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Life claim statistics show worrying health trends

Personal Finance

Liberty and Momentum released their 2016 risk-cover claims statistics recently, revealing worrying health trends, especially in relation to cancer. Liberty’s figures reflect higher cancer claims among young adults, but, on a positive note, there is also evidence that critical illnesses such as cancer are being detected and treated earlier. 

Both assurers produced figures on what they paid out last year in the three main risk policy categories: life cover, disability (income protection) cover, and critical illness cover. 

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Liberty paid out R4.3 billion in claims. Of that, R3.05 billion (about 70 percent) was for life cover, R700 million (about 17 percent) was for critical illness cover, and R550 million (about 13 percent) was for disability cover.

About one in four Liberty claims across all types of policies was for cancer, and about one in five was for a cardiovascular condition. 

Liberty has divided its client base into four life-stage segments: young achievers, young parents, established providers and empty nesters. Cancer was the main cause of claims across the first three segments. The most common type of cancer among women was breast cancer and among men it was prostate cancer. 

Of particular concern is that cancer figures among the younger two segments have increased since 2015. The top four causes in each segment were as follows:

Young achievers: cancer 15.2 percent of claims (12.3 percent in 2015), retrenchment 11.7 percent, motor vehicle accidents 9.7 percent, and cardiovascular disease nine percent.

Young parents: cancer 24.4 percent of claims (22.5 percent in 2015), cardiovascular disease 14.7 percent, retrenchment 9.3 percent, and central nervous system (CNS) conditions and strokes 9.3 percent.

Established providers: cancer 26.2 percent, cardiovascular 22 percent, CNS conditions and strokes 9.2 percent, and musculoskeletal disorders 5.6 percent.

Empty nesters: cardiovascular 23.7 percent, cancer 23.3 percent, respiratory conditions 7.3 percent, and CNS conditions and strokes six percent.

Liberty’s geographical breakdown of claims is of interest, with the Northern Cape showing the lowest percentage of claims for cancer. Cancer claims were highest in Limpopo (35 percent of claims, with 22 percent of claims for cardiovascular disease). The other provinces were as follows: Mpumalanga (32 percent cancer, 23 percent cardiovascular), Western Cape (29 percent cancer, 20 percent cardiovascular), Free State (24 percent cancer, 23 percent cardiovascular), Gauteng (24 percent cancer, 18 percent cardiovascular), North West (23 percent cancer, 14 percent cardiovascular), KwaZulu-Natal (20 percent cancer, 29 percent cardiovascular), Eastern Cape (19 percent cancer, 21 percent cardiovascular), and Northern Cape (16 percent cancer, 24 percent cardiovascular).

Liberty’s chief medical officer, Dr Philippa Peil, says: “We have seen these worsening health trends ever since we started reporting our claim statistics in 2006. There are a number of reasons, such as lifestyle choices, our diets, lack of physical activity and genetic markers. Given the increasing rate of cancer claims, it is important to take serious care of your body and to identify serious illnesses as early as possible.”  

Henk Meintjes, head of risk product development at Liberty, says: “Many people believe that misfortunes won’t happen to them, but when you consider the statistics, the importance of insurance protection against debilitating events and death becomes quite clear.”

Momentum’s figures

Momentum paid out R3.63 billion, of which R2.78 billion (about 77 percent) was for life cover, R439 million (about 12 percent) for disability cover, and R406 million (about 11 percent) for critical illness cover.

Looking at Momentum’s life policy claims, the four major causes of death were: cardiovascular disease (34 percent), cancer (19 percent), respiratory conditions (10 percent) and unnatural causes (10 percent, of which half were motor accidents). Four percent of death claims were for people under the age of 40.

The top four causes among Momentum’s critical illness claims were: cancer (34 percent), cardiovascular disease (23 percent), CNS conditions and strokes (14 percent), and musculo-skeletal conditions (eight percent).

In the area of critical illness cover,  Momentum’s statistics show cancer and other critical illnesses being detected and treated earlier. “Early pay-outs for lower-severity levels of critical illnesses are featuring more prominently in our claims statistics,” George Kolbe, the head of marketing for life insurance at Momentum, says.

The statistics indicate a steady decline in claim pay-outs for critical illnesses at the most advanced stage and a corresponding increase in earlier-stage pay-outs. During 2014, the pay-outs for critical illnesses of the highest severity was 58 percent of the total, and this declined to 43 percent in 2016. However, over the same period, the pay-outs for critical illnesses at the lowest level of severity increased from 10 per cent to 37 per cent of the total number of pay-outs for critical illness claims.


FAST FACTS

  • Liberty paid out 91.8 percent of claims; Momentum paid out 94.7 percent of claims.
  • Liberty paid an average of R17 million each working day, with one claim paid every eight minutes.
  • Momentum paid a total of 11 778 claims in 2016. This equals 47 claims each working day.
  • For each Momentum Myriad female client who died in a motor vehicle accident, four male clients died in motor vehicle accidents.
  • Momentum’ s largest claims in 2016: a death claim of R51 million, a lump-sum disability claim of R11 million, an income protection disability claim of R240 000 a month, and a critical illness claim of R5.3 million.


CONSUMERS SEE THE NEED TO BRIDGE THE GAP

Despite financial hardship, consumers are making an effort to close the insurance gap, which is the difference between the actual risk cover they have and the amount they need, according to the Association for Savings & Investment SA (Asisa).

The 2016 Life and Disability Insurance Gap Study, conducted by Asisa in partnership with True South Actuaries & Consultants, indicates that the average South African earner has an insurance gap of R2.1 million.

Hennie de Villiers, the deputy chair of the Asisa life and risk board committee, says recurring premium risk business showed strong growth of nine percent in 2016. Consumers took out 5.2 million new individual risk policies to cover events such as death, disability and dread disease, compared with 4.8 million policies in 2015.

He says the seven-percent drop in the first-year policy lapse rate also highlights that consumers are serious about increasing their risk cover. (A lapse occurs when the policyholder stops paying premiums.)

De Villiers says that the immediate benefit of saving the monthly premium by lapsing the policy comes at the cost of an asset in the future – the policy payout.

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