Category Life Insurance

Old Mutual pays-out record R21,2 billion in claims in 2021 – a year on year increase of 51%

28 June 2022 Old Mutual

Old Mutual, according to its latest Claims Statistics Report, has paid out R21,2 billion in claims across Old Mutual South Africa in 2021. The pay-outs include underwritten, non-underwritten and corporate claims and represents a year-on-year increase of 51%.

Total underwritten claims paid out in 2021 stood at just over R11 billion compared to R6,5 billion the previous year, a 70% increase in claims pay-outs and almost double the previous year. This represented a total pay-out ratio of 98% for all underwritten claims.

“The significant increase in pay-outs of 51% bears testament to the importance of having adequate cover in place to provide financially for loved ones in the event of tragedy or unforeseen events,” said John Kotze, Retail Protection Product Head at Old Mutual. “It’s absolutely essential that families and bread winners understand the risks and prepare accordingly.”

Old Mutual’s 98% pay-out ratio on Underwritten Claims meant that the group paid out R43,8 million every working day in 2021, which was R17,8 million more than 2020, and translates to R30 450 being paid out every minute.

The claim statistics report unpacked the group’s underwritten risk cover claims as follows:
• R9,7 billion in death claims
• R432 million in overall disability (disability income benefits and disability lump sum benefits) claims
• R824 million in illness claims
• R8 million in retrenchment claims

Other notable trends in the report were:
• An increase in Life cover claims of R 5,17 billion, compared to previous year’s R4,57 billion.
• A decrease in Disability Lump Sum claims of R13,3 million.
• Disability Income claims increased by R10 million since 2020.
• Retrenchment claims paid decreased by R4,65 million from 2020.

Causes of claims
In terms of claims per product category, death was the largest cause of pay-outs at 88%, followed by illness at 8%, retrenchment at 0.08%, disability income at 1% and disability lump sum at 3%.

“Less than 2% of claims were repudiated. The Majority of repudiated claims were due to benefit definitions not met, where exclusions apply, or where fraud has been detected. This highlights the need for customers to speak to their advisers who would explain to them what they’re covered for, what the definitions mean and the terms and conditions in their contract,” said Kotze.

“An example of a repudiation would be where a claim for suicide was submitted during the first 2 years of the policy, despite a two-year suicide exclusion applying”.

He noted that while fraudulent pay-outs decreased year-on-year, fraud remained the second largest contributor to death claims being repudiated.

Gender trends
The overall claims are split by 55% male and 45% female. “Overall, men claimed more for death benefits (65%) than women (35%) which is due to men having a higher mortality rate. Men tended to opt more for death cover than women. At the same time, women have more funeral insurance (58%) than men (42%). Evident from the report is the fact that men and women lead different lifestyles, with men more likely to engage in more dangerous work and or recreational activities (79%) compared to no such claim in women,” Kotze said.

Severe illness
The Big Four illnesses (cancer, heart attacks, strokes and coronary artery bypass grafts) made up 72% of Severe Illness claims, roughly the same level as in 2020. However, coronary artery bypass grafts decreased by 43% compared to 2020. When it came to a gender split under severe illness, men suffered more from Myocardial Infarction (22%) compared to women (4%).

Women made more cancer claims as opposed to men. For women, breast cancer was the largest contributor (29%) under the severe illness claims, while prostate cancer was the leading cause in men (9%).

It is noteworthy that most claims made under Severe Illness in 2021 were the same as in previous years. Men seem to have increasingly become aware of the need for prostate check-ups, leading to a 6% decrease in death benefit claims for prostate cancer and disability income having no prostate cancer claims.

Psychiatric Disorders
The report revealed that 94% of all the Psychiatric disorder claims received were filed under Disability Insurance. The top three claims’ events were: major depression (51%), anxiety (19%) and post-traumatic stress disorder (PTSD) (17%).

“Major depression has consistently been the highest claimed category for the last five years. Anxiety and PTSD were new in 2021 to be in the top three. There was a huge drop in claims for major depression in 2021 (65%). This could be because there has been an ease of Covid restrictions. People are typically feeling less lonely having been reconnected to their families and work, there’s an added flexibility working from home while most are back to their regular routines,” said Kotze.

Sickness Income
Claims for sickness income were higher in 2021 than the previous year. “Infectious disease was the most claimed under Sickness Income, this is consistent with 2020. This is likely linked to claims made due to Covid-19,” the insurer said.

Interestingly the number of claims in 2020 were 2,2 times higher than in 2021. “Covid potentially skewed some statistics with reference to infectious disease,” states the report.

Female only benefits
There has been a rise in ovarian cancer among women, leading to 83% of the claims in this category. “Early detection is important, and we encourage women to go for their annual check-ups,” said Kotze.

“Our pay out performance deserves special mention in a year that has challenged so many. In this context our record over the past 12 months underlines why we remain one of the most trusted insurance providers in South Africa and beyond. We look forward to continuing our 177-year legacy as a company that puts people first – ensuring that we are there for our customers when they need us the most.”

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