R10 billion more in claims supports advice value proposition
It has been a busy couple of weeks for financial journalists reporting on employee benefits and life insurance stats. A couple of days ago, FAnews shared the key numbers from Momentum Life’s 2025 Claims Statistics, and today, we report on the claims experience of another insurance brand.
Another R10 billion or so in claims paid
Your writer had the opportunity for a virtual sit-down with Tom Crotty, Head of Technical Marketing at Liberty Life, and Sinethemba Khoabane, Head of Risk Product at the group’s corporate benefits division, to talk through the R7.79 billion in retail life payouts and R2.59 billion in group risk payouts for 2025, respectively.
One of the points stressed consistently during this interaction was that life insurance is age-agnostic; you never know at what age a death, disability or severe illness event might strike. Across the retail business, the youngest death claim was for a 22-year-old male who unfortunately passed away following a motor vehicle accident, triggering a death claim payout of over R600 000 to his beneficiary, in this case his mother. The policy had been taken out just over a year before the accident. At the opposite end of the timeline, the estate of a 103-year-old man received R280 000 following the policyholder’s death from cardiovascular failure.
“These examples show the full age span of claims we are seeing in the client space,” Crotty said. Financial advisers and planners can use such examples to illustrate the value of life insurance across their clients’ life stages. He added that claims had been received at almost every year of age between the two illustrative cases. Another age-related observation was that the number of insureds in their eighties or older continues to grow due to improving mortality statistics. People are living for longer and their policies are staying on the books for longer too.
Cancer remains the dominant cause
The total for death claims came in at R5.6 billion, with the leading causes including cancer (30.1%); cardiovascular disorders (24.1%); and respiratory disorders (8.8%). Males accounted for over two thirds of the total claims paid versus women at 30.7%. At a gender level, women were more at risk from cancer (35.3%) than men (27.9%), but men experienced proportionally more cardiovascular disorders at 25.9%, compared with women at 19.8%.
Your writer observed the mere 1.8% increase in claims paid between 2024 and 2025 and asked if this was within expectations. “We saw a 3% drop in the number of claims whereas the average size of a claim was around 4.5% higher,” Crotty said. As an aside, there is no tangible link between claims paid and inflation due to the policy benefits being negotiated years prior to a loss event. If anything, inflation impacts at a household income level, and could result in the eventual claim reducing as insureds adjust sums insured due to affordability concerns.
Your writer was stunned by the slide detailing the largest critical illness claim paid by the insurer in 2025. “This looks like a massive claim for something that does not sound terribly serious,” he exclaimed, in response to the top-line numbers. The policyholder received over R38 million on the confirmed diagnosis of a significant sleep disorder that had an “established permanent impact on the clients’ ability to earn an income.”
The claim was used to show that there are conditions outside of the traditional accident or illness categories that can also have a serious impact on a client’s ability to do his or her job, and earn an income. This claim spanned the income protection and lump sum disability worlds. “The income protection paid on a monthly basis is one piece of the puzzle, with additional lump sum disability,” Crotty said. He also commented on the value added through financial advice, in this case through the inclusion of a premium waiver at policy inception.
Disability and critical illness
The overall claims picture for 2025 emerged over two additional dashboards. The first described the R924 million paid for loss of income due to disability, with major causes being musculoskeletal disorders (21.1%); cancer (15.2%) and cardiovascular disorders (10.3%). Claims were paid to policyholders from as young as 24 years old all the way to 73. The second dealt with the R1.24 billion paid out for critical illness claims due to cancer (42.6%), cardiovascular (25.3%) and central nervous system disorders (8.7%).
The presentation and media release were dotted with marketing phrases like ‘living lifestyle’ and ‘premium waiver’ and this-or-that ‘protector’, leading to your writer asking the experts why policy benefits were so complicated. Crotty observed that competitive forces across the insurance sector had resulted in complex products that could be “difficult for a client to understand, let alone for advisers to understand across product providers.” Even so, product design teams are hard at work to make certainty, simplicity and humanity part of the end solution.
“We want to make it simpler to understand the product and [easier for advisers and clients] to go through the underwriting, onboarding and claims processes,” Crotty said. FAnews would love to hear from advisers and planners among our readership as to whether insurers are succeeding in this quest. Comment below if you find the benefits offered on today’s life covers are easy to understand, easy to structure and easy to advise on.
Even the paid versus declined claims statistics have become difficult to interpret. The insurer published an all-claims decline ratio of 9.5%, of which 7.3% were due to the claim not meeting criteria, followed by 1% for ‘condition not covered’ and just 0.6% each for exclusions and ‘non-disclosure, fraud and other’. The high percentage of claims not meeting criteria stems from how the insurer gathers and reports on this data.
There is no first stage ‘filtering’
According to Crotty, they accept all claims, and then discard those that are perhaps submitted by the client in duplicate, or submitted by both adviser and client, or submitted as a disability or income protection claim when the client only has death cover, etc. Another issue is that clients submit separate claims against every policy they hold, with only one of those claims going on to be assessed on its merits.
Turning to group benefits, Liberty Corporate paid claims totalling R10.4 million per working day in 2025, for a total of R2.6 billion. The breakdown given was R1.286 billion for group life assurance; R965 million for income protection; R123 million for critical illness; R114 million for lump sum disability; and R105 million for funeral benefits. The retail; financial and professional services; and manufacturing and distribution sectors were singled out as accounting for almost 40% of total claims paid for the year.
Closing the insurance gap
Khoabane observed that the long COVID impact that many insurers had been concerned about had not materialised, as evidenced by a 19% year-on-year decline in lump sum disability claims. He observed that many South Africans had their first experience of insurance in a group scheme context, mainly via death or income disability, but with an encouraging improvement in critical illness and income protection covers. “Group schemes go a long way in closing the insurance gap,” he concluded.
Writer’s thoughts:
Risk insurance product innovation is useful if advisers and clients understand what is being bought, when it will pay and how it fits into a financial plan. Today’s question is for both advisers and consumers: has life insurance become too complicated? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
