Mortality and morbidity risk improvements
Discovery Life paid R9.1 billion in claims across its group risk and individual policy portfolio in 2024, rejecting fewer than one in 100 of claims submitted. The bulk of claims paid stem from individual life claims including R3.428 billion in life cover, R1.544 billion for severe illness, R933 million for capital disability, and R673 million in income continuation benefits.
The core purpose of insurance
Daniel Stoch, Head of Research and Development at Discovery Life, credited the “vast degree of innovation” within the life business for the incredible claims story. “Our core purpose of making people healthier and enhancing and protecting their lives resonates whenever you think about claims and our promise to pay out claims to clients,” he said. He was part of a four-person team assembled to unpack the insurer’s 2024 life claims statistics for the media.
Deputy CEO Gareth Friedlander pointed out that the R9.1 billion in payouts grew to R11.5 billion if you included non-claim incentives. The presentation also featured a snapshot of the insurer’s dollar life plan which has paid out a little over USD34 million since inception. The plan is designed to insulate policyholders from currency volatility. “Our dollar plan clients [benefitted from] a 19% effective boost in payouts compared to [what they would have received] on a local plan [in rand] over that period of time,” Friedlander said.
The benefits of cancer screenings
There is a lot of work happening to improve policyholders’ health and wellbeing outcomes. Dr Maritha van der Walt, Chief Medical Officer at Discovery Life, said the group had seen an increase in the number of cancer screenings for all cancers for which routine screening is available. “If cancer is detected early, it can be treated; and early treatment leads to a much better outcome,” the doctor said.
She mentioned an increase in 2024 over 2023 for mammograms (+14%); colon screenings (+29%); and prostate screenings (+19%). Preventative screenings matter to the insurer because they reduce the number of disability claims for so-called Category A cancers. Discovery Life has experienced a 62% increase in lower severity cancer claims between 2020 and 2024, and although disability claims for Category A cancers were slightly higher in 2024 than in 2020, they have declined by 16% compared to 2023.
Sylvia Steyn, Head of Claims and Servicing, was on hand to share some insights into the causes of death across age groups. In the 61 and over category, heart and artery (34%) related claims dominated, followed by cancer and respiratory causes. Cancer claims topped all other age groups, barring 18–30-year-olds, where 29% of claims were due to motor vehicle accidents. Under the unnatural death causes for all age groups, Discovery showed 35% due to suicide, 23% motor vehicle accidents, 17% crime, 15% other accidents, and 10% trauma.
Motor vehicles and suicides
“Motor vehicle accidents have been quite prevalent and very concerning at younger ages,” Steyn said. In fact, these accidents account for around 60% of unnatural death claims for age 30 and younger.
But one of the most disturbing ‘reveals’ was that suicide, at 45%, led the unnatural death claim causes in the 41–60-year grouping. “This is a sad and concerning statistic,” Steyn said. “We have seen an alarming increase of 62% in suicides this year compared to the five-year prior average.” A five-year average is used to smooth the often-erratic trend. The discussion briefly turned to depression and mental wellbeing.
Discovery shared that around 63% of suicide claimants were registered on Discovery Health Medical Scheme for depression, anxiety, bipolar, and / or mood disorder. “Sometimes we could see that there was a comorbidity that may have contributed to this devastating decision, such as intractable pain or late-stage cancer or a chronic neurological condition; but it remains very sad,” Steyn said. From a holistic advice perspective, this statistic reinforces the value in the human touch and relationship building between adviser and client.
Multi claims in the severe illness realm
Another part of the presentation that should give pause for thought to financial planners dealt with the growing take-up of comprehensive multi-cover claims cover for severe illnesses. “An unbelievably large proportion of our insureds are starting to claim multiple times,” said Friedlander. He noted that once an insured had claimed for a severe illness, there was a high probability of claiming again. Case in point, 22% of total claims paid under the insurer’s severe illness benefit were for second, third, fourth, or higher payouts.
“This is a very powerful piece of the product, and certainly something that we are watching from a trends perspective,” Friedlander said. FAnews asked the Deputy CEO if financial advisers could take any lessons from the insurer’s experience. He explained that advisers must understand how the multi claims severe illness benefit works for each of their insurance providers. Considerations include how each insurer considers the severity of subsequent claims; how they weight up related versus non-related severe illnesses; etc. “These are the types of details that financial advisers will need to understand and advise on,” he said.
From a purely statistical perspective, Discovery’s claims experience suggests that it is crucial for your clients to have cover that will serve them over the long term and accommodate changes in medical technology and longevity experiences. For example, many insureds now live 30–40 years after suffering a heart attack. “The risk of future claims after a first cardiac event is exponentially higher,” Friedlander explained. From an adviser perspective, what good is a severe illness benefit if it excludes all subsequent artery- or cardiac-related events on the basis of the first heart attack?
Stoch said the multiple claims statistics emphasised the need to buy cover at younger ages. “If you look at the risks that you are exposed to as a young person and the runway for the rest of life, then things like income protection are absolutely crucial for young clients,” he said. “The vast array of unnatural causes of claim at younger ages [also reinforces] the need for life cover.” He argued that the shared-value model served as an excellent incentive to encourage young clients to take up traditional covers.
Behaviour-related outcomes
There are other benefits to consider. Friedlander said that the insurer’s shared-value model was having a positive impact on its disability and mortality claims experience. “We have seen a 47% reduction in disability claims for clients who are on gold or diamond status relative to clients who are not on Vitality or who are not engaging in Vitality,” he said.
Discovery saw a 29% reduction in nervous system-related disability claims among engaged Vitality insureds versus unengaged insureds. Improvements were also reported under the heart and artery category, a 36% reduction, and cancer, an 18% reduction. The outcome for mortality claims is even better, with a 57% reduction in BREAK death claims among the insurer’s most engaged clients. “To be able to pull down your entire mortality curve by 57% is a dramatic outcome,” the Deputy CEO said.
The presentation dedicated some time to explaining the ancillary and shared-value benefits that it offers alongside its core insurance covers. This complex mix of shared-value versus traditional insurance cover sparked a flash of sympathy for those offering advice on modern-day insurance and investment solutions. Why? Because in the context of an insurer paying out R2.4 billion in paybacks and cash conversions over just 12 months, you have little choice but to factor in these incentive programmes in your financial advising.
Do not wait until it is too late
For an unconventional close, we leave financial advisers with two additional insights from the presentation. First, the income protection claims statistics show a high skew to insureds in the 31–40 age group where one in four claims stemmed from permanent disability. Second, one-in-10 children are expected to suffer a life-changing event before the age of 18. There is no excuse for your clients to defer buying life insurance cover until they are older, and you should pay close attention to the childcare severe illness benefits your insurance partners offer.
Writer’s thoughts:
The claims stats shared in today’s newsletter show that young insureds are not immune to death or disability, and that many severe illness claimants go on to claim again. Does your advice process and the products you recommend reflect this reality? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
