Bugs on the march – underestimated infectious diseases

Mammals, alone, play host to 320 000 unknown viruses. And if just one of them jumps to humans, it could well touch off the next epidemic or pandemic. Another source could be organisms embedded in melting permafrost mostly in the Northern hemisphere, Russia, Canada and Alaska. This can result in the release of bacteria and pathogens into hitherto frozen soil. A case in point was in August 2016 when anthrax bacteria escaped into the soil of Russia’s far northern region. Among other possible consequences for the insurance industry, the permafrost thawing could become an additional risk factor in geographies with a high life & health insurance penetration, such as Canada.

Pathogens could be distributed either through water, air (wind) or human traffic/travel, causing large-scale infection in more densely inhabited areas. Such pathogens may be unknown to people in these regions (or travelling through those regions) and may not have a natural barrier. The spreading of tropical weather conditions support so-called vector-borne diseases (e.g. West Nile virus in the US).

For emerging and re-emerging infectious diseases, it is necessary to understand the interactions between microbial pathogens and their hosts as well as the impact of environmental and social factors on these interactions. Many infectious diseases like Avian Flu, SARS, Ebola, Smallpox, Yellow Fever, Dengue and Zika are well known. However, their impact becomes less predictable probabilistically since the risk factors driving them are changing and becoming more complex. These risk factors include:

  • Changes in land use or agricultural practices
  • Changes in human demographics and society
  • Poor population health (e.g. HIV, malnutrition) and failure of public health programmes
  • Hospitals and medical procedures
  • Contamination of food sources or water supplies
  • International travel and trade
  • Pathogen evolution (drug resistance, increased virulence)
  • Climate change (e.g. vector-borne diseases)

The question isn’t whether another deadly infectious disease will appear, but when and how well society is prepared to cope with it. An additional aspect is bio-terrorism. This could become an increased threat as the increasing number of research labs dealing with lethal pathogens are not always well protected and controlled.

While certain factors increase the risks as described above, others can be mitigating influences. These include medical advances, generally improved sanitation and advanced modelling capabilities which can help the design of risk mitigation actions.

Potential impact:

  • Since pricing would not necessarily reflect the changing dynamic, there would be increased mortality and health costs for society in general and the insurance industry in particular.
  • In an extreme scenario, a major epidemic or pandemic also has significant relevance for P&C-related lines and the financial markets.
  • A bio-terrorism attack can most likely only be discovered with a significant time lag. This would make it very difficult to implement forceful risk mitigation action and could potentially lead to large L&H losses.

This text is an excerpt from the "Swiss Re SONAR, New emerging risk insights", June 2017.

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