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Category Life Insurance

A near-trebling of individual life claims

20 June 2022 Gareth Stokes

In a recent presentation on the impact of COVID-19, a leading financial services provider revealed that 0.4% of its clients, totalling more than 15000 people, had succumbed to the disease between March 2020 and May 2022. This shocking statistic played out against the backdrop of 309000 excess deaths in South Africa, with around 488 excess deaths per 100000 citizens through pandemic. Days later the same firm presented its 2021 life claims statistics virtually, to a group of journalists. Riaan van Reenen, CEO at Discovery Life said the insurer had paid out more than 2000 claims in the year to December 2021.

Staggering increases in claims paid

Overall, the life insurer paid out ZAR11.8 billion across its group life and individual life books, with the latter part of the business accounting for ZAR9.1 billion of the total. “It is very easy to get lost in big numbers; but we should remember that each one of these claims represent a life-changing event for an individual, for a family,” said Van Reenen. The claims year was defined by a staggering increases in claims paid, with the R6.2 billion paid out under the life cover benefit almost three-times the 2020 total, up 173%. Claims paid on the individual life book were also 89% higher, with similar surges in each of the claim benefit categories offered by the insurer. 

“We have seen an increase [in pay-outs] in every single one of the claims benefits that we offer; [this experience] shows the importance of having a sufficient and comprehensive cover [in place]; not only life cover but also severe illness cover, disability cover, income protection cover as well as [protection for] families and the education needs of our children,” Van Reenen said. The latter two categories featured strongly during the presentation, as the insurer drew attention to various of its recent product design innovations, the purpose always being to better meet members’ needs. 

In today’s fast-paced environment the quantum of claims paid is often less important than the efficiency of the claims assessment and pay-out process, thus ensuring the fair treatment of customers. The Ombudsman for Long-term Insurance’s (OLTI) latest statistics offer independent insights into insurers’ performances under these heading. According to Van Reenen, fewer than 1% of claims submitted to the insurer during 2021 were repudiated due to policyholders’ fraud, non-disclosure or misrepresentation. Commenting on the group’s OLTI experience he said: “We have seen a reduction in the number of complaints relative to our book, and we have an outstanding track record in that most of the claims that are brought to the Ombudsman’s attention for independent review and assessment are still upheld in line with our original decision”. 

Insuring through five waves of pandemic

There have been five distinct waves of COVID-19 infection since the pandemic was confirmed in March 2020, and one of the reasons for the sharp rise in pandemic-related claims during 2021 is that the second and third waves peaked during the period, with the fourth wave also well underway by December. From a death claims perspective it is worth noting that the number of infections with the more severe Beta and Delta variants of COVID-19 peaked in January and July last year. “We have seen the impact of Beta which translated into claims early on in 2021, followed by Delta, followed by Omicron later in the year, and that has led to an enormous lift in the excess death claims,” said Van Reenen, adding that the insurer’s latest claims experience mirrored that of other life insurers. 

The statistics allowed for some interesting reflections on commonly held beliefs about Covid, most notably on its impact across age groups. “The disease impacted every single age group, and actually contributed to a higher relative increase in natural mortality rates at some of the middle ages, which is perhaps not commonly understood,” said Gareth Friedlander, Deputy CEO at the life insurer. He dismissed the common misperception that people were dying with Covid, rather than from it, saying: “The non-Covid deaths have increased slightly; but we have the full number of Covid deaths on top of that”. The insurer estimated that ZAR3.8 billion worth of life insurance claims paid in the 2021 year could be attributed to pandemic death or illness, with the bulk of this total in the individual life space. 

The usual suspects under cause of death

According to Dr Maritha van der Walt, Chief Medical Officer at Discovery Life, Covid was the major cause of death for females and males across all age groups. Stripping out the effects of the disease revealed the usual suspects contributing to death claims. “For women, cancer, with breast cancer in the number one position for cancer-related deaths; heart and artery dominated the cause of death statistics for men, with an increase in prostate cancer related deaths as well,” she said. The conversation turned to the need for severe illness benefits, and the challenges faced by insurers’ product development teams to offer innovative benefits in this area. More than 600 of the insurer’s severe illness claims benefits were ‘upgraded’ in the 2021 year, totalling around ZAR313 million. 

The severe illness statistics presented an opportunity to promote mental and physical wellbeing. “The past year has amplified the importance of a healthy lifestyle and the impact that can make in reducing your risk of a severe outcome or even dying from Covid or any other disease,” concluded Van Reenen. The insurer’s statistics show a reduction of 59% in the mortality risk of its engaged members, as measured by the well-known Discovery Vitality programme. 

Writer’s thoughts:
The record claims paid by Discovery Life echoes the reporting we have seen from the rest of the country’s major life insurance providers; as does its experience with claims repudiations at the Ombudsman for Long-term Insurance. Do you think that our major life insurers are largely in line with one another with regards to their product offerings and your clients’ experience of their claims pay-outs, or are there big gaps emerging between the best and worst in this industry? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

Comments

Added by Humphrey, 23 Jun 2022
I must agree with Gerrit. Personally i know of 3 healthy middle aged gentlemen that died of heat attacks / strokes days after receiving the vaccine. Personally I know of one 89 year old gentleman who died of COVID in a state hospital.
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Added by Gerrit Viljoen, 20 Jun 2022
This statistic is in line with world trends but the annoying truth is that the excess death can only be attributed to the vaccine and all and sundry are denying it. The Covid 19 disease itself had not had even close these numbers as after the vaccine got introduced but in time the collaborators will have to own up to the truth. Not even speaking about the VAERS reported vaccine injuries which also gets denied by all.
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We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?

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