Death claims surge 53% during Covid-19 third wave

South African life insurers reported a 53% surge in death claims between 1 April and 30 September 2021 compared to the same period in pre-Covid 2019, according to statistics released by the Association for Savings and Investment South Africa (Asisa).

The rand value of these claims increased by 127%.

The six-month reporting period to the end of September 2021 covers the third wave of Covid-19 transmissions from early May 2021 to the middle of September 2021, said Hennie de Villiers, the deputy chairperson of Asisa’s Life and Risk Board Committee.

The six-month death claims statistics show that 565 522 claims were received between 1 April and 30 September 2021 to a value of R44.42 billion. During the same period in 2019, life insurers received 369 892 death claims to a value of R19.53bn.

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.

South Africa announced its first Covid-19 case on 5 March 2020 and the first Covid-19 death was reported on 27 March 2020.

Third wave was more severe

Last year, Asisa released the first data set for the 12 months from 1 April 2020 to 30 March 2021, which included the first and second waves of the pandemic.

Life insurers reported a total of 1 023 083 death claims to a value of R47.58bn. This represented a 43% increase in death claims compared to the same period from 2019 to 2020 and a 64% increase in rand value, demonstrating that the third wave was significantly more severe than the first two waves of the pandemic.

De Villiers said 1 588 605 death claims were received in the 18 months from 1 April 2020 to 30 September 2021 (in other words, during the first three waves). Life insurers paid out benefits of R92bn to the beneficiaries who submitted these death claims.

He said although not every death for which claims were submitted would have been caused by Covid-19, there was 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.

De Villiers said the R92bn in death claims paid to families during the first 18 months of the pandemic came at a time when Covid-19 resulted in massive job losses and the economy was struggling as a result of reduced retail spending and local and global restrictions that affected sectors such as tourism.

He said the significance of the R92bn in death benefits paid becomes particularly evident when considered against the R60bn paid by the government’s Covid-19 Temporary Employee/Employer Relief Scheme to furloughed workers from inception in March 2020 to July 2021.

Premiums will rise – if they haven’t already

Life insurers expect the relatively higher rate of death claims to continue until South Africans start embracing vaccinations as the new normal, De Villiers said.

“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-19.”

De Villiers said premiums have already increased in the group life insurance space, for example, but employers that have implemented mandatory vaccination policies are starting to benefit from preferential premium rates.

Considering “the staggering number” of death claims submitted over only 18 months, South Africans should guard against complacency.

“While the death rate has been lower during the fourth wave than in previous waves due to vaccinations and the emergence of the Omicron variant, death claims rates have not yet returned to pre-pandemic levels. Also, less than 50% of our adult population has been vaccinated,” De Villiers said.