Liberty paid out R6.98 billion in retail claims to about 31 808 individuals and their beneficiaries in 2022, amounting to R26.85 million every working day, according to the life insurer’s latest statistics.
Claims pay-outs decreased by 31% from the R10.12bn paid out in 2021, driven largely by a significant decline in Covid-related claims, which fell to R449m in 2022 from R3.47bn in 2021.
Despite the decline, the R6.98bn paid out last year was 10% higher than in 2020, the first year of the pandemic.
“The significant reduction in Covid-related claims signals that the worst of the pandemic is over. However, secondary effects of the pandemic have emerged in the form of chronic illnesses,” said David Jewell, the executive for retail solutions at Liberty. “The long-term effects of Covid-19 will take many years to work their way fully through the claims experience.”
Liberty said 94.8% of claims submitted in 2022 were paid compared with 93.6% in 2021. The reasons for non-payment included the critical illness policy not covering the disease or condition and the claim not meeting the benefits criteria.
Life insurance claims comprised R5.4bn of the R6.98bn Liberty paid out, while claims because of disability, critical illness, and income protection increased. In 2021, these conditions accounted for 13.7% of all claims; in 2022, they made up 22.4%.
Lifestyle protection claims under disability and critical illness policies increased by almost 14%. Lump-sum income protection claims rose 13%, and monthly income claims increased more than 3%.
Cancer was the leading driver of pay-outs in 2022, accounting for 28.8% of claims, followed by cardiovascular disease and disorders (22.4%), respiratory issues (11.9%), strokes (6.5%) and renal disorders (5.9%).
Breast cancer accounted for 49% of cancer-related claims for female policyholders, and prostate cancer for 31.5% of all approved cancer claims for male clients.
The late diagnosis of diseases such cancer because of missed routine checks during the lockdown has resulted in doctors detecting these diseases at later stages. Liberty’s chief medical officer, Dr Dominique Stott, said most cancer claims are at stages three and four, whereas they used to be at stages one and two.
Increase in claims related to mental health
Liberty’s statistics indicated a rise in income protection claims resulting from diagnoses for mental and behavioural disorders, from 5% in 2020 to more than 9% in 2022.
Stott said this was not entirely unexpected because a number of people lost their businesses, loved ones, and income during the pandemic. Since then, South Africans have been struggling to cope with the rising cost of living and the impact of loadshedding on businesses.
Stott said the impact of loadshedding on businesses and employment was becoming worse, and Liberty has already experienced an uptick in claims linked to psychiatric disorders this year.
Another reason claims linked to psychiatric disorders are likely to increase is that South Africa does have sufficient psychiatrists and psychologists to help everyone who suffers from these conditions, she said.
Liberty Corporate also recorded an increase in psychiatric and neurological disorder claims. Psychiatric-related claims rose to the third position under income protection benefits, accounting for 14.8% of all pay-outs – higher than stroke and cancer for that category. They also accounted for 9% of all lump-sum disability claims.
However, suicide claims attributed to mental health issues declined. In 2021, the proportion of death claims attributed to suicide shot up to 5.8% from 1.3% in 2020. In 2022, it decreased to 2.6%.
Retrenchment claims
Retrenchment claims fell in 2022, accounting for 4% of all claims compared with 7.2% in 2021. More than half of such policies were taken out in Gauteng (52.1%), followed by KwaZulu-Natal and the Western Cape. A high proportion of retrenchment claims were from clients aged 35 to 44 years.
“This reflects the effects of a subdued economy on this cohort,” said Tom Crotty, a risk proposition management specialist at Liberty. “The impact of the subdued economy, combined with the further economic stress brought on by loadshedding, is affecting businesses across the country.”
Liberty paid out R2.58bn in corporate claims, 25% less than in 2021, again thanks to the easing of the Covid-19 pandemic. More than 40% of claims were from clients over the age of 55.
