Unjabbed to pay more for life insurance as Covid-19 death claims surge

Faced with a surge in Covid-19 death claims, SA life insurers are hiking the premiums on policies for the unvaccinated as they warn that death rates among those who have not received shots could remain elevated even as the pandemic eases.

The latest data available from the Association for Savings and Investment SA (Asisa), whose members include players in the R3.7-trillion life insurance industry, showed that the value of death claims in the six months to September 2021 more than doubled from the same period in 2019, before the onset of the pandemic. Life insurers reported a 53% surge in claims.

The period covered the third wave of the Covid-19 pandemic, which lasted from early May to mid-September.

While there is an indication that the Omicron-driven wave towards the end of 2021 was less fatal, Asisa said there is “overwhelming evidence” that risks were significantly lower among the vaccinated.

Asisa’s data is in line with reports from major insurers such as Sanlam, which have reported higher excess mortality claims — those that exceeded its long-term actuarial assumptions — in the period coinciding with the second and third waves of Covid-19. With vaccination having been shown to be the most effective protection against severe illness and death, insurers are debating how to shift premiums to reflect those risks.

It comes as the government grapples with how to open up the economy completely and end the state of disaster without risking a new infection surge.

Hennie de Villiers, the deputy chair of Asisa’s life and risk board committee, said that while “anecdotal evidence” suggests lower death rates during the fourth wave, the country has to guard against complacency.

“Factors that contributed to this lower mortality rate include increasing vaccinations ... and the emergence of the Omicron variant,” he said on Monday. “We should guard against complacency, however, as mortality rates have not returned to pre-pandemic levels yet. Less than 50% of our adult population has been vaccinated.

“There is overwhelming evidence that the risk of severe illness or death is significantly lower in those who are fully vaccinated.”

He warned in a later statement that a consistently higher claims experience “will leave insurers with little choice but to adjust premiums in line with the higher risk presented by someone who is not vaccinated and therefore more likely to die from Covid-19” .

De Villiers noted that premiums have already increased for the unvaccinated in group life insurance, for example, but that employers that have implemented mandatory vaccination policies are starting to benefit from preferential rates.

De Villiers said premium increases for the unvaccinated are mostly related to age and comorbidities, which, when taken together, resulted in premiums increasing by as much as 100%. In some cases coverage was declined.

“So it is really a risk-based approach that insurers are taking,” De Villiers said, adding that most insurers these days are asking new policy applicants a question about vaccination.

Asisa figures show that in the six-month period to end- September 565,522 claims were received with a value of R44.42bn. In the same period in 2019, life insurers received 369,892 death claims to a value of R19.53bn.

These claims were made on individual life, group life, funeral and credit life policies.

Asisa statistics for the 12-month period from April 1 2020 to end-March 2021 showed that life insurers reported a total of 1,023,083 death claims valued at R47.58bn.

This represented a 43% increase compared with the same period from 2019 to 2020.

De Villiers said a “staggering” 1.59-million death claims were received in the 18 months from April 1 2020 to the end of September, with life insurers paying out benefits of R92bn.

ensorl@businesslive.co.za