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Life insurers pay out R47.6bn following deaths of more than 1 million policyholders

By Given Majola Time of article published Sep 2, 2021

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Life insurers have paid R47.58 billion to beneficiaries following the deaths of more than a million policyholders in 12 months, according to death claims statistics released this week by the Association for Savings and Investment South Africa (Asisa).

The statistics reflected claims made against individual life, group life (offered by employers), credit life and funeral cover policies.

The data showed that 1 023 083 policyholders died between April 1 last year and March 31 this year.

The deputy chairperson of Asisa’s life and risk board committee, Hennie de Villiers, said this represented an increase of 309 733 lives lost compared to the death claims statistics for the previous 12 months, during which 713 350 policyholders died.

“These are staggering numbers, and there is no doubt that Covid-19 has caused many of these additional deaths, whether directly as a result of a person contracting the virus or because people were reluctant to seek medical attention for other serious conditions. The hard lockdown conditions, curfews and alcohol bans would have reduced violent and accidental deaths,” said De Villiers.

De Villiers said Asisa and its members recognised that behind these numbers were real people who have suffered the pain of the loss of loved ones.

“While losing a family member results in a very challenging time for those left behind, the pay-out of a death benefit does alleviate the financial hardship that can result when a breadwinner dies, and this is where life insurance plays an invaluable role.”

He said the beneficiaries of the 1 023 083 policyholders who died in the 12 months to the end of March this year would have received death benefits of R47.58bn across all lines of risk business. This represented a 64 percent increase in the value of claims paid by life insurers compared to the previous 12 months, when R29.08bn was paid, according to De Villiers.

Asisa said this also represented a R47.58bn injection into the country’s economy during a time when industries, such as tourism and the liquor, were throttled because of the Covid-19 pandemic, resulting in massive job losses.

De Villiers said the reality was that during a period when job losses and salary cuts reduced retail spending, death benefits payments played an important role in supporting the economy.

The significance of the R47.58bn in death benefits paid by life insurers in the 12 months to the end of March was said to have become evident when considered against the R60bn paid by the government’s Covid-19 Temporary Employee/Employer Relief Scheme to furloughed workers from inception in March last year to July this year.

De Villiers said the biggest jump in the value of benefits paid was in the individual life space, where life insurers reported a 70 percent increase. In the 12 months to the end of March, life insurers paid R29.11bn to the beneficiaries of individual life policies, compared to R17.12bn in the previous 12 months.

De Villiers said the highest increase in the number of death claims was in the funeral insurance space, where the number of deaths recorded increased by 216 705 in the 12 months to the end of March.

The life insurance industry held assets of R3.23 trillion at the end of last year, while liabilities amounted to R2.89trln. This left the industry with free assets of R333.5bn, which was more than double the capital required by the solvency capital requirements.

“As an industry, we expect the death claims statistics for the current financial year to tell a grim story, as they will reflect the severity of the current Covid-19 third wave. While the life industry remains well capitalised and in a strong position to continue paying death claims, no amount of money can make up for the loss of a loved one. We, therefore, urge all South Africans to get vaccinated rather than risk death, severe illness or even potential long-term debilitating side effects often caused by Covid-19,” said De Villiers.

Last week, Momentum Life Insurance said it had paid close to R1.4bn this year alone (up to July) for 842 Covid-19-related death claims.

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