Life office sees substantial rise in Covid related death claims

Life office sees substantial rise in Covid related claims

In a recent media release, Petrie Marx, Product Actuary at Sanlam Individual Life, provided some insight into the impact of the pandemic on its individual life business.

In 2020, Sanlam Individual Life paid R4.75 billion in total claims:

  • R3.97 billion for death and funeral claims
  • R398.9 million for disability, loss of income and impairment claims and
  • R386 million for severe illness and injury claims.

“Sanlam Individual Life paid out R458.95 million in pandemic-related claims in 2020. With the second wave, we have surpassed this significantly, and already paid out R622.66 million for Covid-19 claims in Q1 of 2021”, according to Marx.

The number of claims for Covid-19 fatalities in 2020 for Sanlam Individual Life was initially relatively low, with most Covid-19 claims being for sickness and income protection. Claims for death and funeral benefits increased to make up the majority in December 2020, January 2021 and February 2021. Following the second wave, the first three months of 2021 saw significantly more death and funeral claims, with the Individual Life business paying out its highest number of Covid-19 claims in any month in February 2021: R8.25 million for sickness and income protection and R422.73 million for death and funeral claims. Marx adds, “It’s clear the second and third waves are having a greater impact on our Individual Life client-base. But it should be noted that Sanlam Sky and Sanlam Corporate (our employee benefits business) were already hit hard in wave one.”

In 2020, death claims resulting from ‘diseases of the respiratory system’ increased to 21%, from 11% in 2019. Covid-19 was also the single biggest factor behind the 60% year-on-year increase in funeral claims. The pandemic also had less obvious implications, including 60% fewer claims under the accidental death benefit.

Marx says, “Aside from the increase in claims resulting from Covid-19, the main effect we saw in 2020 was a 60% decrease in accidental claims for all benefits. This may well have been the result of the strict lockdown regulations. It was also evident in the breakdown of disability claims where claims for mental disorders went up from 8% in 2019 to 19% in 2020.

He notes that the 2020 claim statistics did not include the impact of the second and third wave, so Sanlam expects to see a different outcome in 2021, where lockdown laws were looser, and its main client-base was more affected. “There is also speculation that 2021 may see an increase in claims as a result of late diagnosis of, say, cardiovascular disease or cancer, or from people suffering from “long-Covid”, but we have not yet seen this coming through in our claims.”

The cost of absenteeism

In total, Sanlam Individual Life paid R29.95 million in claims for people being booked off work for Covid-19. This hints at what absenteeism may have cost the country. Positive COVID-19 cases have once again peaked in the third wave which South Africa has experienced over the last few weeks and Sanlam is currently experiencing an influx of claims as a result of the 3rd wave. Marx says some provinces such as Gauteng, the Northwest and Limpopo are showing a decline in positive cases while coastal provinces such as Kwazulu-Natal continue to show an increase in infections.

The Sanlam Individual Life claim statistics also made it clear it’s imperative not to lose sight of the other main causes of severe illness in the country. “Cancer remains the main cause of severe illness claims; in the last six years, it’s accounted for 60% of all the severe illness claims paid annually. We’re also seeing trends from previous years continue, like the continued rise in breast cancer in women.”

Marx concludes that the pandemic has increased awareness of the importance of having a sound financial plan in place, should the unthinkable happen. “

To view the complete Sanlam Individual Life 2020 claim statistics, click here.

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2 Responses to Life office sees substantial rise in Covid related claims

  1. Martyn Moore 16 August 2021 at 3:17 pm #

    So there was never a better time to have quality cover in place than recently!

    • Paul Kruger 16 August 2021 at 3:22 pm #

      Absolutely, Martyn. I recall a friend responding to a client who said that he had more than enough life cover: “I have yet to meet a widow who was of the opinion that her late husband was over-insured”.

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