Claims grow again

Henk Meintjes, Head of Risk Product Development at Liberty

There is an English proverb which says that being forewarned is being forearmed. Having a wealth of information at your finger tips allows you to plan for the future to avoid repeating the actions that saw you in the position that they are currently in.

For insurers, it allows them to gain insight into their client base and allow them to design products differently and focus their distribution models in a particular way. For advisers it’s about seeing what products their clients are buying and where more advice is needed. 

Big numbers

Liberty traditionally releases its claims statistics towards the beginning of the year, and this year’s statistics show that there was not a significant change from any previous year in terms of the reasons why people claim. 

During 2017, the company paid out just under R4.5 billion in claims. This is an average of just under R18 million every working day. 

In 2006, Liberty paid out R1,1 billion in claims. This remained pretty stable until 2014 where there was a jump from R2,93 billion (paid out in 2013) to R3,27 which was paid out in 2014. Since then, the increase has been dramatic with a R1,19 billion jump in four years. 

Invaluable info

According to Henk Meintjes, Head of Risk Product Development at Liberty, the company is keeping an eye on these statistics and has noted that there has been a significant increase in claims over the past four years. 

He added that the vast majority of all Liberty claims payments, R3.24 billion, were for life protection products following the death of a client. In addition, R691 million was paid in respect of lifestyle protection to help claimants make the lifestyle adjustments required following a critical illness diagnosis or treatment. 

“Just over R525 million was paid for loss of income protection, including both lump sum (R375 million) and monthly income payments (R151 million). These payments help clients make lifestyle changes and pay monthly expenses following a disability, retrenchment or other impairments which prevent them from earning their normal income,” said Meintjes. 

Major killers

Meintjes added that cancer remains the leading cause for claims at 24.3%, followed by cardiac and cardiovascular conditions at 19.8% of all claims. 

Cancer affected all age and social groups; making up 16% of all claims for young clients entering their first jobs, 21% for Young Parents (who are starting families), 26% for Established Providers (those clients who have kids already leaving school) and 25% for Empty Nesters (clients approaching or entering into retirement).  

Dr Thabani Nkwanyana, Liberty Medical Officer said, "cancer remains one of the leading causes of death in our society. This is reflected in Liberty’s Claim Statistics and has been a recurring trend for the past three years. The good news, however, is that cancer treatment is widely available and effective, but works best if the cancer is detected earlier rather than later, so regular consultations with a doctor are highly recommended." 

Meintjes added that there are growing cases of clients claiming for psychological related diseases such as stress and depression. “We need to be careful when it comes to these claims because they are not very easily verifiable. As insurers, we always have to plan and ask a lot of questions around how we underwrite these types of claims. We need to get better at identifying the drivers of these types of claims and we ultimately need to put all of our efforts into assisting clients and getting them back to work,” said Meintjes. 

Keeping an eye on the north

In their 2016 Claims Statistics, Liberty reported that there was a lot of claims coming from the farming community in the Northern Cape which was, at the time, going through a significant drought. 

The 2017 Claims Statistics show once again that 25% of the claims from the Northern Cape were made by farmers. Meintjes said that this is significant and is worth further investigation. He added that the first thing that needs to be established is whether the farming community makes up 25% of the population of the Northern Cape; the second thing that needs to be determined is the level of insurance penetration among the farming community in the area. 

Taking chances

Even though we live in a world where technology can basically do anything, there are still some clients who feel that they need to take a chance when it comes to claims. 

Meintjes pointed out that Liberty paid out 89,3% of their claims throughout 2017. Of the claims that were not paid, 8,6% of the conditions claimed for did not match the claims requirements specified in Liberty’s policy documents. A further 1,6% of clients did not disclose important information at the application stage of the policy and 0,5% of claim events were specifically excluded in the policy documents at the inception of the policy. 

“Clients need to familiarise themselves with the claims criteria and to check in with their advisers, to make sure they have the correct cover in place. Importantly, clients also need to disclose and answer all questions asked in the application honestly and accurately to ensure that the contract is, and remains valid,” said Meintjes. 

Editor’s Thoughts:
These insights provide insurers with the necessary information to plan ahead in terms of servicing their client base, designing new products and getting new business. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.