Cape Town - Deaths, loss of income and retrenchment saw SA banks paying out billions in life insurance and death-related claims in 2021 as a result of the Covid-19 pandemic.
Absa Life Insurance revealed that it saw a 61% increase in mortality claims in 2021 compared to 2020 with a 49% growth, amounting to R2.7 billion.
FNB Life insurance also paid out more than R2.4bn in life insurance and policies in 2021. The bank indicated that out of the R2.4bn, R2.3bn were death-related claims and over R81 million were for disability.
Other claims included that of retrenchment relating to income (R190m).
According to the National Institute for Communicable Diseases, 100 070 people have died in South Africa of Covid-19 since the pandemic began.
The death rate recorded in the Western Cape is 122 deaths a day at its highest on August 1 and July 30, 2021, respectively.
Tsietsi Mahlasela, FNB PR manager, said claims were in their billions. “FNB Life has paid out over R2.4bn in life insurance and policies to its customers in the last year. The majority of pay-outs (R2.3bn) were for death-related claims, followed by retrenchment and/or inability to earn an income (R190m) and disability (over R81m).
“Death-related insurance claims have decreased over the course of the fourth wave of Covid-19, compared to spikes recorded during the first, second and third waves of the pandemic. Similarly, claims relating to retrenchment and/or inability to earn an income have begun to normalise as lockdown restrictions are gradually eased.”
Raj Makanjee, CEO of FNB Retail, said the claims were far larger in comparison with the fourth wave and that it grew during the first, second and third wave, even seeing a spike in income claims relating to retrenchments.
"Our life insurance business has been a significant part of our efforts to support customers in navigating the uncertainty of the pandemic,” he explained.
“As a result, we take pride in our ability to pay out claims at this substantial scale, particularly because we only integrated this insurance business into our offering only six years ago with the aim of helping customers in times of vulnerability. As a financial services provider with a focus on money management, we believe that insurance is vital in protecting families against financial hardship," he added.
Eugene Strauss, managing executive at Absa Life Insurance, Retail and Business Bank, said the narrative was the same with their claims seeing a steep increase in death claims and income last year.
“Overall in 2021, we experienced claims growth of 49% to R2.7bn as mortality claims increased 61% compared to 2020,” he told Weekend Argus.
“We saw a significant increase in mortality and retrenchment claims experienced during 2021. As a result, we increased our specific life insurance reserves related to Covid-19 to R423m, which impacted headline earnings.
“This included claims made by Temporary Employee/Employer Relief Scheme (TERS) beneficiaries.
“While TERS is a temporary income for the employee, we took a view in the best interest of the customer to not consider this as an income and to allow them to claim for loss of income on their credit life policies over and above TERS.
“This has been partially offset by 7% growth in net premiums to R4bn from R3.7bn in 2020. This expansion in premium was driven by growth in the funeral and Instant Life business as a result of closer integration with bank operations and increased awareness of the value of life insurance with consumers.
“Our value of new business also increased by 45% in 2021 as a result,” he added.
Goredema Tatenda, of Standard Life Insurance, was also approached but did not comment.
Chandre Matlala, specialist: content and PR, brand communications for Capitec, said their data would only be available next week.
“We are currently in a closed period due to our upcoming results on 12 April so we are unable to assist with any stats at this time.”
Weekend Argus