South Africa's largest life insurers have reported increases of 50% to 60% in death claims against fully underwritten individual life policies between March last year -- when the first COVID-19 case was recorded in South Africa -- and the end of January 2021.
Although life insurers anticipated that death claims would increase in line with the national death rate during the second COVID-19 wave in January 2021, the number of insured lives lost exceeded the expected death rate by four times at the peak of the second wave, reported the weekly newspaper Daily Maverick 168.
In comparison, the country as a whole saw an increase in reported deaths of 2.8 times the expected death rate.
“This was a surprising finding given that policyholders with fully underwritten life policies tend to have fewer co-morbidities and usually have access to better healthcare,” said Anja Kuys, chair of the Actuarial Society of South Africa’s Continuous Statistical Investigation (CSI) committee.
The information came via a CSI-designed dashboard that tracks excess death claims against policies. The data is submitted by four of SA’s biggest life insurers, representing about 70% of individual life insurance premiums, and the data is used to provide life insurers with insights into the impact of the COVID-19 pandemic on policyholders as measured by excess deaths. This is to help ensure accurate pricing of future policy benefits and ensure sufficient capital reserves.
The statistics exclude universal life policies and limited underwriting policies (such as funeral policies).
The life insurance industry has recorded excess deaths not only among people holding fully underwritten life insurance policies but also across the spectrum of policies held by South Africans.
Overall, the life industry recorded 434,216 death claims in 2020, a significant increase from the 317,442 claims received in 2019. In total, claims and benefit payments worth ZAR522.7bn ($38.1bn) were received from life insurers in 2020. This is an increase of ZAR31.7bn or 6% from 2019, according to the Association for Savings and Investment South Africa.
The payments made to policyholders and beneficiaries included retirement annuity and endowment policy benefits, as well as claims against life, disability, critical illness and income protection policies.