In the fourth part of our swan blog series, we look at the impact of climate change on mortality and morbidity.
In this blog series we discuss climate related risks on the spectrum of well established, known, quantifiable risks (‘white swans’) to the extreme, unknowable risks (‘black swans’). In between we find risks that are highly probable, high impact in potential, but are often ignored. These are the ‘gray rhinos’.
In the fourth part of our swan blog series, we look at the impact of climate change on mortality and morbidity.
As global average temperatures continue to increase, life insurers will need to consider if, when, and how this could affect mortality or morbidity, and how liabilities may change in response. Climate change has both direct and indirect impacts. Sudden, extreme events and changes in temperature are directly impacting mortality and morbidity, and there are several indirect impacts on socioeconomic variables (healthcare and income inequality for example).
We believe the indirect impacts outweigh the direct, mostly temperature related impacts. Also, indirect impacts may affect segments of population disproportionately. For example, the insured population is healthier and would be less affected by the collapse of health care infrastructure compared to the general population.
The primary drivers of direct impacts are:
The impact is measured as excess deaths above the expected number of deaths. We note that excess deaths can also be negative as experienced by some northern European countries where mild winter weather reduces cold related mortality.
Several approaches for modelling life expectancy were discussed in the IFoA’s Longevity Bulletin 2025 climate change issue. However, these approaches suffer from key limitations such as limited data and that past weather impacts may not be a good proxy for the future due to highly unpredictable changes looming from potential tipping point breaches.
Interactions between health, mortality and climate are specific to individual location and latitude. Low-income countries across Africa, Asia, and Latin America are highly vulnerable. These regions are prone to severe weather events (droughts, floods, extreme heat) further exacerbated by rising temperatures. These regions rely heavily on climate vulnerable sectors like agriculture with lack of resources and infrastructure for recovery in case of any catastrophic event. This contrasts with the Western world, which is predominantly driven by the service and technology economy that are relatively less susceptible to extreme climate events.
Climate change amplifies the risk of vector-borne diseases by creating warmer temperatures and altering rainfall patterns. These changes expand the geographic range, survival rates, and biting frequency of disease vectors such as mosquitoes and ticks. This leads to accelerated pathogen development, prolonged transmission seasons and increases the risks for diseases such as Lyme, West Nile virus and Dengue fever.
All these factors could lead to additional deaths if temperatures remain high for an extended period. To increase this complexity, climate can also indirectly impact vectors and vector-borne diseases in several other ways. Those include affecting food sources for wildlife that act as blood hosts and changing host activity patterns, interactions, and distributions.
Read more: UK government 2023 report on health effects of climate change in the UK
Climate change threatens food and water security. Extreme weather disrupts supply chains, degrades soil, alters rainfall, and stresses water resources, leading to reduced crop yields, malnutrition, increased prices, and potential conflicts.
Vulnerable regions are mostly exposed with impacts felt globally through trade disruptions and worsening existing inequalities, increasing the risk that temporary shortages turn into sustained stress.
In Egypt, for example, heatwaves and irregular rainfall keep decreasing wheat yields. The UK imports nearly half of its food supply, of which roughly 20% is sourced from climate-vulnerable countries that have limited adaptive capacity.
Certain commodities such as cocoa, bananas and coffee are at risk as these crops require a tropical climate and cannot be grown at scale.
Water security in arid and semi-arid regions like the Middle East, North Africa, and South Asia is severely compromised by climate change. These regions face amplified effects like extreme heat, reduced rainfall, increased evaporation, and erratic precipitation, worsening existing water stress from high demand and poor management, leading to aquifer depletion and desertification.
Climate change affects every aspect of the health care system. Health and social care services are likely to face operational risks due to extreme weather events. These include:
People living in poverty suffer disproportionately more from the adverse effects of climate change than the rich. The relationship between climate change and social inequality is characterised by a vicious cycle. Initial inequality makes disadvantaged groups suffer disproportionately from the adverse effects of climate change, resulting in greater subsequent inequality.
Inequality places disadvantaged social groups in circumstances – such as poorer housing, limited infrastructure, or risk‑prone locations – that leave them more exposed to climate hazards and other adverse impacts of climate change.
Given the exposure level, inequality increases these groups’ susceptibility to damages caused by climate hazards and decreases the groups’ relative ability to cope with and recover from the damages they suffer.
For example, inequality often compels them to live in areas more prone to flooding. Their exposure to flooding caused by climate change is higher than those who have greater economic advantage.
Among those living in the flood zone, the disadvantaged groups prove to be more susceptible to the damages caused by flooding – for example their houses may get completely washed away or be damaged seriously, because these are often made of flimsy materials. By contrast, the houses of the more affluent suffer less damage because these are generally made of sturdier materials, such as brick and concrete.
The vulnerable have less ability to cope with and recover from the damages caused by floods as the rich may buy insurance and thus get compensated for the damages. By contrast, the vulnerable may not be able to afford such insurance and must absorb the entire loss, leading to greater loss of their asset position. Other indirect impacts further widening the inequality tend to be inflationary in nature in terms of food prices and insurance premiums.
Read more ‘Climate Change and Social Inequality’
When we think of climate change induced mortality, we often focus on catastrophic events like wildfires, floods and droughts. The attention is mainly on the direct short-term impacts and on mortality (positive excess deaths).
Direct impacts of climate change on mortality and morbidity are evident, supported by quickly emerging experience on excess deaths (whether negative or positive). These are white swans. Insurers should consider including them, where applicable, as a factor in mortality and morbidity projection models as a ‘climate change term’ calibrated on the emerging data. This would be like a COVID term that has appeared in some mortality models after 2020.
However, we believe that the most consequential effects are the indirect impacts. As we have seen, these are intertwined and far more subtle and nuanced than the direct impacts. These are gray rhinos, already emerging through scattered early signals, and are highly likely to have a substantial impact on mortality and morbidity over the medium and long term.
Climate change acts as a potent threat multiplier by accelerating and amplifying the disruptive effects of events already happening. We will discuss these multiplier effects in the next part of this blog series, covering aggregation.
It is challenging and complex to quantify the exact contribution of climate change to mortality, but as actuaries we need to understand how these confounding impacts may influence the existing drivers of mortality. If we don’t make any allowance for these influences now, it may be too late to mitigate severe impacts when the gray rhino finally strikes.
