1. Philadelphia Actuaries Club Pandemics – Past, Present and Future Presented by Annemarie Brownmiller Consulting Services of Princeton, LLC 19 November 2009

2. Pandemics Past, Present and Future Definitions History of Pandemics Current Situation Implications of Pandemic Modeling Pandemics

3. Definition of Pandemic Pandemic: An epidemic (a sudden outbreak) that becomes very widespread and affects a whole region, a continent, or the world The most common characteristics are: The ability to cause illness on a global basis Little or no pre-existing immunity Potential for serious complications Virus is new subtype No vaccines available in the early stages Influenza pandemic lasts longer than typical flu season

4. Definition of Pandemic Influenza Viruses Influenza Viruses –A Subtype (HxNx) Strain Multiple Species –B Humans Only –C Mild Illness

5. Definition of Pandemic Influenza Viruses Antigenic Drift –Minor change –Same subtype Antigenic Shift –Major change –New subtype

6. History of Pandemics History of Pandemics in the 20th century: –1918 Spanish Flu (most severe) – Infection Rate – close to 35% – Over 40 million deaths in 60 countries –1957 Asian Flu (moderate) – 2 million deaths – 1968 Hong Kong (mildest) – 1 million deaths

7. Learning from the Past SARS –SARS infected over 8,000 people in 25 countries resulting in almost 800 deaths –Cost to global economy - $40 billion* –Transported by air travel *Roche, CDC

8. Inter-pandemic phaseLow risk of human cases1 New virus in animals, no human cases Higher risk of human cases2 Pandemic AlertNo or very limited human-to-human transmission 3 New virus cases human cases Evidence of increased human-to-human transmission 4 Evidence of significant human-to -human transmission 5 PandemicEfficient and sustained human-to-human transmission 6 World Health Organization Phases of Pandemic Alert

9. 21 st Century Pandemic Threats H5N1 (Avian) Influenza H5N1 virus first identified in 2003 442 reported cases through 9/24/2009 and 262 deaths H5N1 is still a serious concern with the potential to cause a deadly pandemic.

10. 21 st Century Pandemic Threats Novel 2009 H1N1 (Swine) Influenza What is Swine Flu? –Morbidity –Mortality April 24, 2009 –The World Health Organization reported 7 confirmed cases of H1N1 in the United States. June 11, 2009 –The World Health Organization declares a global pandemic of the novel 2009 H1N1 (Swine Flu).

11. Current Pandemic Statistics Novel H1N1 2009 (Swine) Influenza 2009 H1N1CasesHospitalizationsDeaths 0 – 178,000,00036,000540 18 – 6412,000,00053,0002,920 65 +2,000,0009,000440 Total22,000,00098,0003,900 CDC estimates of 2009 H1N1 Cases and Related Hospitalizations and Deaths from April – October 17, 2009 by Age Group (mid-level estimates)

12. Current Pandemic Statistics Influenza (Including Novel 2009 H1N1) Source – CDC FluView as of Week 43

13. Implications of Pandemic Risks to Manage Economic Business Continuity Claims Surge

14. Risks to Manage Economic Global recession Asset values Liquidity risk

15. Risks to Manage Business Continuity Employee absenteeism –How do we continue operations when up to 30% of work force is absent –In addition to sick employees, absenteeism results form sick family members along with the ‘worried well’. Disruption of infrastructure Flexibility Travel Policies

16. Risks to Manage Business Continuity Health Insurer –Demand for services –Impact on revenue and reserves –Supply chain –Computer –Plan benefits –Communication

17. Risks to Manage Claims Surge Health Insurance Claims Disability Claims Workers Compensation Life Insurance Claims

18. Modeling Pandemic Impact Health Insurance Input Assumptions Scenarios Output Pandemic Model Estimated excess claims due to pandemic Number of Claims Estimated excess claims due to pandemic Claim Cost Estimated excess claims due to pandemic Limited by Capacity

19. Modeling Pandemic Impact Health Insurance Input to Model –Exposure –Duration –Pandemic Waves

20. Modeling Pandemic Impact Health Insurance Occupancy and Surge capacity –Hospital bed staffing –Occupancy rate –Surge capacity –Critical care beds –Ventilator capacity

21. Modeling Pandemic Impact Health Insurance Utilization –Level of care –Length of Stay –Outpatient Visits

22. Modeling Pandemic Impact Health Insurance Cost Estimates –Inpatient Non-ICU ICU Ventilator Dependent –Outpatient Physician Visits RX Cost of Antiviral

23. Modeling Pandemic Impact Health Insurance Assumptions –Infection Rate The attack rate of an influenza virus determines the percent of the population that becomes infected Attack rates can vary by age with illness among school age children tending to be highest

24. Modeling Pandemic Impact Health Insurance Assumptions –Hospitalization rates Age Underlying health status –Scenarios Mild Pandemic (1968 – Hong Kong Flu) Moderate Pandemic (1957 – Asian Flu) Severe Pandemic (1918 – Spanish Flu)

25. Modeling Pandemic Impact Health Insurance Output –Number and cost of hospital admits Non-ICU admits ICU Admits Ventilator Admits –Number and cost of outpatient visits –Capacity limits Hospital surge capacity Provider surge capacity

26. Pandemic Projections Input ParametersEstimate* US Population307,024,641 Attack Rate15% Hospitalization Rate (of those infected)6% Acute Respiratory Failure Rate (of those hospitalized) 12% * Source – Swine origin influenza A (H1N1) virus and ICU Capacity in the US: Are we prepared? Authors: Marya D. Zilberberg, Christian Sandrock, and Andrew Shorr

27. Pandemic Projections OutcomesMean Estimate*CSP Model** Total Cases46,053,696 Hospitalizations2,763,2221,803,000 Acute Respiratory Failure331,587216,000 * Source – Swine origin influenza A (H1N1) virus and ICU Capacity in the US: Are we prepared? Authors: Marya D. Zilberberg, Christian Sandrock, and Andrew Shorr ** CSP Model Using 15% attack rate and most likely assumptions for a moderate pandemic

28. Fighting the Virus Vaccines –Development time –Prioritization for vaccine distribution Populations at risk for complications Health care and public service –Transmission impact

29. Very Safe Generally for Most People to Take Fighting the Virus Safety of H1N1 vs. Seasonal Flu Vaccine Very Safe for Pregnant Women to Take Very Safe for Children 6 Months to 2 Years to Take Harvard Opinion Research Program, Harvard School of Public Health, September 14-20, 2009.

30. Fighting the Virus Antiviral Medications –Reduce the severity of influenza symptoms –Lessen the risk of getting influenza –Make people less contagious

31. Pandemics Yesterday vs. Today –Better drugs –Coordinated response –Healthier population –Global networks –Global travel –Population Size Density –AIDS

32. Pandemics Past, Present and Future Review of pandemics Implications for insurance company Model insurance exposure

33. Questions? Thank you!