Model estimates that a modern day "Spanish flu" would result in between 21 and 33 million deaths globally. Developed countries would experience the lowest mortality rates, with population-level mortality rates in the range of 0.08%-0.09%, as shown in Figure 3. In fact, the AIR model suggests that, due to medical and technological advancements, case fatality rates would be almost 90% less than what was experienced during the actual 1918 Spanish flu. However, the AIR model also finds that increased global travel and an aging population would raise the death rate of a modern day "Spanish flu" pandemic by 30% and 8%, respectively, compared to the actual mortality rates in 1918. Taken together, these modeling results suggest that dramatically fewer excess deaths—nearly 70% fewer than actually occurred in 1918—would result from a "Spanish flu" event today.
The stochastic "modern day Spanish flu" event generated for the AIR model produces an age CFR profile similar to that of the actual 1918 pandemic. Specifically, the stochastic pandemic event exhibits increased mortality rates among young- to middle-aged adults (25-34 years of age), yielding a "W"-shaped mortality profile very similar to the mortality profile of the actual 1918 pandemic. This "W"-shaped profile can be attributed to the ability of the simulated virus to cause a cytokine storm, demonstrating the model's ability to capture the effects of this complex syndrome.
Table 1. Mortality and life insurance losses estimated by AIR for seven countries due to a modern-day recurrence of the 1918 influenza pandemic (Source: AIR)
||Number of Deaths
||Industry Life Insurance Losses (USD billions*)
*All losses converted from local currency to USD using exchange rates as of 12/31/2012.
The AIR model estimates that a modern day "Spanish flu" event would result in additional life insurance losses of between USD 15.3-27.8 billion in the United States alone. According to the American Council of Life Insurers, benefits paid to beneficiaries in 2010 amounted to more than USD 58 billion (ACLI, 2011). Therefore, losses from a modern day "Spanish flu" would represent close to a 48% increase in the total benefits paid by the life insurance industry.
Putting the Simulated Pandemic in Context
The AIR Pandemic Flu Model features a 500,000-year stochastic catalog of more than 18,000 simulated pandemics. Based on this stochastic catalog, AIR can estimate exceedance probabilities for a modern-day recurrence of the 1918 pandemic from various perspectives. Exceedance probabilities vary by country and, within those countries, the probabilities also vary by age group. The AIR Pandemic Flu Model shows that, for the U.S. and UK, the observed population-level mortality from a recurrence would have an exceedance probability between 0.5%-1.0%, corresponding to a 100-200-year return period. This return period holds true for most age categories, with a few exceptions. For example, the mortality level for the 25- to 34-year-old age category is associated with a return period of around 200–400 years, which arises from the pandemic's atypical "W"-shaped mortality profile. Conversely, for the 65+ age category, the estimated level of mortality would have a return period around 50–100 years.
Insurance and reinsurance companies should, however, realize that a modern-day "Spanish flu" pandemic does not represent a worst-case scenario in terms of pandemic risk. For example, an emergent pandemic strain could be resistant to antiviral drugs; in addition, it may prove impossible to manufacture a vaccine in a timely fashion due to production difficulties. Hospitals may also be overwhelmed by the influx of the sick and the "worried well" and may be unable to provide care to everyone who needs treatment. For these reasons, and due to the threat of highly pathogenic avian influenza, the AIR stochastic catalog also includes extreme events with CFRs as high as 25%-30% in developed countries. Events this severe have the potential to cause hundreds of millions of deaths globally, including millions of deaths in the United States alone.
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1 AIR trends historical life insurance losses to modern-day dollars using the share of GDP method (the share of GDP represented by a historical loss value is calculated, and this proportion is applied to the current GDP).
2 While all of these treatments are available in developed countries, their availability in other parts of the world varies.