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Policyholder deaths exceed the 1 million mark

Policyholder deaths exceed the 1 million mark

Death claims statistics released today by the Association for Savings and Investment South Africa (ASISA) show that 1 023 083 policyholders died between 1 April 2020 and 31 March 2021. This represents an increase of 309 733 lives lost compared to the statistics for the previous 12 months for claims made against individual life, group life (offered by employers), credit life and funeral cover policies.

Hennie de Villiers, deputy chair of the ASISA Life and Risk Board Committee, says: “These are staggering numbers and there is no doubt that Covid-19 has caused many of these 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. The hard lockdown conditions, curfews and alcohol bans would have reduced violent and accidental deaths.”

De Villiers says the beneficiaries of the 1 023 083 policyholders who died in the 12 months to the end of March 2021 would have received death benefits of R47.58 billion across all lines of risk business. This represents a 64% increase in the value of claims paid by life insurers when compared to the previous 12 month period when R29.08 billion was paid.

This also represents a R47.58 billion injection into the country’s economy during a time when industries like the tourism industry and the liquor industry were throttled due to the Covid-19 pandemic, resulting in massive job losses.  “The reality is that during a period when job losses and salary cuts reduced retail spending, death benefits paid would have played an important role in supporting the economy.”

The significance of the R47.58 billion in death benefits paid by life insurers in the 12 months to the end of March 2021 becomes 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 last year to July 2021.

De Villiers says that the biggest jump in the value of benefits paid was noted in the individual life space where life insurers reported a 70% increase from R17.12 billion to R29.11 billion.

The highest increase in the number of death claims took place in the funeral insurance space where the number of deaths recorded increased by 216 705 in the 12 months to the end of March 2021.

Death claims and benefits paid

Categories Total death
claims
1-Apr-20 to
31-Mar-21
Total death
claims
1-Apr-19 to
31-Mar-20
% change
in no of
death
claims
Total value
of benefits
1-Apr-20 to
31-Mar-21
Total value
of benefits
1-Apr-19 to
31-Mar-20
% change
in Rand
amount
Individual life 64 750 41 371 57% R29.11bn R17.12bn 70%
Group life 108001 44413 143% R7.98bn R4.87bn 64%
Funeral 821952 605 247 36% R8.74 bn R5.71 bn 53%
Credit life 28380 22319 27% R1.75 bn R1.39 bn 26%
Totals 1 023 083 713 350 43% R47.58 bn R29.08 bn 64%

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

The South African life insurance industry held assets of R3.23 trillion at the end of 2020, while liabilities amounted to R2.89 trillion. This left the industry with free assets of R333.5 billion, which is more than double the capital required by the Solvency Capital Requirements (SCR).

“As an industry we expect the death claims statistics for the current financial year to tell a grim story as they will reflect the severity of the current Covid-19 third wave. While the life industry remains well capitalised and in a strong position to continue paying death claims, no amount of money can make up for the loss of a loved one. We therefore urge all South Africans to get vaccinated rather than risk death, severe illness or even potential long-term debilitating side effects often caused by Covid-19.”

Most life offices have made provision for more losses in anticipation of new waves of the pandemic. Click here to read the Daily Maverick article on this.

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