SOUTH African life insurers reported a significant drop in death claims for the six months to the end of March this year when compared to previous six monthly reporting periods since the start of the Covid-19 pandemic.
The country experienced the fourth wave of Covid-19 infections during December last year, which peaked during the middle of that month.
The Association for Savings and Investment South Africa (ASISA) started tracking death claims against individual life, group life (offered by employers), credit life and funeral cover policies at the beginning of April 2020 to measure the impact of the Covid-19 pandemic on the long-term insurance industry. South Africa announced its first Covid-19 case on 5 March 2020 and the first Covid-19 death was reported on 27 March 2020.
Commenting on the death claims statistics released by ASISA on Thursday, Hennie de Villiers, deputy chair of the ASISA Life and Risk Board Committee, said while the actual number of reported Covid-19 cases was much higher during the fourth wave when compared to the first three waves, the number of death claims processed by life insurers during this period was significantly lower. “We believe that the death rate during the fourth wave was lower because on average infections caused by the Omicron variant were milder, more people had been vaccinated and a significant number of people had pre-existing immunity due to previous infections.”
The six-month death claims statistics show that 396 698 claims were received between 1the beginning of October last year and the end of March this year to a value of R28.5 billion.
“This is a significant drop from the more than half a million death claims received during the previous six month period, which included the third wave. The most recent numbers are also closer to the 333 509 death claims received in the six months preceding the pandemic.”
De Villiers said a total of 1 985 303 death claims were received in the 24 months from 1 April 2020 to 31 March this year. Life insurers paid out benefits of R120.5 billion to the beneficiaries who submitted these death claims.
He said that while not every death for which claims were submitted had been caused by Covid-19, there was no doubt that the pandemic has been responsible for many of the additional deaths. “This could be directly as a result of a person contracting the virus or because people were reluctant or unable to seek medical attention for other serious conditions.”
However, De Villiers cautioned against complacency saying that while the death rate was lower during the fourth wave than in previous waves, the number of death claims was still almost 20 percent higher than in the corresponding pre-pandemic period. He said only around 50 percent of the adult population has been vaccinated and future variants may emerge as more aggressive.
De Villiers points out that with almost two million life policies paying out in excess of R120.5 billion in the two years since COVID-19 arrived in South Africa, many families received much-needed financial assistance following the devastating loss of a loved one. As a result of COVID-19, many lives were lost at a time when the pandemic also resulted in massive job losses and the country’s economy was struggling.
He explains that life altering events like death, disability and critical illness could not be timed or predicted. “Therefore, the best time to put in place sufficient cover to help your family survive financially in a time of need is while you are healthy and able to qualify for cover at affordable rates and without exclusions. Also, if you already have cover it is of utmost importance that you continue paying your premiums so that you remain covered. If you let your policy lapse you may not be able to secure cover at the same rates – or not at all - when you apply for it again.”
De Villiers added that unfortunately many people underestimated the financial impact on their families when a breadwinner died or became disabled.
De Villiers said despite the significant increase in claims paid as a result of the Covid-19 pandemic, the life insurance industry remained resilient and able to support its policyholders and their beneficiaries throughout this difficult time and beyond.
De Villiers said the South African life insurance industry held assets of R3.71 trillion at the end of last year, while liabilities amounted to R3.36 trillion. This left the industry with free assets of R350.5 billion, which was just under double the capital required by the Solvency Capital Requirements (SCR).