Any investor worth their salt knows a good exit strategy is as vital to a good outcome as anything that came before.

Governments around the world are now grappling with this scenario as they look for ways to unwind social restrictions put in place to contain COVID-19 without reigniting the outbreak.

Most jurisdictions have a policy which has slowed the spread of the disease, but all are less sure when it comes to an exit strategy. The brutal reality is that no one will be entirely safe until there is a vaccine. But no coronavirus has had a successful vaccine developed before, and a wait of at least a year is forecast.

Yet actuaries at Rice Warner say Australia and New Zealand are in pole position to beat the odds and successfully transition toward a post-COVID-19 era.

The risk of going early with relaxation of restrictions is still large, they say, but the risk of holding out longer will be “crippling for the economy.”

This will be significant for insurers, where the major area for claims exposure stemming from coronavirus is likely to be disability cover such as total and permanent disability (TPD) and income protection.

It is likely that Australia will experience a less severe impact on employment than in countries where measures to counter the virus have “waxed and waned,” actuary Michael Berg told insuranceNEWS.com.au.

“We wouldn’t want to get overly optimistic, but realistically it has been rapid and huge progress, and there’s the chance to capitalise on that progress,” he says.

“Australia and New Zealand aren’t the only success stories, but they are very much at the front of the developments in making progress.”

The geographical advantage of being island nations, as well as swift decisions to proactively stop international traffic, have placed Australia and New Zealand ahead of other countries, with a better outlook for successfully relaxing restrictions and reigniting the economy.

“New Zealand went hard and early. Australia was less early but still took decisive action, and also the subsequent actions have been very effective.”

Mr Berg believes this is likely to leave Australia strengthened relative to its global peers, though in absolute terms it is “successful damage control more than anything you’d necessarily feel happy about”.

In practical terms, governments should be planning a careful phased exit that is evidence-based, using testing as a circuit breaker. The plan must have overarching consistency across states and territories.

Governments around the world are faced with the dilemma that if restrictions are relaxed too soon they will be back to square one. But equally there are no “zero risk” options.

One-dimensional strategies which fight the virus without reference to the economic implications will “kill more people from poverty and mental health issues than they save from the virus,” Rice Warner’s report says.

Rebooting the economy is increasingly urgent as Australia faces a huge debt burden. State governments face a gaping revenue hole as they maintain services and retain public servants while the revenue side of the ledger plummets from lost stamp duty, public transport fares and taxes from gambling, payrolls and consumption.

“We need to assume that we will have to come out of the lockdown long before a vaccine is available,” Mr Berg says.

“If we’re erring slightly on the side of caution that may well be sensible, given that nobody is able to act on complete or perfect information. But erring massively on the side of caution would have an economic cost which can really come back to bite us.

“So it’s a very difficult balancing act.”

Ideally it will be a case of moving levers, monitoring the outcome and then deciding which levers to move next, based on the available evidence.

Trusting the hypothesis that healthy lives will recover without hospital treatment, limited relaxation of social distancing could be allowed while still isolating at-risk Australians. The actuaries hypothesise that Australia could isolate 15% of those over the age of 60, all of those over 70 and younger people with a history of diabetes, heart disease, respiratory problems and cancers, as well as people living with high-risk people.

An element of social distancing may still persist until a vaccine can be relied on. International travel would likely be one of the last things to be relaxed, and accompanied by testing and period of required quarantine.

“If we could show that those without a significant co-morbidity are at little risk of serious illness or death, we could start the economy moving quickly,” Mr Berg says.

“We are in a position that the number of infected people is at a relatively low number.  From this, we should be able to triage the population and get back to normal.”