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Old Mutual pays out a record R21.2bn in claims in 2021

Old Mutual paid out R21.2 billion in claims in South Africa last year, 51% higher than in 2020, according to its latest claims statistics report.

“The significant increase in pay-outs of 51% bears testament to the importance of having adequate cover in place to provide financially for loved ones in the event of tragedy or unforeseen events,” said John Kotze, retail protection product head at Old Mutual. “It’s absolutely essential that families and breadwinners understand the risks and prepare accordingly.”

Total underwritten claims paid out in 2021 came to slightly more than R11bn, compared to R6.5bn the previous year, an increase of 69%.

Old Mutual paid out R6.6bn in corporate claims and R3.6bn in non-underwritten claims.

The claims pay-out ratio for all underwritten claims was 98%, but the headline figure obscures the divergence in pay-outs across product categories.

The main reason underwritten claims were not paid was the benefit definition not being met, which accounted for 69% of repudiations, followed by non-disclosure (20%).

Life cover claim pay-outs double

Life cover claim pay-outs more than doubled last year, increasing from R4.57bn to R9.74bn.

Old Mutual paid out 99% of death claims.

Although fraud accounted for only 4% of claim repudiations across all underwritten risk products, fraud was the second-biggest reason (20%) for the rejection of death claims after non-disclosure (73%).

The top four reasons for death claims were respiratory system disorders (45%), cardiovascular disorders (15%), cancer and tumours (13%), and “trauma and lifestyle” (12%). Among the latter, the main reasons for claims were motor vehicle accidents (54%), followed by shooting accidents (25%), and crime and violence (15%).

The average age for a death claim pay-out was 62 years for both men and women. As expected, death benefit claims were higher for men (65%) than for women (35%).

Disability claims

Old Mutual paid out R432 million in disability (income and lump-sum benefit) claims, with a pay-out ratio of 87%.

Disability lump-sum claims decreased by R13.3m, while income claims increased by R10m compared to 2020.

Claim rejections were higher for lump-sum claims (85% approved) than for income claims (90% approved).

The main reason claims were rejected was the benefit definition not being met (82%), followed by underwriting exclusions and non-disclosure (9% each).

The average age of a disability claimant was 48 for men and 45 for women, with the youngest male claimant 24 and the youngest female 25.

Musculoskeletal disorders and infectious diseases were the main reasons for disability income claims (27% each). The next three biggest reasons were cancer and tumours (12%), central nervous system disorders (7%) and psychiatric disorders (7%).

Musculoskeletal disorders were also the main reason for income claims (26%). The next four biggest causes of claims were central nervous system disorders (17%), cancer and tumours (14%), sensory and communication disorders (10%), and psychiatric disorders (9%).

The top three psychiatric order claim events were major depression (51%), anxiety (19%) and post-traumatic stress disorder (PTSD) (17%).

“Major depression has consistently been the highest claimed category for the last five years. Anxiety and PTSD were new in 2021 to be in the top three,” said Kotze.

“There was a huge drop in claims for major depression in 2021. This could be because there has been an ease of Covid restrictions. People are typically feeling less lonely, having been reconnected to their families and work. There’s an added flexibility working from home, while most are back to their regular routines,” he said.

Severe illness claims

Severe illness claims pay-outs totalled R824m, with 85% of claims paid out.

Most claims were rejected because the benefit definition was not met (96%). The other reasons for claim rejections were general and underwriting exclusions (1% each), and non-disclosure (2%).

The average age of a claimant was 56 for men and 54 for women, with the youngest male claimant 22 and the youngest female 20.

Cancer, heart attacks, strokes and coronary artery bypass grafts made up 72% of severe illness claims, about the same level as in 2020.

Among men, the top three severe illnesses were cardiovascular disorders (41%), cancer and tumours (40%), and central nervous system disorders (12%).

Prostate cancer was the main reason men made severe illness cancer claims.

However, Old Mutual said men seem to have increasingly become aware of the need for prostate check-ups, because there was a 6% decrease in death benefit claims for prostate cancer, while there were no disability income claims for prostate cancer.

Cancer and tumours (60%) were the leading severe illness among women, with breast cancer the largest contributor. The two other top causes for claims among women were central nervous system disorders (14%) and cardiovascular disorders (12%).

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