With a national death toll of over 41000 since March last year, life insurance companies in South Africa have paid out hundreds of millions of rand in claims from clients who have died from Covid-19.
While experts from the industry say that claims for fatalities were initially relatively low with most claims being for sickness and income protection, claims for death and funeral benefits have since increased to make up the majority. These trends reflect the acceleration of the pandemic.
Product Actuary at Sanlam Petrie Marx said: “Between March and August 2020, Sanlam Individual Life paid out R144 million in death and funeral claims.
“In August 2020 alone, death and funeral claims related to Coronavirus were double the amount paid out for the period March to July,” said Marx.
Similarly, CEO of FNB Life, Lee Bromfield, said: “FNB Life saw a significant spike in death and retrenchment claims during the hard lockdown in 2020.”
Bromfield said: “Due to the closed period, we are unable to provide the latest figures at this stage. However, we can confirm that by June 2020, FNB Life had paid out in excess of R100 million in credit life policies to protect the livelihoods of customers whose income was affected by the pandemic or retrenched.”
The closed period is the time between the completion of a listed company’s financial results and the announcing of these results to the public.
Head of strategic finance at Momentum Metropolitan Cobus Rothman said: “In line with the increase in nationwide reported deaths we have observed an increase in mortality claims during the first and the second waves of infections.
“At our year-end financial results in September 2020, we announced that we have set aside funds to provide for the increase in claims. Deaths of young professional people have been in the minority, with most national deaths in the higher age brackets,” said Rothman.
CEO of Phoenix FSG Clayton Samsodien said: “The bulk of our business is in healthcare and employee benefits, medical schemes in particular. Business has remained stable aside from higher death rates and retrenchments.”
Samsodien said: “The same cannot be said for life and insurance with higher than usual lapse rates. On the medical scheme side, claims ratios were lower due to members postponing electives whereas life and insurance policies are normally the first to be cancelled in challenging financial times and affordability considering pay cuts being experienced.
“Financial service providers (FSPs) that have not implemented prudent financial risk management plans or are dependent on industry sectors of operation or product categories have been negatively impacted. Some of these businesses have had to close their doors whilst others have had to retrench and implement salary cuts. Some of these businesses will not come back after Covid-19,” said Samsodien
Meanwhile with regard to denied or fraudulent claims as a result of Covid-19, deputy ombudsman for Long-Term Insurance Jennifer Preiss said: “We have so far received 245 complaints about Covid-19-related claims declined, of these 108 are about death claims.”
Preiss said: “Not all claims have been valid but this does not mean that the claimants have attempted to scam the insurers. We do not know of attempted insurance-related scams as a result of Covid-19.
“Claimants may not know which events are covered by the policy or the policy terms and conditions that have to be met for a claim to be valid. If consumers have complaints about policies, including about poor service, they can complain to the Ombudsman if they have already complained to their insurer without success. We can be reached via email at [email protected],” said Preiss.
“Our service is free for consumers. We try and settle the complaint in the first instance and if that does not happen we make a decision. Our decisions are binding on insurers but not on complainants. We have a fairness/equity jurisdiction. We can also award compensation for poor service up to a limit of R50000,” said Preiss.