How Covid and lockdowns impacted Discovery Group Risk’s claims

How Covid and lockdowns impacted Discovery Group Risk’s claims

Discovery Group Risk has reported a huge increase in the number and value of claims in its 2021 financial year because of the impact of Covid-19.

“The 2021 financial year saw large increases in our group risk claims profile, as well as large variances against expectations. This experience reinforces the devastating impact the pandemic has had on mortality and morbidity. Large shifts were observed within both the total number and value of claims paid, with the biggest increases being observed within our death benefits,” said Guy Chennells, the head of Products for Discovery Employee Benefits.

  • The value of claim payouts increased by 42%, to R2.1 billion, in the year to June 2021 compared to the previous year.
  • The number of claims paid out increased by 35% compared with 2020, to 8 840.
  • The value of life cover claims increased by 74% to R1.28bn.
  • The value of funeral cover claims increased by 87% to R59.8 million.
  • Spouse life cover benefit claims totalled R23.4m, of which 19% were confirmed Covid-19 “events”.
  • Unnatural deaths increased by 42% over the year and natural deaths by 82%, with a 16% and 84% split between natural and unnatural death causes over the period.

Discovery Group Risk has incurred 490 Covid-19 life cover claims totalling more than R700m over the course of the pandemic (2020 and 2021 calendar years). Excess death claims over this period totalled R1.3bn. Death rates due to Covid-19 were higher in men and, as expected, increased by age.

In September 2021, following the third wave, Discovery Group Risk paid the highest number of claims in a single month since inception more than 13 years ago. The second wave was the most severe, with the highest number and the total value of death claims related to Covid-19 at R221 486 478, Chennells said.

Discovery said although Covid-19 increased its excess deaths in 2020 and 2021, not all excess deaths could be directly attributed to Covid infections (see below).

Covid the main reason for natural deaths

Natural deaths among men increased by 92%, and by 69% among women.

Covid-19 was the main cause of natural death among men (47%) and women (41%). The second-highest reason for women was respiratory diseases (17%), while for men it was heart and artery conditions (15%). “These conditions may be related to Covid-19, as they are often exacerbated by the virus,” Discovery said.

The average age of a female Covid victim was 49 years, while it was 51 for men.

Deaths of members with diabetes, one of the co-morbidities associated with a higher risk of developing Covid-19 complications, increased by 450% outside of reported Covid death claims.

Death claims due to cancer increased by 97% over the year, which attests to the fact that screening and registration for cancer benefits may have decreased, Discovery said.

Car accidents account for most unnatural deaths

Motor vehicle accidents accounted for most of the increase in unnatural deaths, despite the lockdown restrictions. Crime was the second-highest cause of unnatural death.

Average car accidents by month dropped during lockdown levels 5 and 4 (nearing zero in absolute terms) but started to pick up to levels higher than before. This aligns with global trends where there have been reports of more reckless driving on account of less congestion, and impaired driving as alcohol consumption increases once lockdown restrictions are eased, Chennells said.

Men accounted for 90% of motor vehicle accident deaths in 2021, compared with 74% in 2020.

Motor vehicle claims increased dramatically in the retail and the transport and logistics sectors in 2021 compared with 2020.

The number of suicides also increased – it was the third-largest cause of unnatural death – “attesting to the strain on mental well-being caused by the pandemic”, Chennells said.

“Suicides by month showed an upward trend, with peaks roughly correlated to stricter lockdown periods.”

There was a dramatic increase in female suicides, going from 0% of claims in 2020 to 18% in 2021.

Most suicides in 2020 and 2021 occurred in the financial services sector, while the retail sector saw a marked increase in suicides compared with 2020.

The rate of suicide increased the most within the youngest age band, 0 to 30 years, compared to last year. However, the 31-to-40 age group had the highest suicide rate.

Explaining excess deaths

Discovery defines “excess deaths” as deaths observed over and above what it would usually expect in a year. It said reported Covid-19 cases accounted for 50% of excess deaths in 2020 and 2021.

An analysis of claims data, in conjunction with additional data from Discovery Health, found the following reasons for excess deaths, some of which help to explain why members with no sickness or Covid-19 infection may have experienced higher mortality:

  • Increased rates of suicide and motor vehicle accidents, particularly among men;
  • Delayed cancer registrations and treatment; and
  • Delayed detection and management of chronic conditions.

In addition, Discovery said it picked up on unreported Covid-19 deaths, where members tested positive for Covid-19, but the cause of death was not reported as due to Covid-19.

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