Incorporating a 'dread' disease
The Life Offices' Association (LOA) and Aids Law Project (ALP) held a joint media conference in Johannesburg on Tuesday.
At this conference, the LOA announced best practice guidelines for its members in determining claims on policies which were previously sold with HIV/AIDS exclusion clauses in place.
Policies paying lump-sum benefits (including group life, credit life or assistance policies) will be affected by the guidelines. It is important to note that the new guidelines will not prevent claims from being rejected due to material nondisclosure. They also exclude policies for income replacement benefits, "living benefits" or those requiring repeat testing.
LOA members have agreed to apply these practice guidelines, with two members indicating they will apply them to policies that have been in force for more than five years. These members account for more than 95% of life-insurance business in South Africa.
Out with the old
In January 2005, the LOA banned the use of HIV/AIDS exclusion clauses in new life-insurance business, and in June 2006 they banned the use of specific waiting periods.
These measures did little to help individuals who bought life-insurance policies with the exclusion clause prior to January 2005. Insured individuals on these policies who later contracted the virus had their claims rejected despite contributing premiums for a number of years. The LOA's latest announcement will stop this practice, and hopefully make life cover more accessible and consumer friendly.
Speaking for the ALP, Fatima Hassan welcomed the LOA's announcement. She said that from 1 April 2007 claim rejections based on the AIDS exclusion clauses would finally come to an end after more than 10 years application. She mentioned that the decision would go a long way toward lessening the socio-economic impact on families who lose their main breadwinner to the illness.
The ALP would lobby the Financial Service Board to address the 5% of life insurance business that was not covered by the LOA guidelines. They would also continue to fight for affordability and choice where life insurance product for people living with AIDS and HIV was concerned. Finally, they would continue to petition for the abolishment of mandatory pre-contract HIV testing.
Medical knowledge and statistics drive the change
Insurers operating in South Africa face a number of challenges when calculating mortalities and associated risks as these relate to HIV/AIDS. The reason is that despite some 13% of the adult population being infected, very few are receiving regular and monitored treatment. This makes it very difficult for the life industry to assess the outcomes being achieved in treating the illness. Existing statistics cannot be applied to South Africa due to differences in infection rates and infection types.
Dr Pieter Coetzer, convenor of the LOA's Medical and Underwriting Committee commented on the impact of recent improvement in HIV/AIDS treatment: "Initially, there was no treatment for HIV and the disease was therefore not insurable. Now, provided there is full compliance with ART (anit-retroviral treatment) prescriptions, HIV/AIDS is considered a chronic treatable disease like diabetes and many other chronic diseases and is therefore insurable."
As medical science progresses, we can expect further changes to the 'risk pool' that insurers consider when calculating policy premiums. Disclosure of a condition like HIV/AIDS will remain an upfront requirement - but the premium cost to the insured should reduce as more information about the outcomes of HIV/AIDS treatment becomes available.
Tuesday's announcement is another that moves HIV/AIDS closer to being viewed as an ordinary, treatable chronic disease.
Editor's thoughts:
Plenty has been said about the use of HIV/AIDS exclusions in insurance policy wording. Are there other exclusions that you would like to see removed from policies in the years ahead? Send your comments to gareth@fanews.co.za.
