How can actuarial thinking improve wellbeing outcomes post-COVID-19?

COVID-19 has had a devastating and unprecedented impact on our wellbeing. It presents significant risk management challenges for government to reduce these impacts, including those related to the population’s health, economic, and social wellbeing[1]. Given the need for a focus on long term outcomes amidst significant uncertainty, opportunities exist to embed actuarial thinking and principles into the management of population wellbeing outcomes.

Impacts on wellbeing due to COVID-19

The systemic impact of the COVID-19 pandemic on our wellbeing, across a broad spectrum of domains, is unmatched and includes:

  • Health: As at the 1 January 2021, 82 million cases of COVID-19 have been confirmed, including 1.8 million deaths, worldwide[2]. There are also a series of second-order effects from COVID-19, which place significant strain on health systems including: the financial cost of providing additional urgent services and disruption to existing services such as cancer screening[3].
  • Economic: Economic indicators including unemployment, wage growth, and investment have all pointed to a weakened economy. Australia has accrued its largest deficit since World War II as it increases expenditure on initiatives such as the JobKeeper wage subsidy to support the Australian economy[4]. There are also significant disparities in the economic impacts associated with the pandemic by industry and nature of employment.
  • Social: While more difficult to quantify, the pandemic has materially impacted our social wellbeing. Lockdowns, introduced to reduce the spread of infection, have led to increased isolation, further impacting our communities, relationships, and mental health. A slow economic recovery is likely to lead to prolonged financial stress, a significant factor contributing to poor mental health[5]. Increased stress and isolation due to the pandemic have also indicated evidence of worsening domestic and family violence[6].


Risk management challenges for government

COVID-19 presents enormous challenges for government[7] to manage the various risks that affect its citizens’ wellbeing, particularly given the rapidly evolving nature of the pandemic. The pandemic has highlighted the need for improved government planning, processes, and infrastructure to respond to the immediate effects and evolving risks.

The management of these risks are complex as they require trade-offs across wellbeing domains and cohorts of society. For example, lockdowns are more likely to adversely affect younger people’s economic wellbeing whilst providing greater health outcomes for older persons[8].

The complexity of the risk management challenges that government faces means a framework is needed to ensure there is a holistic response to risk management of wellbeing outcomes which informs transparent and evidence-based decision making. Actuarial expertise is well suited to managing these complexities.

Why actuaries should be involved

Actuarial expertise and modelling can add value to government policy given its need to manage long term risks and outcomes. Recent examples of such actuarial involvement include:

  • the establishment of the National Disability Insurance Scheme (NDIS) in 2013, which was based on insurance principles to inform outcomes and costs over participants’ lifetimes[9];
  • the Department of Social Services uses a priority investment approach to understand drivers of dependency on welfare through projection of future lifetime welfare costs[10]; and
  • in New Zealand, Oranga Tamariki (Ministry for Children) leverages actuarial expertise to model individual’s service interactions with government over their lifetime to directly project wellbeing outcomes[11].


These examples demonstrate that actuaries have the requisite expertise of working with uncertainty, long term outcomes and large datasets to support government’s objectives with evidence-based policy. In times of greater uncertainty such as a pandemic, it underlines the importance for expertise in managing uncertainty and a long-term approach to outcomes and wellbeing.

Shift towards outcomes and wellbeing

Government is increasingly focussing awareness on outcomes and wellbeing rather than simply monitoring usage and cost of government services. Both NSW and Victoria have developed outcome frameworks to guide agencies and organisations to systematically track and report on priority wellbeing outcomes[12].

The shift in focus from service usage to outcomes and wellbeing is made possible with improved data capture and management practices. These improvements are expected to continue to drive increased understanding of wellbeing, use of evidence-based policy and actuarial involvement.

How can actuaries contribute to a wellbeing framework?

Opportunities exist to extend existing wellbeing frameworks through the embedding of actuarial principles. A wellbeing framework that incorporates the potential distribution of future outcomes rather than simply reporting on historic outcomes allows forward looking policy decisions. It can also provide greater insight into the uncertainty of achieving desired outcomes, and the trade-offs between different outcomes.

