KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL

FANews
FANews
RELATED CATEGORIES
Category Life Insurance

Third wave COVID-19 death claims rate for insured population almost four times higher the expected death rate

14 December 2021 Actuarial Society of South Africa

South Africa’s largest life insurers received 22 544 death claims against fully underwritten life policies* in the 19 months between the start of the COVID-19 pandemic in March last year and the end of September 2021.

While not all the claims were for policyholders who died as a result of COVID-19, five of South Africa’s largest life insurance companies reported a fourfold increase in death claims at the peak of the third wave against a book of 2.09 million fully underwritten new generation life policies.

These statistics are contained in the updated Death Claims Dashboard maintained by the Continuous Statistical Investigation (CSI) Committee of the Actuarial Society of South Africa (ASSA). Anja Kuys, chair of the ASSA CSI committee, says the dashboard has been updated to reflect data for the three COVID-19 waves recorded to the end of September 2021. Claims statistics are submitted by five of the country’s biggest life insurers, representing around 85% of South African individual life insurance premiums.

The ASSA Death Claims Dashboard was designed to track excess death claims against fully underwritten new generation individual life policies. Excess death claims represent those that exceed the expected numbers based on historical data. Kuys says the aim is to provide life insurers with consolidated insights into the impact of the COVID-19 pandemic to guide accurate pricing of future policy benefits as well as ensuring sufficient capital reserves.

Death claims against fully underwritten new generation individual life policies (1 March 2020 - 30 September 2021)

Month

Total death claims

March 2020

636

April 2020

540

May 2020

629

June 2020

852

July 2020

1 256

August 2020

1 105

September 2020

786

October 2020

710

November 2020

703

December 2020

1 546

January 2021

2 709

February 2021

1 131

March 2021

860

April 2021

833

May 2021

985

June 2021

1 800

July 2021

2 691

August 2021

1 772

September 2021

1 000

Total

22 544

 

According to Kuys the pandemic has resulted in massive upward swings in the number of claims. “While the usual number of claims expected for fully underwritten new generation life policies would be between 600 and 700 a month, over the 19 months to September 2021 the number of claims has consistently been above average, and at the peak of the second and third waves reached around 2 700.”

Excess deaths

Kuys says claims for insured lives lost exceeded the expected death rate by a large margin during all three COVID-19 waves (represented by the red line in the graph below). While statistics from the South African Medical Research Council (SAMRC) show that the actual death rate for the overall South African population (grey line in the graph) also exceeded the expected rate, Kuys notes that more significant divergences are seen for insured lives.

Source: Actuarial Society of South Africa (ASSA) Death Claims Dashboard

Kuys notes that there are two main reasons for the higher excess death rate in policyholders with fully underwritten life policies. She explains that the average age of the insured population is higher than the average age of the overall South African population. “The numbers provided by the South African Medical Research Council include children, a group that fortunately did not experience excess deaths during the pandemic,” says Kuys.

The second reason, according to Kuys, is that the death rate for the insured population was lower than for the total South African population before the arrival of the COVID-19 pandemic. This resulted in life insurers recording a much higher percentage increase in excess deaths for policyholders.

“There are significant differences in insured mortality as compared to overall population mortality, which has always been present in South Africa, even pre-COVID. Therefore, it is very important for life insurers to have access to credible statistics relating to the population they insure, to ensure sufficient capital reserves and pricing.”
Kuys adds that the biggest divergence in the number of claims received to expected was recorded during the second and third waves. During the third wave, life insurers recorded the highest number of claims during July 2021, with an excess number of claims almost four times higher than the expected. The excess death rate for the overall population was only two times higher than expected.

At the peak of the second wave, life insurers received death claims during January 2021 that exceeded the expected death rate by around four-and-a-half times, while the excess death rate for the overall population was around two-and-a-half times higher than expected.

At the peak of the first wave during July 2020, the excess number of claims experienced by life insurers of 192.4% was the closest to the overall population excess rate of 158%.

Total death claims versus confirmed COVID-19 death claims

Kuys says that of the 22 544 death claims received between March 2020 and the end of September 2021, only 4 163 were due to confirmed COVID-19 deaths. She notes, however, that the actual number of COVID-19 deaths is much higher. She explains that death certificates do not specify COVID-19 as the cause of death and only state whether the cause of death was due to natural or unnatural causes, while data from insurers sometimes classify COVID-19 deaths as pneumonia, organ failure or natural causes.

Higher than expected natural deaths

According to Kuys, the dashboard indicates that among policyholders the rate of claims due to natural causes has remained consistently above normal since the beginning of the pandemic. Natural deaths exclude deaths caused by accidents, violent crimes, and suicide. The graph below shows that the pattern of claims received due to deaths from natural causes closely follows the patterns of the COVID-19 infection waves.

Source: Actuarial Society of South Africa (ASSA) Death Claims Dashboard

Death claims per age band

According to Kuys, the impact of COVID-19 has been surprisingly similar across all age groups in that the number of claims have almost doubled for young lives as well as for the older ages.

Death claims by age band (1 March 2020 - 30 September 2021)

Age band

Total death claims

Number of policies

Expected number of claims

<20

0

1 000

0

20 to 29

161

101 000

100

30 to 39

1 218

514 000

700

40 to 49

3 204

623 000

1 500

50 to 59

5 802

495 000

2 800

60 to 69

6 505

265 000

3 400

70+

5 654

91 000

3 400

 

22 544

2 090 000

11 900

 

The vaccination roll-out for adults aged 60 and over commenced mid-May 2021, and Kuys says that while it is perhaps too early to comment, it is promising to see that the relative increase in death claims for those age brackets are slightly lower. She says this will continue to be monitored throughout the fourth wave and will be reported on when as soon as credible statistics are available.

Death claims by gender (1 March 2020 - 30 September 2021)

Kuys comments that the number of death claims has nearly doubled for men and women.

Gender

Total death claims

Number of policies

Expected number of claims

Male

15 120

1  087 000

7 900

Female

7 424

1 003 000

4 000

Total

22 544

2 090 000

11 900

 

Quick Polls

QUESTION

There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?

ANSWER

Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
fanews magazine
FAnews April 2022 Get the latest issue of FAnews

This month's headlines

The ethical core of insurance relationships
Debarment… a double whammy
A beginner’s guide to scaling the Tech Mountain
Leadership, climate and cybercrime… SA’s top risks
Unpacking the retirement reform developments
Subscribe now