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Discovery Life claims data demonstrates the significant value of comprehensive life insurance during the COVID-19 pandemic

28 October 2021 Discovery

The Shared-value Insurance model offers clients comprehensive protection and value

• Discovery Life released its annual claims data insights today, illustrating the impact of the COVID-19 pandemic on life insurers
• Total claims paid out to clients in 2020 amounted to R4.7 billion,
• COVID-19 related pay-outs are expected to reach R6.2 billion across Individual Life and Group Risk claims by the end of the 2022 financial year
• COVID-19 has overtaken heart disease and cancer as the leading cause of death, as shown through Discovery Life’s claims data
• Key life insurance benefits such as the Income Continuation and Overhead Expense benefits were invaluable during the COVID-19 period, with this category of claim accounting for more than half of COVID-19-related claims, while death claims made up just over a third of COVID-19-related claims paid
• Discovery Life’s Shared-value Insurance model ensured comprehensive protection and value creation for clients including market-leading premium relief and PayBacks along with a diverse product offering. Claims data, considered by Vitality status, also show that COVID-19 mortality risk after infection reduces with increased Vitality engagement
• Discovery Life has paid claims in excess of R36 billion to date
• 21 961 claims were paid in 2020 valued at R4.7 billion
• 97% of all claims were paid out with an effective payout rate of 2.5 claims paid per hour
• 36 743 children are currently covered through the Global Education Protector on Individual policies. The Global Education Protector is an award-winning benefit that enables a parent to financially secure their child’s education in the instance of a life-changing event.
• Discovery Life paid more than 2 000 severe illness claims during 2020. As seen in previous years, the most common severe illness in women is cancer, while the most common severe illness in males is cardiovascular related. 29% of claims were for second or subsequent severe illness claims.

Discovery Life today released key analysis and insights into its claims data for the 2020 calendar year. The claims analysis, an annual exercise done by Discovery Life, offers valuable insights into the macro economic, environmental and health trends affecting consumers and life insurers, and demonstrates Discovery Life’s ability to offer certainty of cover and shared value to clients.

Riaan van Reenen, Discovery Life Chief Executive, said, “Discovery Life’s annual claims analysis comes at a time when the impact of the COVID-19 pandemic on the claims experience of life insurers is becoming clearer. A tragic second and third wave, driven mainly by the Beta variant followed by the highly transmissible Delta variant, as well as the long-term health impact of long COVID, have driven a higher-than-usual claims experience attributed to the pandemic. Although COVID-19 impacted claims in 2020 materially, the impact of the second and third waves primary impacted the 2021 claims experience.”

COVID-19 emerging as the most significant driver of claims experience in 2020 and 2021

COVID-19 has dramatically impacted Discovery Life’s death claims experience, with it now overtaking cancer, heart and artery disease as the primary cause of death amongst Discovery Life clients. Van Reenen says, “If we inspect the highest claims category per year for the past 10 years, we find that COVID-19 has emerged as the leading cause of death – overtaking cancer and artery claims, which in previous years were the main causes of death. Further, deaths emanating from COVID-19 in 2021 have been almost 50% higher than all other causes of death combined,” Van Reenen adds: “Over the previous nine years, heart and artery diseases caused an average of 27% of deaths each year, compared to 57% of all deaths being attributed to COVID-19 for 2021 up to August.”

Throughout the pandemic, Discovery Life clients had and will continue to have comprehensive cover and support. “For Discovery Life, it has been critical to ensure our clients are protected and have certainty of cover during a pandemic when much was initially unknown in terms of treatment, long-term health impact and the role of vaccines in protecting people. Our role early on was to address the impact of COVID-19 through unique product design that considers the nature of the disease as an acute, multi-organ disease and to adequately expand cover to meet this need.”

Last year, Discovery Life introduced the market-first Multi-organ Benefit that is now automatically included as part of all new policies with the Severe Illness Benefit when taken as cover on a new policy . This benefit provides cover for acute illness with multiple organ involvement as well as tiered payments according to severity.

“We’ve also made it our goal to support our clients during these difficult times and we have paid out nearly R3 billion to clients in COVID-19 related claims up to 30 June 2021, and based on our projections we expect a total of R6.2 billion in COVID-19-related claims to be paid out between individual and group risk insurance policies by June 2022. COVID-19 is likely to become an endemic disease in the near future with a continued impact on society in the years to come.” adds van Reenen.

Engaging in healthy behaviours can lower the risk of hospitalisation and complications due to COVID-19

Discovery Life’s Shared-value Insurance model, with Vitality as its foundation, offers one of the most extensive data sets on the link between health engagement (as measured through Vitality status) and lower risk of death from COVID-19.

Discovery Life Chief Medical Officer, Dr Maritha van der Walt, says: “As the pandemic continues and more data becomes available on the link between health behaviours and COVID-19 risk, it’s becoming more evident that a healthy lifestyle can reduce an individual’s risk of severe complications from COVID-19. Our data and analysis show that in 2020, clients on Gold and Diamond status exhibited 73% lower mortality rates than clients without Vitality and those on a Blue status.”

Discovery’s investment in Vitality and its role in encouraging behaviour change from clients through incentives, is having the required positive impact on morbidity and mortality rates.

Discovery Life’s Shared-value Insurance model enables first-to-market incentives for vaccination against COVID-19

Discovery Life’s Shared-value Insurance model is premised on the shared value that is created for both the client and the insurer as well as society. Engagement in healthy behaviours, such as vaccination against communicable diseases, which have been shown to lower mortality and morbidity risks, are monetised as the insurance savings from the lowered risk are shared with clients. Deputy Chief Executive Officer, Gareth Friedlander explains, “Healthy behaviours are proven to lower a client’s risk. A healthier client exhibits lower mortality, morbidity, and lapse rates and when our clients lead a healthy life, it allows us to derive insurance savings over a longer period. We are pleased to announce that 80% of Discovery Life’s clients aged older than 60 have been vaccinated, with the rate for our book overall at 71% having received at least one vaccine."

Friedlander continues: “Through engagement with Discovery’s Vitality wellness and behaviour change programme, we can determine a client’s level of risk and pass these insurance savings back to them through rewards such as lower premiums and PayBacks.” In 2020, Discovery Life clients earned R1.2 billion in PayBacks, contributing to a total of R8.3 billion in PayBacks earned since the benefit was launched in 2004”

Discovery Life is also now extending this philosophy of Shared-value through its PayBack benefit, to that of mitigating the risk of COVID-19 infections. As vaccination programmes globally and in South Africa have been rolling out, clinical data is showing promising results on the positive effect of COVID-19 vaccinations in safeguarding the health of the population.

Friedlander continues, “COVID-19 increases the mortality and morbidity risk of clients by as much as 10 times the base mortality rate. Vaccinations have been shown to reduce this additional risk, new by as much as 95% and Discovery Life clients who commit to vaccinating can now leverage this healthy behaviour of being vaccinated by accessing the Vaccination Max Payback offer guaranteeing them up to 100% of their first years premiums back”

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The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

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