Category Life Insurance

Facing the same risks as claims take their toll

25 April 2017 Jonathan Faurie

The role of life insurance can never be understated. However, its value is only ever appreciated when one looks at the claims statistics presented by life insurers.

We saw some interesting statistics from Liberty earlier in the month. It was now Momentum’s time to present what they went through in 2016. A common thread existed.

The good and the bad

In 2016, Momentum paid out R3.6 billion in claims. This means that during the period, the company paid out R14.5 million (across 47 claims) every working day.

Paddy Padyachee, Head of Claims and Risk Management at Momentum, points out that 94.5% of the claims lodged with the company were valid.

Of the claims that were not valid, 4.5% of the claims did not meet the criteria for a claim while 0.8% of the claims were repudiated. Of the claims that were repudiated, 11% were suicide events (where the suicide happened within the no claim period) while 8% of repudiated claims were because of non-disclosure.

This is similar to Liberty’s results where non-disclosure and suicide was a problem for them during the same period.

Critical illness claims

The statistics indicate a steady decline in claim pay-outs for critical illnesses in their most advanced stages and a corresponding increase, over time, for earlier stage pay-outs.

During 2014, the pay-outs for critical illnesses at the highest severity levels was 58% of the total number of pay-outs and this declined to 43% of the total critical illness pay-outs in 2016.

However, over the same period, the pay-outs for critical illnesses at the lowest severities increased from 10% to 37% of the total number of pay-outs for critical illness claims.

George Kolbe, Head of Life Insurance Marketing at Momentum, said that early detection of critical illnesses is extremely beneficial for clients because that is when illnesses have the best chance of successful treatment.

“Comprehensive critical illness cover is more affordable when selected on cover with tiered claim pay-outs. Being more affordable means that clients can select higher cover amounts without having to compromise on comprehensiveness of cover while still benefitting from increasing pay-outs if the critical illnesses progress. This highlights the importance of benefit design that provides for breadth of cover as a critical component of clients’ holistic financial wellbeing,” said Kolbe.

Delving deeper into numbers

Claims statistics are valuable tools for advisers as they know which products to sell to a specific market.

There were some predicable statistics when it came to the death claims by age. Ten percent of deaths reported to Momentum were claimants between the age of 40 years old and 49 years old. Further, 19% of death claimants were between the ages of 50 to 59 years old while 67% of claimants were over the age of 60 years old.

The youngest male claimant during the period under review was 19 years old while the youngest female was 21. Further, the oldest male claimant was 104 years old while the oldest female claimant was 101 years old. This proves that longevity remains an issue in the industry.

“Longevity is becoming an issue because we are seeing increased instances of people living longer with critical illnesses or overcoming a disease like cancer, but depleting funds in the process. We cannot underestimate the issues this is causing in the industry,” said Padyachee.

Editor’s Thoughts:
Publishing claims statistics shows that companies are assessing the risks inherent with their businesses and are actively trying to overcome them. It will be interesting to see how companies like Momentum respond to these risks in the future. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts


Added by Sumari Hendricks, 20 Feb 2018
This article is a true reflection of the reality of repudiated claims. Why wait to submit the claim to know if your policy will pay? We go out of our way to assist clients to ensure that they have a fighting chance at claim stage. I always say, when your policy gets issued and accepted, there is only one underwriter assessing your risk. When your claim gets submitted. There is team of claims administrators assessing the VALIDITY of the claim. Doesn’t that speak for itself?
DiscloseAll before it is too late

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Added by Pamela Immelman, 02 Jan 2018
I would like to know how many death (by murder) claims are paid out ?
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Added by Jacky Maritz, 25 Apr 2017
It would be interesting to see how many of the suicide claims within the 2 year waiting period was due to policies that were replaced from one insurer to the is a sad topic but clients don't realize there is a break in cover and they think that they have had their policies for more than 2 years when they decide to commit suicide.

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