The US has better population growth forecast than many countries, but is still facing long term headwinds. South Korea still is the most glaring example, but China will continue to see truly shocking population ageing and decline.

https://edition.cnn.com/2024/04/24/health/us-birth-rate-decline-2023-cdc/index.html

Declining populations are rapidly becoming the norm. Global population growth is slowing dramatically and will be negative by the second half of this century.

This may be a bigger driver of change in our lifetimes than climate change.

Actuaries should be dusting off their long term thinking, demographic modelling skills, understanding of economics and markets and yield curves, and penchant for scenario testing. This is a problem for us

In Louisiana, insurers have departed due to heightened storm and flood risks, while in California, wildfires have prompted similar actions. Even State Farm, a major insurer, is suspending new sales and opting not to renew some of its highest-risk policies.

News stories from the US highlight policyholders facing premium increases of 2x, 3x, or even 4x in an attempt to retain coverage. A recent survey by Louisiana State University revealed that 17% of homeowners in the state lost coverage in 2022 alone.

In the UK, discussions on nearly uninsurable flood risks date back to the early 2000s.

Could we see a scenario where all insurers exit a market? Is it impossible that legislators would insist on providing cover in all areas as a response? Would it be unreasonable to additional restrict the maximum loading, or the maximum difference between risk rates to protect consumers?

The Consumer Federation of America estimates that over 7% of all homeowners in the US are uninsured, with lower-income homeowners twice as likely to be affected. Regulators are likely to intervene further if the burden falls disproportionately on vulnerable groups. While not all of this is related to storm and fire risks which are linked to climate change, the trend is likely to worsen.

In South Africa, current thinking suggests climate change will mostly result in hotter and drier conditions (with its own implications including for agriculture, water supply, tourism and disease). However, we have already experienced (and are forecast to continue to see) more extreme weather, greater intense rainfall, and shifts of cyclones southward, changing the frequency and severity of storm damage.

We have already experienced withdrawal of cover, albeit Eskom grid failure related. This demonstrates the principle that insurers cannot insure widescale systemic risks, not least of all without reinsurance.

Let’s be clear – South African insurers are not currently facing the same urgency or scale related to increasing natural catastrophes as their counterparties in the US. Any withdrawal from markets would more likely be lines of business (e.g. agriculture) or risk factors (thatch rooves) or micro areas (for fire or flood or storm surge risk).

To mitigate risk, insurers should focus on:

• developing their emerging risk assessment,
• data gathering and analysis to spot emerging claim hot spots,
• effective relationships with regulators and policy makers, and
• processes and business culture around regular updates to dynamic underwriting guidelines.

The more adventurous could explore:

• tailored products to leverage greater demand for insurance,
• parametric insurance to enable wide-area, low cost coverage of agriculture risks, and
• capital market alternatives to reinsurance to offload risk.

More on these opportunities in a future post.

The sex ratio at birth is not 1 boy to 1 girl. As of 2017, according to World Bank data, it was 1.073 male births for every 1 female birth. In my mind, I still operate on the heuristic of 1.05:1. (It was 1.062:1 in 1962, which probably dates some of my professors rather than me. The US is currently at 1.048:1.)

There are several postulated reasons, including generally higher mortality of males, but also under-registration of female births, and sex-selective abortion and infanticide of female babies. Both of those last two could be attributed to China’s one-child policy. China’s ratio is still 1.15:1 compared to Sierra Leone at 1.018. (Zimbabwe is close to bottom at 1.02 with South Africa not much greater at 1.03.)

The second reason gender at birth is not a coin toss is less well known. The gender of a child is not independent of the gender of the previous child. The impact is small and best-studied on (non-human) animals. One thought is that the “condition” of the mother has an impact on the gender of the child. Other possible factors include frequency of intercourse and paternal age.

Since many of these factors are not independent, the probability of same-gender children is slightly higher than a pure coin toss would indicate, even if it were a biased 1:073:1 coin.

This post was prompted by the interesting analysis of 12 consecutive girl births in a tiny village in Poland. The “statistics lecturer” who explained quite well why this isn’t actually a surprise glossed over some, interesting to me, and arguably important distinctions that demographers (and parents) care about perhaps a little more.

The next Really Interesting Question is what happens to sex ratios, and births and genetic characteristics and selection for children in the coming decades. I can easily imagine that my own children will be the last in “my line” to be all-natural, unedited, unmodified, naturally selected genetic offspring.