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Life insurance industry remains resilient despite sharp rise in Covid-19 related mortality claims

The South African life insurance industry remains financially resilient despite the significant increase in claims as a result of Covid-19, which saw it pay out R92 billion in death benefits over 18 months to September 30, 2021. Photo: File

The South African life insurance industry remains financially resilient despite the significant increase in claims as a result of Covid-19, which saw it pay out R92 billion in death benefits over 18 months to September 30, 2021. Photo: File

Published Mar 15, 2022

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THE SOUTH African life insurance industry remains financially resilient despite the significant increase in claims as a result of Covid-19, which saw it pay out R92 billion in death benefits over 18 months to September 30, 2021.

In total, 1 588 605 death claims were received in the 18 months, the Association for Savings and Investment South Africa (Asisa) deputy chairperson of its Life and Risk Board Committee, Hennie de Villiers, said Monday in a statement.

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He said the South African life insurance industry held assets of R3.71 trillion at the end of 2021, while liabilities came to R3.36 trillion. This left R350.5 billion of free assets, or just under double the capital required by the Solvency Capital Requirements, he said.

South African life insurers reported a 53 percent surge in death claims for the six months between April 1, 2021, and September 30, 2021, when compared to the same period in pre-Covid 2019. The rand value of these claims increased by 127 percent.

The six month period covers the third wave of Covid-19 transmissions from early May 2021 to the middle of September 2021, and 565 522 claims were received worth R44.42bn. In the same period in 2019, life insurers received 369 892 death claims to a value of R19.53bn.

Asisa had started tracking death claims against individual life, group life (offered by employers), credit life and funeral cover policies at the start of April 2020 to measure the impact of the Covid-19 pandemic on the long-term insurance industry.

Asisa’s first data set for the 12 months from April 1, 2020, to March 30, 2021, showed life insurers reported 1 023 083 death claims to a value of R47.58bn, a 53 percent increase in claims compared to the same period from 2019 to 2020, and a 64 percent increase in rand value.

This showed the third wave “was significantly more severe than the first two waves of the pandemic.”

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De Villiers said the R92bn paid to families in the first 18 months of the pandemic was at a time when Covid-19 resulted in job losses, and the economy was struggling from reduced retail spending and restrictions that impacted sectors like tourism.

The R92bn was also significant when considered against the R60bn paid by the government’s Covid-19 Temporary Employee/Employer Relief Scheme (TERS) to furloughed workers from March 2020 to July 2021, he said.

“While the death rate has been lower in the fourth wave than in previous waves due to vaccinations and the emergence of the Omicron variant, death claims rates have not yet returned to pre-pandemic levels. Also, less than 50 percent of our adult population has been vaccinated,” said De Villiers.

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He said life insurers expected the higher rate of death claims to continue until South Africans started embracing vaccinations as the new normal.

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BUSINESS REPORT ONLINE

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