Life insurers reported a significant drop in death claims for the six months to the end of March compared to previous six-month reporting periods since the start of the Covid-19 pandemic. South Africa experienced the fourth wave of Covid infections in December 2021, which peaked during the middle of that month.
The Association for Savings and Investment South Africa (Asisa) started tracking death claims against individual life, group life, credit life and funeral cover policies at the start of April 2020 to measure the impact of the pandemic on the long-term insurance industry.
Commenting on the death claims statistics released by Asisa, Hennie de Villiers, the deputy chairperson of the Asisa Life and Risk Board Committee, said although the actual number of reported Covid-19 cases was much higher during the fourth wave compared to the first three waves, the number of death claims processed by life insurers during this period was significantly lower.
“We believe that the death rate during the fourth wave was lower because, on average, infections caused by the Omicron variant were milder, more people had been vaccinated, and a significant number of people had pre-existing immunity due to previous infections.”
The six-month death claims statistics show that 396 698 claims were received between 1 October 2021 and 31 March 2022 to a value of R28.5 billion.
“This is a significant drop from the more than half-a-million death claims received during the previous six-month period, which included the third wave. The most recent numbers are also closer to the 333 509 death claims received in the six months preceding the pandemic.”
Death claims and benefits paid
The table below compares the death claims paid for the six months to the end of March 2022, which include the fourth wave, to the previous six-month period, which includes the third wave. The table also details the death claims paid over the six months before the Covid-19 pandemic took off in South Africa.
According to De Villiers, a total of 1 985 303 death claims were received in the 24 months from 1 April 2020 to 31 March 2022. Life insurers paid out benefits of R120.5bn to the beneficiaries who submitted these death claims.
He said although not every death for which claims were submitted had been caused by Covid-19, there was no doubt that the pandemic has been responsible for many of the additional deaths. “This could be directly as a result of a person contracting the virus or because people were reluctant or unable to seek medical attention for other serious conditions.”
De Villiers cautioned against complacency: “While the death rate was lower during the fourth wave than in previous waves, the number of death claims was still almost 20% higher than in the corresponding pre-pandemic period. Only around 50% of our adult population has been vaccinated, and future variants may emerge as more aggressive.”
Industry remains resilient
De Villiers said that with almost two million life policies paying out in excess of R120.5bn in the two years since Covid-19 arrived in South Africa, many families received much-needed financial assistance following the loss of a loved one.
Despite the significant increase in claims paid as a result of the Covid-19 pandemic, the life insurance industry remains resilient and able to support its policyholders and their beneficiaries.
De Villiers said the South African life insurance industry held assets of R3.71 trillion at the end of 2021, while liabilities amounted to R3.36 trillion. This left the industry with free assets of R350.5bn, which is just under double the capital required by the solvency capital requirements.
