SA remains world leader with innovative HIV life cover

Although South Africa recently found itself labeled as the country with the highest number of HIV infections in the world, UN AIDS also reports that South Africa boasts one of the most extensive Anti-Retroviral Therapy (ART) programmes with more than 300 000 HIV positive people having been on treatment last year.

Gerhard Joubert, CEO of the Life Offices’ Association (LOA), says this is good news for consumers living with HIV, because it will enable South African life insurers to introduce more affordable and comprehensive life and disability cover for HIV positive people.

Already this week one of South Africa’s largest life insurers, Sanlam, announced new affordable and flexible life and disability cover for people living with HIV. Ever since two smaller life companies, AllLife and AltRisk, pioneered more affordable life cover for HIV positive people, consumers have been waiting for one of the big life companies to develop new generation risk cover for HIV positive people.

South Africa remains one of only two countries worldwide where HIV positive people have access to life insurance products. While three of South Africa’s biggest life insurance companies – Old Mutual, Sanlam and Metropolitan – were the first to introduce life policies for HIV/Aids positive people in as early as 2001, the Netherlands followed suit only last year.

Joubert says a lack of reliable South African data relating to the HIV/AIDS survival rate and the way the disease responds to treatment means that life insurers have to use assumptions when pricing products for HIV positive people, which still renders these products relatively expensive.

“But over the past decade, vast improvements have taken place in the treatment of HIV/Aids. Provided there is full compliance with ART prescriptions, HIV it is now fast becoming a chronic treatable disease like diabetes and many others. Therefore we can expect to see more innovative new generation products that will offer competitive premiums for HIV positive people on an ART programme.”

In terms of individual life cover, HIV positive South Africans currently have access to the following two categories of products:

Older generation products

These products were developed before treatment options were available for HIV positive people. They are available to clients who are not part of a managed health care programme. Old Mutual, Sanlam and Metropolitan currently offer these products.

Some of these products also offer lower rates for HIV positive clients who are on ART at the time of applying for the life cover.

New generation products

These products are much more affordable and flexible in their cover, but require policyholders to be on ART, monitored through a properly structured treatment program. Until this week only AllLife and AltRisk offered such risk products.

Concerns slowing product development

Joubert says there are a number of reasons why life insurers have been slow to develop cheaper and more innovative products for HIV positive people. The main concerns are:

• Access to treatment and availability of ART remain a concern, since life insurers can only offer competitive premiums to HIV positive clients if they remain on appropriate treatment programmes. Also, the long term compliance and effect of viral resistance against treatment protocols still need to be established.

• The demand for policies developed for HIV positive people has been low. Currently, only 2.5% of the annual 500 000 clients tested for HIV at the application stage test positive. Since these are the people who fall within the section of the population that requires life insurance, the market remains very small. In addition, very few of these people request life cover after having tested positive, because they fear loss of confidentiality as a result of having a “special” policy for HIV positive people.

• Long-term insurance policies (including risk cover products) are largely still marketed by intermediaries. In light of the confidentiality issues and stigmatization of HIV/AIDS in South Africa, this form of distribution has obvious drawbacks seeing that the HIV status of the applicant will be known to the intermediary.

SA milestones

Joubert says the life industry takes the plight of South Africans living with HIV very seriously. With the aim of ensuring that HIV positive people are treated more fairly, the LOA has introduced the following initiatives in recent years:

• The LOA’s HIV Testing Protocol, which regulates HIV testing for insurance purposes and has been hailed one of the best in the world. The protocol sets out quality standards for HIV testing and also addresses aspects such as personal pre- and post-test counselling.

• In March this year the LOA issued a best practice recommendation to LOA member offices to waive existing HIV/AIDS exclusions for all lump sum death and disability benefit claims from April this year.

• After doing away with HIV/Aids exclusion clauses for policies issued after January 1, 2005, LOA member offices also scrapped HIV/Aids specific waiting periods for new business as from June 1, 2006.