First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

Pandemic Isn’t Half Over for S. Africa Insurer Seeing...

Newsdeck

Newsdeck

Pandemic Isn’t Half Over for S. Africa Insurer Seeing More Waves

A medical professional holds a Covid-19 vaccine at Groote Schuur Hospital in Cape Town on 21 February 2021. (Photo: Gallo Images / Brenton Geach)
By Bloomberg
15 Mar 2021 0

(Bloomberg) --South Africa may still be short of the halfway mark of the pandemic even after two distinct waves of the coronavirus swept through the country over the past year.

By Roxanne Henderson
Mar 11, 2021, 1:03 PM – Updated on Mar 11, 2021, 2:41 PM
Word Count: 441

“We are basically planning for two-and-a-half more waves,” Sanlam Ltd. Chief Executive Officer Paul Hanratty said by phone. The insurer is also “very realistic” that South Africa’s vaccine program “is not going to impact the current year very significantly,” he said.

Africa’s most-industrialized nation has been the hardest hit by the pandemic on the continent, with an official death toll of over 51,000 and more than 1.5 million infections. It started inoculating health workers in February, but the government’s program may only reach the two-thirds of the population necessary to achieve herd immunity in 12 to 18 months.

With the widest reach across Africa of any insurer, Sanlam is preparing for a doubling in excess claims from surges in Covid-19 infections and the longer-term health effects of the pandemic in coming months.

The grim outlook echoes the view of the owner of South Africa’s largest health-insurance administrator, Discovery Ltd., which said last month the country could record an additional 92,500 deaths from Covid-19 by the end of the year if its vaccine program isn’t effective.

Excess Claims

“We estimate our excess claims for the full 2021 year are likely to be two to three times the level of excess claims for the 2020 year,” Hanratty said in a separate video conference.

While the finalization of business-continuity claims at the firm’s property and casualty insurance arm Santam Ltd. weighed on its outlook, reserves already raised should help it weather the uncertainty, he said.

Read more: Discovery Warns of South Africa Death Spike in Third Covid Wave

Sanlam, with a presence in over 30 African countries, reported a 13% decline in the net result from financial services to 8.4 billion rand ($562 million) for the year ended in December as growth in its general and life-insurance businesses suffered in the fallout from the pandemic. The measure increased by 17% if the Covid-19 impact is excluded.

Results were boosted by a funeral-cover partnership with Capitec Bank Ltd. Another venture launched just two years ago, African Rainbow Life, has been “rationalized” into a broader retail unit to drive efficiencies.

The company has reviewed its remuneration model to retain important staff and introduced a new share program with a “speed of recovery” hurdle to push management to reach key financial metrics in line with 2019 levels as quickly as possible.

© 2021 Bloomberg L.P.

Information pertaining to Covid-19, vaccines, how to control the spread of the virus and potential treatments is ever-changing. Under the South African Disaster Management Act Regulation 11(5)(c) it is prohibited to publish information through any medium with the intention to deceive people on government measures to address COVID-19. We are therefore disabling the comment section on this article in order to protect both the commenting member and ourselves from potential liability. Should you have additional information that you think we should know, please email [email protected]

Gallery

Please peer review 3 community comments before your comment can be posted