Discovery Life’s individual life cover pay-outs jump 173% in 2021

Discovery Life paid claims to the value of R11.79 billion last year, of which R9.1bn was for more than 10 000 individual life claims – an 89% increase in the value of individual claims compared to 2020, according to its annual claims review.

Covid-19 claims on group and individual life policies in 2020 and 2021 came to R6.5bn, with R3.8bn paid out in 2021 on individual life policies.

Discovery said Covid accounted for 60% of the value of its death claims in 2021, making it the single highest cause of death in any given year since 2012.

“Put differently, Covid-19 almost tripled the rand amount of death claims during 2021 compared to pre-pandemic levels.”

The value of claims across all types of individual policies increased last year.

Discovery paid out R6.191bn in life cover benefits, a 173% increase compared to 2020.

Income continuation benefit pay-outs increased by 23% to R534 million last year. Of the 2 985 claims, more than 1 300, or 44%, were for Covid-19.

Excluding “frontline” healthcare professionals, Discovery said there was an increase of more than 500% in income continuation benefit claim amounts for other professionals in 2021.

Discovery Life said it expects to pay a further R2.5bn to current income continuation claimants in the future.

The pay-outs for other benefits in 2021 were:

  • Severe illness: R1.242bn, a 12% increase compared to 2020;
  • Capital disability: R883m, 11%;
  • Health Plan Protector: R127m, 4%;
  • Global Education Protector: R56m, 75%;
  • Funeral benefits: R34m, 24%; and
  • Overhead expenses benefits: R28m, 56%.

Of the R3.8bn in individual Covid-related claims, R3.64bn was for life cover benefits, R91m was for severe illness benefits, and R64m for income continuation benefits.

Increase in mental health conditions

Discovery Life deputy chief executive Gareth Friedlander said the insurer was concerned about the growing prevalence of claims related to mental health conditions.

Last year, Discovery recorded an 18% increase in the number of suicides year-on-year, and it paid out R405m in claims related to mental and behavioural conditions and suicides.

Its data showed that, in the past four years, the number of suicides was more than 25% higher than in the preceding four years.

Friedlander said Discovery’s claims data showed that mental health concerns were not specific to any particular age group.

Cancer is the top severe illness claim

Excluding Covid, Discovery’s claims data shows that cancer is the leading cause of death for women, while for men it is heart and artery conditions. However, cancer is now the leading reason for a severe illness claim among both men and women, whereas historically for men it was heart and artery conditions.

Although cancer survival rates have increased significantly since the 1970s, because of early detection and treatment, the cost of treatment increases every year.

Discovery said cancer treatment costs between R10 000 and R1m per patient per year, while the cost of cancer drugs increases by 10% annually.

Higher cancer survival rates have increased the risk of relapses, as well as the occurrence of secondary cancers.

No vaccination-related claims

At least 75% of Discovery Life clients are vaccinated against Covid compared to the national rate of 32%.

Discovery Life said it has not received a single claim as a result of a vaccination side-effect.

Chief executive Riaan van Reenen said more data and time were required before Discovery would be in a position to conclude that Covid has moved from a pandemic to an endemic.

However, in his opinion, the decline in mortality rates in the fourth and fifth waves suggested that Covid has now become endemic.

Van Reenen said that because Covid was very infectious, it was unlikely to go away, and the risks associated with the endemic would have to be managed.

“The longer-term impact of Covid-19 remains uncertain, and we urge everyone to make sure that they have sufficient cover to protect against unexpected life changing events. Life insurance has seldom been more valuable than at present,” he said.

Asked whether he thought life insurers had “jumped the gun” by underwriting unvaccinated people, Friedlander said it was clear at the time that vaccination was “incredibly effective” in reducing mortality risk, and it made sense to include vaccination status as part of the underwriting risk, particularly for high-risk clients.

However, Friedlander indicated that the risk of not being vaccinated would be re-assessed as the population reaches herd immunity and as successive variants become less virulent.

Benefits of shared-value insurance

Discovery Life rolled out a raft of data to demonstrate the benefits of its shared-value insurance model:

  • In 2021, Gold and Diamond Vitality members had a 59% lower mortality risk compared to clients who did not engage with Vitality.
  • The average life expectancy for Gold and Diamond members was 89 years, compared with 83 years for other Vitality members and 67 for “the insured” South African population.
  • Gold and Diamond members experienced 37% lower disability rates.
  • Diamond members had an 85% lower risk of dying from Covid compared to clients who did not belong to Vitality.
  • Only one Covid-19 death has been recorded among Gold and Diamond clients who are fully vaccinated.
  • Lapse rates declined as Vitality members’ status rose, with the lapse rate among Diamond members 60% lower compared to Blue members.

Discovery Life said it returned R1.3bn to clients in 2021 in the form of paybacks for making healthy lifestyle choices.

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