The Impact of COVID-19 on Bank Owned Life Insurance 

Sep 08, 2020

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.


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