Covid sends death claims spiralling, but FNB Life anticipates a ‘return to normal’
Yet another insurer has announced a record payout in claims for the previous year. FNB Life is the latest, with R2.6bn paid out in life insurance claims — most of which was for death claims (R2.3bn), followed by retrenchment or inability to earn an income (R190m) and disability (more than R80m).
Earlier this month, the Association for Savings and Investment South Africa (Asisa), which represents life insurers, reported a 53% surge in death claims for the six months between 1 April 2021 and 30 September 2021 compared with the same period in 2019.
The rand value of the claims increased by 127%.
The six-month death claims figures show that more than half a million claims (565,522) were received between 1 April 2021 and 30 September 2021 at a total value of R44.4-billion, compared with 369,892 death claims at a total value of R19.5-billion for the same period in 2019 (before Covid).
Hennie de Villiers, deputy chair of the Asisa Life and Risk Board Committee, says that while not every death for which claims were submitted would have been caused by Covid, there is no doubt that the pandemic has been responsible for many of the 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.
According to De Villiers, life insurers expect the relatively higher rate of death claims to continue until South Africans begin to embrace vaccinations as the new normal.
“There is overwhelming evidence that the risk of severe illness or death is significantly lower in those who are fully vaccinated.
“A consistently higher claims experience will leave insurers with little choice but to adjust premiums in line with the higher risk presented by someone who is not vaccinated and therefore more likely to die from Covid,” he cautions.
De Villiers says that premiums have already increased in the group life insurance space, for example, but that employers who have implemented mandatory vaccination policies are starting to benefit from preferential premium rates.
However, FNB Life says that death-related insurance claims have decreased over the course of the fourth wave of Covid, compared with spikes recorded during the first, second and third waves. Similarly, claims relating to retrenchment and/or inability to earn an income have begun to normalise as lockdown restrictions are eased.
Lee Bromfield, chief executive of FNB Life, claims the insurance provider is the only one that proactively pays out life insurance claims by routinely checking the National Population Registry for deceased policyholders.
The pre-emptive claims process pays an average of R14.5-million per month to beneficiaries, with more than R450-million paid out to date. BM/DM
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