FANews
FANews
RELATED CATEGORIES
Category Life Insurance

South Africa leads world in developing HIV life assurance products

13 February 2008 Dr Pamela Chetty, Life Business Unit, Munich Reinsurance Company of Africa Limited (MRoA)

The Life Assurance Industry in South Africa has made considerable progress in the last decade. Ten years ago a diagnosis of Human Immunodeficiency Virus (HIV) meant that a person would be subjected to various types of exclusions. But now, thanks to advancement in the arena of HIV management, the decision for an HIV positive (HIV+) person no longer has to be one of “declined” at inception.

South Africa is one of the first countries in the world to introduce life assurance for HIV+ individuals. With approximately 12% of the country’s 47-million people being HIV+, the Life Assurance Industry was compelled to take a closer look at what could be offered to these individuals.

One of the swing factors in changing the way the Industry views HIV has been the advent of Highly Active Antiretroviral Therapy (HAART). For the condition of HIV being an insurable risk, it is obvious that the life span of an HIV+ person is a vital consideration. HAART has reduced AIDS-related death rates by more than 80% and increased life expectancy for HIV+ people taking the drugs to more than 10 years, according to a study published in the October 18, 2003, issue of The Lancet.

World-wide, ARVs are credited with drastically reducing Aids deaths, improving life span and guarding against opportunistic infections by decreasing viral loads and improving CD4 counts. It is now widely accepted as the frontline treatment for HIV/Aids.

In South Africa, more than 370 000 people had been initiated on government antiretroviral therapy by September 2007 and SA leads all of Africa in its treatment regime and is ranked second only to Brazil, the 10th largest economy in the world. These numbers are even higher if one considers self-funded, Medical Aid and workplace programmes.

This means that a sizeable chunk of the population previously considered uninsurable is now insurable.

In recognition of this, two small companies and at least three large companies in South Africa have introduced life cover for the HIV+ person. And although these policies were initially extremely expensive, it is clear that the industry has opened itself now to a greater understanding of this disease, in terms of treatment and prognosis. More and more, HIV is being perceived as a chronic, treatable disease, not unlike Diabetes Mellitus.

However, the success of an HIV insurance product is critically dependent on one thing - compliance. An HIV+ person once diagnosed has to be compliant to ARV treatment and this necessitates lifestyle changes, taking of daily multi-vitamins, regular blood tests and a commitment to regular follow-ups.

Non compliance has implications for the cost of drugs and an economic impact on the cost of policies. It may contribute to the emergence of drug resistant HIV strains, which are more difficult to treat which may necessitate second or third line drugs which are usually more expensive.

Another economic implication is the success of the life product. Poor compliance has negative outcomes in terms of life span, which would make the product more expensive.

In essence, the HIV+ person with poor compliance will be less insurable. It is here that the challenge for the Life Industry lies.

Researchers have identified six key factors that can compromise ARV compliance. First and foremost is a lack of initial education and targeted literacy programmes. The importance of regular follow-ups, CD4 Counts, Viral Loads, and early and appropriate treating of opportunistic infections should be impressed upon individuals in the initial literacy programmes before they embark on treatment.

Another problem is poly-pharmacy, the use of multiple drugs - or too many forms of the drug - that can result in confusion and compromise compliance.

Social Issues such as the stigma of waiting for ARVs at designated sites can also contribute to poor compliance as can work commitments and unexpected and frightening side effects ranging from the minor for example skin-rashes to the more serious like hepatitis and lactic- acidosis. And last but not least, is simple forgetfulness.

To combat these factors there is much that the Life Insurance Industry itself could be doing to make compliance easier.

For example, strategies need to be developed to build incentives within their products to enhance compliancy, e.g., a reward system for HIV+ clients who exhibit good compliance. Similarly, those clients with records of poor compliance may be subjected to higher premiums or lower sums assured.

Life insurers could also work to improve education and literacy programmes by sponsoring such initiatives for their clients. The costs thereof could be built into the cost of the product. Alternatively, if the client belongs to a medical scheme, the costs can be shared with that.

On the issue of poly-pharmacy the drug regime could be considerably simplified by pre-packaging of drugs in daily packs labelled in chronological order. The Life Insurance provider could assist in pioneering this, and sponsoring the first pre-packaged regimen to their client.

To reduce time spent away from work and stigma issues, life insurers could also assist by offering to courier ARVs to the workplace or other location convenient to the client. The cost of this may be built into the cost of the Life Product or perhaps could be shared with the employer and/or medical aid scheme.

Forgetfulness could be combated by the life insurers sponsoring drug compliancy cards that track what drugs need to be taken when and calculate the percentage compliance at the end of each month. The aim is to achieve greater than 95% compliancy, which is less than three missed doses per month. Less than this results in greater risk of developing resistance. Less than 80% compliancy is associated with greater risk of treatment failure. The drug cards may be used as an assessment tool by the life insurance provider in the maintenance of the policy. Poor compliancy can be penalized by higher premiums, or reduction in the sum assured. Good compliance may be rewarded by cash back benefits, reduced premiums, or free gifts.

The system could be extended with the use of progress cards that summarise all the various parameters involved in treatment of an HIV+ person for example, pill counts, scheduled visits, weight gain, decreasing viral loads and improved CD4 counts. These could be weighted and the final score tabulated every six months to monitor a patient’s progress.

The progress cards could serve as a valuable underwriting tool, as well as a policy maintenance instrument.

The field of developing life insurance products for HIV+ people is relatively new. It is an area of product development where great strides may be made in providing value for money insurance.

To offer a competitive product to the HIV+ person, the key is to create an innovative system that assists the underwriter firstly in making a decision in accepting or declining a HIV+ person and subsequently, once the policy is sold, to assess compliancy and progress of the client.

To ensure that South Africa continues to lead the way in this brave new world of HIV management requires that the Life Assurance Industry take an active role in determining the future and direction of its products.

Quick Polls

QUESTION

South Africa’s economy is facing major policy and market challenges in 2025. As an adviser or broker, what concerns you the most?

ANSWER

Erosion of private property rights
Government interference in free trade
Inflation, administered prices
Weak growth, high debt
fanews magazine
FAnews February 2025 Get the latest issue of FAnews

This month's headlines

Unseen risks: insuring against the impact of AI gone wrong
Machine vs human: finding the balance
Is embedded insurance the end of traditional broker channels?
Client aspirations take centre stage as advisers rethink retirement planning
Maximise TFSA contributions before year-end
Subscribe now