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Insurers expect ongoing mortality uncertainty

25 January 2024 Gareth Stokes

If you spend much time in the darker recesses of YouTube, you will stumble across plenty of conspiracy-type content about excess mortality experiences following the 2020-21 COVID19 pandemic. You will encounter many commentators who believe that excess deaths in 2022 and 2023, especially among younger age groups, were well above the long-term trend, and that this experience is likely to persist this year. Are these often-anecdotal commentaries plausible?

Insights from insurer claims data

There is no better way to get a feel for in-country morbidity and mortality experiences than to put life insurer statistics under the microscope. In a December 2023 media release, Discovery Employee Benefits (Discovery EB) revealed that it was concerned about increasing uncertainty in insurance claims and continued, unpredictable shifts in the conditions driving its death and disability claims experience. The insurer’s experience is worth analysing given that it covers more than 500 000 employees at 2 500 employer groups across South Africa. 

“As the world starts putting COVID-19 mortality claims behind it, the insurance industry is battling a wave of uncertainty,” the communication led, before sharing that the insurer had paid out R1.94 billion in death and disability claims via group risk benefits for the year to 30 June 2023. The insurer conceded that the total number of death claims had increased slightly compared to pre-pandemic levels, and that there had been a slight decline in the number of natural deaths in 2023 compared to 2022. 

This writer did some digging to reveal a 25% contraction in claims paid values for the latest year, with R2.6 billion in total claims paid for 2021-22. Discovery EB also paid claims totalling R2.1 billion in 2020-21 and R1.48 billion in 2019-20. For annual reporting purposes, these numbers are consolidated in the group’s overall life result. 

Reflections on ‘mortality acceleration’

Guy Chennells, GM and Head of Product at Discovery EB said that the slight decline in 2022-23 natural death claims may prove short-lived due to a phenomena called temporary mortality acceleration. The term, which this writer had not encountered before, refers to a period during which the number of deaths accelerates ahead of the normal expected death rate. So, the decline in the number of natural death claims recorded in 2022-23 was likely due to the pandemic-related accelerated mortality experience in 2020-21 and 2021-22. 

All things being equal, the natural death experience could worsen in coming review periods as the mortality acceleration impact dissipates and the negative healthcare outcomes from pandemic-related delays in preventative screenings filter through. And until such time as the mortality experience trends back to the long-term average, insurers and employer groups will find it difficult to predict what future claims periods might look like. Turning to the insurer’s actual 2022-23 experience, respiratory disease (24%); cardiovascular complications (23%); cancer (19%); and multi-organ failure (14%) emerged as the leading causes for natural death claims. 

The data revealed an interesting condition-related skew between current and pre-pandemic death claims. There was a 16% decline in cardiovascular-related deaths compared to the 2019-20 financial year and a 40% decline in renal disease-related death claims despite both of these conditions being associated with an elevated risk of death after a Covid infection. In contrast, death claims due to cancer, multi-organ failure and endocrine-related diseases were reported at levels that are way above pre-Covid levels, possibly due to an increasing prevalence of underlying conditions. 

Unexpected natural death outcomes

From worst to best, endocrine and metabolic disease-related deaths were 116% higher compared to pre-Covid levels; cancer-related death claims were 36% higher; and multi-organ failure deaths were 20% higher. Insureds age 50-years and older bore the brunt of this experience, with both cancer-related deaths and deaths caused by respiratory diseases above the levels recorded pre-pandemic for this age group. 

For 2022-23, unnatural deaths were 20% above the levels which were recorded during the 2019-20 financial year, though there is an established, persistent upward trend since the start of COVID-19. Suicide-related deaths were 54% up on pre-Covid levels, with the biggest increases coming from members under 40-years of age. “Suicide statistics in the under 30s age group have skyrocketed but there was also a significant increase in the 30- to 40-year-old age group,” Chennells said. “This could be because people in these age bands face the most economic pressure”. Rising interest rates and inflation throughout 2022-23 placed households’ finances under pressure. 

Unnatural deaths caused by crime increased sharply during Covid too with an apparent correlation to rising unemployment. The good news is that such deaths, although still higher than before the pandemic, are 30% down compared to the worst experience. Overall, the claims trends for the year ended 30 June 2023 varied based on cause of claim and factors such as age, gender and income, making it almost impossible to predict the long-term death claims trajectory. The same holds for disability claims which came in higher than the prior year, though there were significant differences in the diseases driving claims in 2022-23 compared to pre-pandemic. 

Elevated disability claims levels

Discovery EB reported that elevated disability claims levels have persisted since 2019-20. In the latest year, the company paid out over R730 million in disability claims, with 74% of that total paid out under the Income Continuation Benefit, now being 10% higher than pre-pandemic levels. Chennells said the disability rates increased more drastically in 2023 with conditions like cancer; nervous system; respiratory; and mental and behavioural disorders remaining stubbornly higher than pre-pandemic levels. 

Chennells attributed the nervous system and respiratory-related claims trend to the long-term effects of COVID-19 as the virus has been proven to cause damage to lungs and other respiratory organs, and to increase the risk of developing blood clotting disorders. “When it comes to mental and behavioural disorders, we have seen a 79% increase in disability claims from young families in the 30-40-year age band since the year to June 2020,” he added. Insureds in the mid-income bracket were also worse-affected. 

Some reflections on gender

According to the insurer, female insureds were under significant pressure, with their 2022-23 disability claims increasing by 13% relative to pre-COVID levels, while the value of disability claims from male insureds decreased by 10% over the comparable period. 

A clear understanding of claim drivers is essential for insurers that are keen to identify and mitigate poor health outcomes among their insureds. Unfortunately, as the brief commentary shared in the insurer’s 2022-23 claims review illustrates, predicting and pricing for expected claims is more complex and challenging than ever, especially in the competitive group risk environment. 

“We have always taken a responsible and informed approach to pricing for risk for the coming period,” concluded Chennells. “We anticipated that many of these claim trend drivers would be with us post-Covid; now the challenge is to try and forecast the expected levels of claims correctly so that pricing remains sustainable going forward”. 

Writer’s thoughts:
Much has been written about the impact of pandemic on mortality rates, with many fearing that necessary adjustments to individual and group life insurance premiums would make this type of cover unaffordable. Has the impact on your clients’ life insurance premiums been as extreme as initially feared? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

Comments

Added by Gareth Stokes, 25 Jan 2024
The intertwining of 'Big Pharma' into both the media and regulatory spaces in many Western economies is a major problem. Over time, the truth will eventually leak into the legacy and mainstream media channels, @Stephen. Until then, we will have to seek truth elsewhere - and work harder to validate same.
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Added by STEPHEN ROBERT POVERELLO, 25 Jan 2024
The medical industry, Big Pharma and insurers will be constantly in denial that the Covid JAB has anything to do with excess deaths. Until they own up to the truth they will constantly shout "conspiracy theory".
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