Risk Management in Deadly Times: The U.S. Life Insurance Industry in the 1918-19 Influenza Pandemic

42 Pages Posted: 26 Sep 2020 Last revised: 8 Mar 2024

See all articles by Gustavo Cortes

Gustavo Cortes

Warrington College of Business, University of Florida

Gertjan Verdickt

University of Auckland - Department of Accounting and Finance

Date Written: March 7, 2024

Abstract

Using a novel, hand-collected dataset of U.S. life insurance companies during the Influenza Pandemic of 1918–19, we show that high-exposure life insurers charged higher prices on new policies vis-à-vis less exposed firms. Although the disease surprisingly increased the mortality rates among younger adults, it also increased awareness of the importance of life insurance. We argue that price increases were a crucial risk management tool. Coupled with a surge in demand and coverage, it prevented further financial distress. While devastating for public health, the 1918-19 Influenza Pandemic was not too severe for the life insurance industry.

Keywords: Spanish Flu Pandemic, 1918–19 Influenza, Life insurance firms, COVID-19

JEL Classification: N11, N12, N21, N22, N81, N82, G22, G52

Suggested Citation

Cortes, Gustavo and Verdickt, Gertjan, Risk Management in Deadly Times: The U.S. Life Insurance Industry in the 1918-19 Influenza Pandemic (March 7, 2024). Available at SSRN: https://ssrn.com/abstract=3697832 or http://dx.doi.org/10.2139/ssrn.3697832

Gustavo Cortes

Warrington College of Business, University of Florida ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

HOME PAGE: http://warrington.ufl.edu/directory/person/9136/

Gertjan Verdickt (Contact Author)

University of Auckland - Department of Accounting and Finance ( email )

Private Bag 92019
Auckland 1001
New Zealand

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