The Association of Savings and Investment South Africa (ASISA) recently released death claims figures which left no doubt as to the true impact of Covid-19 when it comes to mortality rates.

Industry-wide figures from South African life insurers show that there was a 53% surge in death claims for the six months between 1 April 2021 and 30 September 2021 when compared to the same period in 2019. The Rand value of these claims increased by 127%.

This covered the period of the Covid third wave, from early May 2021 to the middle of September 2021.

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

Death claims help measure Covid impact

ASISA started tracking death claims against individual life cover, group life cover (offered by employers), credit life insurance and funeral cover policies at the start of April 2020 to measure the impact of the Covid-19 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.

Last year, ASISA released the first dataset for the 12-month period from 1 April 2020 to 30 March 2021. During this period, life insurers reported a total of 1 023 083 death claims to a value of R47.58 billion.

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.

In total, 1 588 605 death claims were received in the 18 months from 1 April 2020 to 30 September 2021. Life insurers paid out benefits of R92 billion to the beneficiaries who submitted these death claims.

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-19, 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.

De Villiers notes that behind these death claims are real people who are suffering the pain of having lost a loved one. “We acknowledge that the payout of a death benefit cannot take this pain away. However, it can alleviate the financial hardship that often follows the loss of a breadwinner.”

De Villiers points out that the R92 billion in death claims paid to families during the first 18 months of the pandemic also came at a time when Covid-19 resulted in massive job losses and the country’s economy was struggling as a result of reduced retail spending and local and global restrictions that impacted vital sectors like tourism.

He adds that the significance of the R92 billion in death benefits paid becomes particularly evident when considered against the R60 billion paid by the Government’s Covid-19 Temporary Employee/Employer Relief Scheme (TERS) to furloughed workers from inception in March 2020 to July 2021.

Life insurers caution against complacency

De Villiers says considering the staggering number of death claims submitted over a short period of 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.”

According to De Villiers, life insurers expect the relatively higher rate of death claims to continue until South Africans start embracing 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 Clovid-19.”

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

De Villiers says the life insurance industry remains resilient and able to support its policyholders and their beneficiaries throughout this difficult time and beyond despite the significant increase in claims paid as a result of the Covid-19 pandemic.

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 R350.5 billion, which is just under double the capital required by the Solvency Capital Requirements (SCR).

This article first appeared in City Press.