Key contributions that actuarial thinking and principles can make to wellbeing frameworks are:

  • Modelling the distribution of outcomes: Government needs to be able to identify appropriate targets for outcomes and this is best done by understanding the potential distribution of outcomes that could eventuate. Modelling the distribution of outcomes can not only identify what is a reasonable target level to select for outcomes but can also identify previously unconsidered risks by thinking critically about the various factors which influence the modelled outcomes.
  • Understand risk trade-offs: Modelling can also be extended to understand the trade-off/interaction of different risks across multiple domains of wellbeing, as well as understanding the differences in impacts by cohort. This is particularly relevant to crises such as a pandemic where impacts are diverse and wide ranging.
  • Understand the impact of policy decisions: Actuarial modelling can be performed to understand the potential impacts of proposed actions on outcomes and hence support the selection of appropriate actions by policymakers.
  • Measure outcomes and understand drivers of experience: Government must measure how it has performed against its stated targets and understand how it should adapt policy where outcomes aren’t achieved. This shares commonality with experience analysis performed by actuaries, in which actual outcomes are compared to expected outcomes to understand drivers of experience.



COVID-19 has demonstrated the need for government to make complex decisions to mitigate risks to wellbeing. While government has begun to implement wellbeing frameworks, there are opportunities to enhance these frameworks by incorporating actuarial thinking and principles. This includes using a forward-looking approach which models the potential distribution of outcomes to understand risks to those outcomes, across wellbeing domains, and various cohorts. Actuarial thinking and expertise are becoming increasingly valuable to government, particularly during times of high uncertainty, as government continues to promote evidence-based policy, and improvements are made to data management practices and modelling capabilities.


[1] This essay will focus only on the health, economic and social domains of wellbeing, but note that this does not represent an exhaustive list of the domains which government would be needing to understand and support.

[2] WHO Coronavirus Disease (COVID-19) Dashboard, World Health Organisation, accessed 17 January 2021.

[3] How has COVID-19 impacted cancer screening? Adaptation of services and the future outlook in Australia, PHRP, accessed 17 January 2021.

[4] The COVID-19 economic update in numbers, Australian Financial Review, accessed 17 January 2021.

[5] Mental health and COVID‐19: are we really all in this together?, Medical Journal of Australia, accessed 17 January 2021.

[6] Responding to the ‘Shadow Pandemic’: Practitioner views on the nature of and responses to violence against women in Victoria, Australia during the COVID-19 restrictions, Monash University, accessed 17 January 2021.

[7] While the focus of this essay is how government can most effectively manage risk and subsequently actuarial involvement, the principles discussed above are relevant to the private sector. Several large businesses such as airlines and sporting codes have been significantly affected by the pandemic yet the pandemic is not a complete unknown – flu pandemics have been known to eventuate every 100 years or so. Businesses must also ensure that they have sufficiently planned such that they can appropriately respond to these events. This could include setting aside funds in good times for adverse events such as this and ensuring there is appropriate planning and infrastructure to adapt their business models (potentially for considerable lengths of time) as required.  

[8] This is a generalisation as there will clearly be economic impacts for older persons and health impacts for younger persons but the principle that impacts will not be equally felt is what is most relevant.

[9] Overview of the NDIS Operational Guideline – About the NDIS, National Disability Insurance Scheme, accessed 17 January 2021

[10] Australian Priority Investment Approach to Welfare, Department of Social Services, Australian Government, accessed 17 January 2021.

[11] Lifetime Wellbeing Model for New Zealand Children, Oranga Tamariki, NZ Government, accessed 17 January 2021.

[12] The Human Services Outcomes Framework, NSW Department of Finance, Services and Innovation, accessed 17 January 2021.
Victorian public health and wellbeing outcomes framework and data dictionary, Victorian Department of Health & Human Services, accessed 17 January 2021.


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