Don’t Look Up (Or You Might See a Staggering Employee Death Rate)

Employers in America have a lot on their minds as we enter 2022, and retirement plan advisors will have to forgive them if their 401k plan isn’t exactly a top priority at the moment.

Consider the headaches employers face as they try to formulate and execute plans to get employees back in the office during the extended pandemic, with the Omicron variant currently wreaking havoc just after the Delta variant put many back-to-office plans on hold.

I recently stumbled upon startling comments from OneAmerica Chairman, President, and CEO Scott Davison that got me thinking about this, made during a Dec. 30 virtual news conference about the current COVID surge sponsored by the Indianapolis Chamber of Commerce and the Indiana Hospital Association.

I’m not sure why it hasn’t gotten more attention—reminds me of a little of a dumbfounded Leonardo DiCaprio and Jennifer Lawrence in “Don’t Look Up” wondering why no one cares that a comet they discovered is about to destroy Earth—but Davison sounded the alarm about a truly staggering increase in working-age death rates.

It’s something he knows plenty about as the top executive at a $100 billion life insurance and retirement company in America’s heartland that, among its businesses, offers group life and disability insurance to employers.

Listen to what Davison had to say about 23 minutes into the hour-long YouTube video (he speaks for about four minutes, and appears in other portions as well), and try to tell me it shouldn’t concern Americans:

“We are seeing right now the highest death rates we’ve ever seen in the history of this business. And it’s not just at OneAmerica: The data is consistent across every player in that business.”

Davison said death rates among working-age people—those 18 to 64 years old—are up 40% over what they were pre-pandemic, based on third- and (preliminary) fourth-quarter 2021 data.

“Just to give you an idea of how bad that is, a three sigma or a 1-in-200-year catastrophe would be a 10% increase over pre-pandemic levels,” Davison said. “So, 40% is just unheard of.”

“We are seeing right now the highest death rates we’ve ever seen in the history of this business.”

OneAmerica CEO Scott Davison

Let that sink in for a moment.

The American Council of Life Insurers reported in December that the COVID-19 pandemic drove the biggest increase in death benefits paid by U.S. life insurers since the 1918 influenza epidemic. Death-benefit payments rose 15.4% in 2020 to $90.43 billion, mostly due to the pandemic. In 1918 during the deadly Spanish flu pandemic, payments surged 41%.

If Davison’s figures are accurate, 2021 could end up resembling 1918 for life insurers.

I could understand if employers might seem a little less worried about their workers saving enough for retirement right now when they have should have a legitimately heightened concern about keeping them healthy.

Not surprisingly, Davison said OneAmerica’s group life insurance business is being greatly impacted by the pandemic.

“What the data is showing to us is that the deaths that are being reported as COVID deaths greatly understate the actual death losses among working-age people from the pandemic. It may not all be COVID on their death certificate, but deaths are up just huge, huge numbers.”

He noted the company is also seeing a dramatic surge in short- and long-term disability claims as a result of the pandemic.

“At OneAmerica, we expect the cost of this is going to be well over $100 million, and this is our smallest business. So it’s having a huge impact on that,” Davison said.

He said the costs will have to be passed on to employers purchasing group life insurance or disability policies, who will have to pay higher premiums.

“Premiums are starting to go up, so it will cost more for employers,” he said. “Most of us in the industry are starting to target and to add premium loads onto employers that are based in counties that have low vaccination rates. It’s just typically what we would do for underwriting when you have a risk factor like that.”

Difficult back-to-office decisions

Thinking further about this, it occurs to me that OneAmerica kind of represents a microcosm of what corporate employers in the U.S. are dealing with right now.

Near the beginning of his Dec. 30 comments (about 21 minutes into the video) Davison notes the company has about 2,400 employees, and about two-thirds of them would be working in the company’s downtown Indianapolis headquarters under normal circumstances.

Nearly all of its employees have been home for nearly two years, “and we’re getting to the point where that’s just not working anymore,” Davison said.

“We feel very strongly that for us to be fully effective as a business that we need to have people back in on a hybrid schedule. The challenge we have is that 84% of our people are vaccinated, and we have heard loud and clear from our vaccinated employees that they want no part of working in an open office environment with unvaccinated associates,” Davison continued.

“Some have made it very, very clear that if we try to comingle them with unvaccinated people, they’ll consider that our workplace is not safe, even though we have medical-grade HVAC in our buildings. We’re pretty sure we’re going to lose a number of highly valuable vaccinated associates if we try to comingle. So given that we feel that once we get through this Omicron wave that we need to be back in on a hybrid schedule, we’ve had to make the hard decision to require vaccinations. We think the impact on our business of requiring vaccinations will be very light, but we feel if we don’t require vaccinations, we’re really going to struggle to attract the type of people that we want to work in our companies.”

Think any other corporate execs are wrestling with similar issues and facing difficult decisions? 401k advisors might have to cut employers a little extra slack this month if they seem a little preoccupied.

SEE ALSO:

• Pandemic Leads to Big Spike in Social Security Beneficiary Deaths

• COVID-19 Causes Big Drop in U.S. Life Expectancy