Four of South Africa’s largest life insurers reported will increase of between 50% and 60% in death claims in opposition to totally underwritten particular person life insurance policies between March final year and the top of January this year, with claims for January 4 instances these recorded in January 2020, earlier than the pandemic hit.
The increase in death claims was revealed by a brand new dashboard designed by the Continuous Statistical Investigation (CSI) Committee of the Actuarial Society of South Africa (ASSA) to trace extra death claims in opposition to totally underwritten new era particular person life insurance policies. The statistics exclude common life insurance policies and restricted underwriting insurance policies.
The ASSA Death Claims Dashboard tracks information submitted by 4 of the nation’s largest life insurers, representing round 70% of South African particular person life insurance coverage premiums.
Covid-19 influence on policyholders
Anja Kuys, chair of the ASSA CSI committee, says the intention of the dashboard is to offer life insurers with consolidated insights into the influence of the Covid-19 pandemic on policyholders as measured by extra deaths to assist them with correct pricing of future coverage advantages in addition to making certain ample capital reserves.
She says the ASSA Death Claims Dashboard reveals, for instance, that whereas life insurers had anticipated death claims to increase in line with the nationwide death rate in the course of the second wave, insured lives lost really exceeded the anticipated death rate by 4 instances at the height of the second wave in January 2021. She provides that by comparability the nation as a complete noticed an increase in reported deaths of 2.8 instances the anticipated death rate.
Kuys says this was a shock discovering on condition that policyholders with totally underwritten life insurance policies are inclined to have fewer comorbidities and often have entry to raised healthcare. She explains that totally underwritten particular person life insurance policies are pure danger merchandise solely issued to policyholders who’ve gone by the underwriting course of involving a complete evaluation of their way of life, well being and medical historical past. She factors out that the mortality expertise of these policyholders subsequently differs considerably to that of the remainder of the inhabitants. In addition, says Kuys, the death profit values of these insurance policies are usually a lot greater than the advantages supplied by funeral or credit score life insurance coverage.
“It’s difficult to determine why the change in death rates for insured lives deviated so significantly from the national death rates during the second wave. This does underscore the need for credible statistics that will enable life insurers to accurately price future risk and ensure that they have sufficient capital reserves in place.”
The graph beneath compares complete inhabitants deaths (in blue) recorded from 2020 and past by the South African Medical Research Council (SAMRC) to the death claims (in purple) skilled by 4 of South Africa’s largest life insurers.
According to Kuys, the ASSA Death Claims Dashboard supplies actuaries with the annualised mortality rate for every month ranging from March 2020 in comparison with an estimate of the annualised mortality rate averaged over 2018 and 2019, offering a sign of extra mortality. This evaluation is completed individually for deaths on account of all causes in addition to for pure causes solely.
In addition, an evaluation is carried out based mostly on confirmed Covid-19 deaths as recorded by the contributing corporations. Kuys notes that the precise quantity of Covid-19 deaths might be greater than what was reported, since death certificates typically state the trigger of death as “natural causes”, “pneumonia” or “organ failure” even when this was brought on by Covid-19.
The dashboard reveals that in the 11 months between March 2020 and the top of January 2021, 4 of the largest life insurers acquired 7 040 death claims in opposition to a complete of 1.49 million totally underwritten new era life insurance policies. Of these claims, 1 515 have been for confirmed Covid-19 deaths. South Africa recorded the primary Covid-19 death on 22 March 2020.
By comparability, South Africa had recorded 44 509 Covid-19 deaths between March 2020 and the primary week of February 2021. Over the identical interval, nonetheless, South Africa skilled 137 731 extra deaths on account of pure causes in keeping with analysis by the SAMRC and the UCT Centre for Actuarial Research. The analysis estimates that 85% to 95% of the surplus pure deaths are attributable to Covid-19.
According to Kuys, when in comparison with consolidated claims averages for 2018 and 2019, the full death claims reported symbolize an extra death rate of 1.9 per thousand, bringing the full death rate for March 2020 to finish of January 2021 to five.1 per thousand. The common complete rate for 2018 and 2019 was 3.2 per thousand, so which means that the quantity of deaths over the course of the pandemic is sort of 60% greater than would have been anticipated in a standard year.
Death claims in opposition to totally underwritten new era particular person life insurance policies: March 2020 to 31 January 2021
Death claims per age band
Kuys says the dashboard reveals an increase in death claims of between 50% and 70% in all age bands above 30 when in comparison with anticipated deaths.
According to Kuys, the very best quantity of Covid-19 associated death claims was submitted for policyholders between the ages of 60 to 69 (467), adopted intently by the 50 to 59 age band (447 instances). These two age bands additionally skilled the very best quantity of death claims between March 2020 and the top of January 2021. Kuys says it isn’t shocking that death claims in these age bands are greater than for the 70+ age bracket the place there are fewer policyholders.
Death charges by age band (March 2020 to 31 January 2021)
Death claims by age band (March 2020 to 31 January 2021)