Articles

The Impact of COVID-19 on Bank Owned Life Insurance 

Newport has received a number of questions from our clients and advisor partners regarding the impact of COVID-19 on Bank Owned Life Insurance and the life insurance industry. The potential impact of a global pandemic specific to the insurance industry includes: mortality impact, operational impact and economic impact. 

Mortality Impact

Based on our current understanding of COVID-19, and the demographics of those likely to die from the virus, we do not believe this will have a material impact on the life insurance industry.  Newport has experienced a small increase in BOLI mortality claims relative to the volume of policies we administer.  Our life insurance partners have indicated that they are experiencing similar increases, but to date, the financial impact of these increases appears to be manageable and is not likely to limit or impair the industry’s claims paying ability.

Operational Impact

As with many companies, being forced into virtual work initially created some difficulties for insurers, but for BOLI carriers those issues were relatively minor. Newport has seen little delay in obtaining values or claims processing. Life insurance carriers were well equipped for virtual work and managed to make a near seamless transition from a policyholder’s perspective.

Economic Impact

The U.S. life insurance industry entered the COVID-19 recession from a position of strength. Between strong carrier capital levels and lessons learned from the financial crisis, we do not foresee any immediate and/or material impact to the life insurance industry due to the current downturn of the economy. The implications of a longer-term recession coupled with continued low interest rates could have negative consequences for the entire U.S. economy, including life insurers.

Newport will continue to monitor the impact of COVID-19 on the life insurance industry and provide updates as necessary.

Securities are offered through Newport Group Securities, Inc., a dually registered investment advisor and broker dealer, Member FINRA and affiliate of Newport Group, Inc. Securities in California are offered under the Newport Securities Insurance Services. For more information on Newport Group Securities, Inc. and it’s services please visit our website at www.newportgroup.com.

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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services.
Investment Advisory and fiduciary consulting services are offered through Newport Group Consulting, LLC, a registered investment adviser and wholly owned subsidiary of Newport Group, Inc.
Securities are offered through Newport Group Securities, Inc., a dually registered investment advisor and broker dealer, member FINRA and affiliate of Newport Group, Inc. Securities in California are offered under the Newport Securities Insurance Services. See BrokerCheck for more information. Other insurance products may be offered by Newport Group, Inc.
For more information about Newport Group Consulting and its services, please refer to our Form ADV Part 2A.
Newport Trust Company, is a New Hampshire state chartered trust company and wholly owned subsidiary of Newport Group, Inc. Newport Trust Company provides independent fiduciary and trustee services for employee benefit plans.