Vaccination - a shot worth more than politics and profitability

One of the blessings of modern medicine is vaccination. Immunisation is a cost-effective way to keep many transmissible viral and bacterial diseases in check and, according to estimates of the World Health Organization (WHO), prevents 2–3 million deaths every year. But this achievement is under threat, due to questions around the economic viability of vaccine production and distribution and also what we see as weaponisation of vaccination in areas of conflict and with growing impacts of anti-vaccination campaigns. Vaccine shortages and refusal increase the likelihood of infection spread, which can potentially balloon to pandemic proportions, most notably for highly infectious diseases where herd immunity counts. The implications of a pandemic are most severe for life and health insurers. There are indirect implications for broader financial markets also.

For profitability reasons, the large pharmaceutical companies in the West are content to leave vaccine production to companies in new markets such as China. Globally, more vaccines are needed to fight diseases like hepatitis B or influenza and the supply chain has become increasingly based in the East. This results in new dependencies and the possibility of vaccine shortages in some locations, especially during periods of heightened political tension and national economic rivalry. Another danger we see is a lag in the development of new vaccines where the profit potential does not make for an attractive business case for pharmaceutical companies.

The WHO lists “vaccine hesitancy” among the “Ten threats to global health in 2019.”1 This “reluctance or refusal to vaccinate despite the availability of vaccines” is attributable, among others, to complacency, inconvenience in accessing vaccines and lack of confidence, the report says. Whatever the reasons, such attitudes risk the resurgence of otherwise avoidable dangerous diseases. A very recent case in point, in the US, there were 465 confirmed cases of measles across 19 states in the first quarter of 2019, the second largest outbreak since 2000 when measles were said to have been eliminated.2

The anti-vaccination movement derives legitimacy from cultural and/or philosophical rejection of vaccines as a force for good. However, in our view the politicisation of the anti-vaccination movement as a means of expressing dissent against domestic authorities and international organisations only heightens the risk of pandemics.

Potential impacts:

  • Vaccines shortages and refusals increases the likelihood that infections will spread, increasing morbidity and mortality.
  • Life insurers are exposed to higher claims in the case of a severe pandemic.
  • A large pandemic can have significant impact on the health system and also mortality, with potential for large scale reduction of regional populations.
  • A drop in productivity, due to many factors (eg, closed schools). Trade, travel and tourism will be subdued and economic output will be reduced.3 This affects financial markets and is therefore directly relevant for re/ insurersʼ balance sheets on both the asset and liability side. 


[1] Ten threats to global health in 2019, World Health Organisation, 2019

[2] Measles Cases and Outbreaks, Center for Disease Control and Prevention

[3] Epidemics and Economics, Finance and Development, Vol 55, No. 2, IMF, June 2018