Did the 1918–19 Influenza Pandemic Kill the US Life Insurance Industry?

37 Pages Posted: 26 Sep 2020

See all articles by Gustavo Cortes

Gustavo Cortes

Warrington College of Business, University of Florida

Gertjan Verdickt

Monash University - Department of Banking and Finance; KU Leuven, Department Accounting, Finance and Insurance

Date Written: September 24, 2020

Abstract

We document two puzzling facts during the 1918–19 influenza outbreak. First, we find no significant differences among US life insurers’ profitability before or after 1918. Second, there are fewer insurers in distress after the outbreak. We argue that an increase in insurance demand offset higher death claim payouts. Moreover, we find that life insurers from heavily affected states were more likely to issue equity. The prudential control of state regulators also mitigated financial difficulties. The influenza pandemic, while severe from a public health perspective, was arguably a blessing in disguise for the sector.

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, Did the 1918–19 Influenza Pandemic Kill the US Life Insurance Industry? (September 24, 2020). 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)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

HOME PAGE: http://www.verdickt.eu

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