Category Life Insurance

Life insurers to waive existing HIV/AIDS exclusions

27 March 2007 Life Offices Association (LOA) AIDS Law Project (A

The Life Offices' Association (LOA) announced today that as from next week its member life offices will no longer apply existing HIV/Aids exclusions to life and disability policies.

This follows a best practice recommendation by the LOA to its member offices to waive existing HIV/AIDS exclusions for all lump sum death and disability benefit claims submitted from April 1, 2007.

As a result, going forward, no claim for a lump sum death or disability benefit will be denied by any of these life companies based on the HIV/AIDS status of the insured person, unless the policyholder is found guilty of material non-disclosure.

Making the announcement at a joint media briefing with the AIDS Law Project (ALP), Gerhard Joubert, CEO of the LOA, says even though the best practice recommendation is not binding, all LOA member offices have agreed to waive the exclusions.

Joubert explains the HIV/AIDS exclusion clauses will be waived for all types of life and disability cover that pay lump sum benefits, including group life, credit life and funeral cover.

The waiving of exclusions does not apply to:

*  Income protector policies and hospital cash plans.

*  Policies requiring regular HIV retesting.

*  Cases where policyholders committed material non-disclosure. This is particularly relevant to low premium policies like funeral policies that often rely on disclosure rather than HIV testing.

Fatima Hassan, senior attorney with the ALP, described the decision by LOA member offices to waive HIV/AIDS exclusions for existing policies as totally groundbreaking and one of the biggest moves the life industry has ever made.

"We believe that uncertainty about this disease resulted in the life industry imposing an outdated model on people living with HIV/AIDS. For years the ALP has been representing beneficiaries who did not receive a benefit because the policyholders died after contracting the virus although they were HIV negative when they took out their policies."

Hassan notes that there has been a massive shift within the life industry over the past 10 years in its approach to HIV/AIDS.

"We have been lobbying the life industry to drop HIV/AIDS exclusions for a number of years. And at last people have been given the security and peace of mind that their life and disability policies will pay out the lump sum benefit they have been paying premiums for even if they contract HIV/AIDS."

Joubert says after doing away with HIV/Aids exclusion clauses for policies issued after January 1, 2005, LOA member offices also scrapped HIV/Aids specific waiting periods for new business as from June 1, 2006.

In addition, the LOA regulates HIV testing for insurance purposes through the LOA HIV Testing Protocol, which sets out the methodology to be used for HIV testing and also addresses aspects such as personal pre- and post-test counselling.

Dr Pieter Coetzer, convenor of the LOA's Medical and Underwriting Committee, says over the past decade vast improvements have taken place in the treatment of HIV/AIDS.

"Initially, there was no treatment for HIV and the disease was therefore not insurable. Now, provided there is full compliance with ART (anti-retroviral treatment) prescriptions, HIV/AIDS is considered a chronic treatable disease like diabetes and many other chronic diseases and is therefore insurable."

Dr Coetzer says although most existing cover options remain fairly expensive, some life insurers are in the process of developing new generation products that will offer competitive premiums for HIV positive people on an ART programme.

He says the history of diabetes is a good example of how cover becomes available and cheaper as sustainable treatment options are introduced and insurers gain a better understanding of a disease.

"Before the 1950s diabetes was not treatable and therefore also not insurable. Thereafter  treatment options became available, but because initial outcomes remained uncertain insurance was very expensive. As treatment and outcomes improved, insurance for diabetics has become very affordable.  Today diabetics who comply with treatment regimes can obtain very competitive rates."

Dr Coetzer says until now there has been a lack of reliable South African data relating to the HIV/AIDS survival rate and the way the disease responds to treatment. He says this is mainly because only a small number of people are on treatment. Also, those receiving treatment have been on it for relatively short periods.

"Because South Africa is grappling with unique challenges when it comes to HIV/AIDS, assumptions and models are used by life insurers and therefore existing products are still relatively expensive."



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