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Covid-19 shines spotlight on gaping holes in personal risk planning and responding insurance solutions

11 August 2020 Pandemic Shield

The Covid-19 pandemic has pulled a critical thread, unravelling the fibre of every economic and social structure, across countries, continents and communities.

In the wake of soaring infections, hospitalisations and global lockdowns, this black swan event has painfully revealed how vulnerable we are to an unprecedented, globally synchronous health disaster. It has also shown with startling clarity how financially unprepared we are for a worst-case scenario that no one saw coming.

“Where people thought they had insurance cover to carry them through the worst, some discovered that pandemic events and notifiable diseases are excluded in many policy wordings. Covid-19 doesn’t fall into the benefit categories for critical illness cover, while disability insurance does not provide cover for a notifiable disease like Covid-19, as it does not cause any short- or long-term disability. While some income protection policies do provide cover if you are booked off from work as a result of Covid-19, there may be waiting periods imposed. In such a case, to qualify for a claim, you would have to be booked off work and not earning an income for longer than your applicable waiting period. If this waiting period is two weeks or one month, you may find that you are not covered if you return to health and work in less time than the stipulated waiting period. Another major factor is that many income protection insurance products are simply not affordable for a large percentage of South Africa’s working population,” explains Martin Rimmer, CEO of Sirago Underwriting Managers which administers ‘Pandemic Shield’.

Pandemic Shield provides an affordable solution that pays out a lump sum stated benefit if the policy holder is hospitalised as a result of being positively diagnosed with COVID-19 – or any other World Health Organisation declared pandemic illness in the future which requires ongoing treatment for the declared pandemic. The benefit trigger is an admission to hospital longer than 48 hours. The Pandemic Shield insurance policy is underwritten by GENRIC Insurance Company.

“The financial hardships brought on by a Covid-19 related hospital admission are most obvious for the self-employed, tradesmen and artisans, freelancers, sales people, call centre agents, commission earners, informal traders, independent contractors and so on – all people who physically need to be present and productive in order to generate an income and pay the bills. If hospitalised for Covid-19, their ability to earn is immediately hindered. The risks however don’t stop there and the financial implications are much wider and interconnected - think of the single parent who needs to fund additional childcare and groceries, medication costs, transport, pay the bills or face a prolonged recovery period after hospitalisation – all of which can severely stress personal and family finances,” adds Rimmer.

The reality is that when the coronavirus pandemic broke, there was no safety net that caters for such an unprecedented peril. Pandemic Shield was rapidly developed and launched to meet the glaring need for financial risk protection at a time of huge uncertainty and duress – paying a lump sum of either R25k or R50k (option specific).

Pandemic Shield is not an income protection benefit, but rather pays a fixed lump sum that can be used to help mitigate some of the financial obligations one may face while hospitalised.

The odds of being hospitalised are significant
While about 80% of people will have no or mild symptoms not requiring hospitalisation or advanced medical management, for other the virus takes a serious turn. According to the World Health Organisation (WHO), around 1 in every 5 people – 20% - who are infected with COVID-19 develop difficulty in breathing and may require hospital care. People who have underlying medical conditions such as diabetes, heart disease, respiratory disease or hypertension are among those who are at greater risk. Given the high prevalence of these conditions in South African society, our odds of being hospitalised are significantly higher.

Pandemics set to amplify
In the absence of a vaccine, herd immunity or significant behavioural change which is virtually impossible in South Africa’s vastly unequal society and living conditions, several experts have warned that South Africa may have to treat Covid-19 the same way it has handled TB and HIV - and learn to live with the virus on a long-term basis. Many scientists are also warning that Covid-19 is just the tip of the iceberg.

In an article published on BizCommunity (27 July 2020), Professor Robert Bragg, Researcher in the Department of Microbial, Biochemical and Food Biotechnology, and Professor Aliza le Roux, Assistant Dean: Natural and Agricultural Sciences and Associate Professor: Zoology and Entomology at the University of the Free State (UFS), warn about future pandemics, saying that humans’ interaction with animals and lack of learning from the past are the reasons for this. Dr Martin Nyaga, Senior Researcher: Next Generation Sequencing (NGS), agrees and says new viruses will keep emerging due to their general nature. There are very real concerns for much bigger, more serious pandemics. ¹

Prof Bragg cites that the bird-flu virus - Influenza H5N1 - has a mortality rate of around 60-65%, but it has not yet developed human-to-human transmission. If it does, we could be in for a horrific pandemic. ¹
“Covid-19 has changed everything and highlights a serious and urgent need for a new approach of how we interact, work, socialise, what we eat and how we do our financial and risk planning. Seven months ago, no one could have foreseen that pandemic risk would need to be factored into one’s personal financial and health planning. Covid-19 has radically changed the type and level of risk protection demanded in a world where pandemic illnesses look set to be part of the future in an increasingly interconnected and ecologically-fraught world,” concludes Rimmer.

References:
1 - Covid-19 only a dress rehearsal for pandemics, found at: https://www.bizcommunity.com/Article/196/858/206652.html [Accessed 3 Aug 2020]

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