Ebola – Actuarial insights

The Ebola outbreak in West Africa is not over yet. But there have recently been a few cautious articles suggesting that it is getting better, and that perhaps the worst is over.

The Economist, probably the mainstream media source I trust the most on this, says,

The outbreak continues to claim lives, but after glimmers of good news in recent weeks worrying signs remain.

And just this week, the Vice President of Sierra Leone put himself into quarantine after one of his bodyguards died of the disease.

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Source: Health Committee of the International Association of Actuaries

The International Actuarial Association recently released a paper on Ebola, which is worth a read. After a summary of the latest state of play, both what we know about Ebola, and the current outbreak, there is a very interesting section on modelling the impact of Ebola on an insurer – relevant to a health or life (and disability) insurer.

The paper outlines the way in which you might set up a multi-state model with transitional probabilities between states (quite similar to the disability income model many life & health insurance actuaries are familiar with), but also points out that:

In general, it is worth pointing out that Ebola, as an epidemic, has the general form of high mortality rates and low transmission probabilities. Because of the lower transmission probabilities such an epidemic is typically therefore easier to contain, and typically has a less significant population mortality impact than an epidemic with lower mortality rates and higher transmission probabilities, such as a full-blown avian flu epidemic.

None of that is much comfort to anyone who lives in West Africa. But if you live in a country with a strong health system, the paper points out that:

For actuaries working in countries where there are good national preparations for Ebola, as mentioned above, the results of the multi-state model would typically indicate that the risk to an insurer is fairly limited.

The paper reinforced to me that the infectiousness of diseases is just as important as their deadliness in working out how scared you should be. The post I wrote last year about Ebola certainly brought that home to me, and the latest measles epidemics in the US and Europe makes that point very clearly. While the death rate from an individual case of measles is quite low compared with Ebola measles is one of the most infectious diseases around. So in the last six months, around 70,000 people probably died of measles world-wide, compared with just under 10,000 from Ebola.

Ebola has the potential to be terrifying, if it spreads. But its methods of transmission make it easier to contain, at least in a country with a reasonably well-functioning healthcare system.