How the first, second and third coronavirus waves impacted the insurance industry

Insurance companies are now emerging from the third wave of COVID-19 that steamrolled through South Africa.

According to Craig Baker, CEO of MiWayLife, the effects of the first and second waves were clearly evident. “Claims related to Covid spiked in June, July and August 2020. Although these decreased a little once the first wave subsided, there was another significant rise in claims related to the disease in January, around the time of the second wave. It is expected that in the weeks that follows the subsidence of the current third wave, we will see another increase in death claims.”

Linked to this, the company has also seen an increase in additional funeral claims, which rose by as much as 100% from April this year.

Moreover, according to information released by the Association for Savings and Investment South Africa (ASISA), as many as 1 023 083 policyholders passed away during the past year – an increase of 309 733 people when compared with the previous 12-month period. Beneficiaries of these policyholders have been paid out R47.58bn in death benefits; 56% more than the R29.08bn paid the previous year.

The increase in claims related to COVID-19 stands in stark contrast to claims related to other conditions. For example, claims for asthma, bronchopneumonia, cardiorespiratory attacks and chronic obstructive pulmonary disease have all decreased significantly since 2019.

These changing trends point to the fact that the insurance industry must be prepared for change, Baker says, adding that it is important that medical underwriters be prepared to adjust for new diseases, as well as new conditions that arise from these diseases.

But, if there are implications for underwriters, consumers must also be prepared to adjust to changes where necessary. For example, Baker says that although there may not be any amendments to underwriting questions, consumers must accept that minimum waiting periods may be included on some risk covers where the underwriters are unsure of certain conditions.

The upshot? “There is no time like right now to buy cover, as the price will be in line with our current knowledge. Rather be able to reassess cover if you no longer need it, or if you need less cover, than be in a position where you cannot buy it or buy more of it when you need it most.”

Baker believes it is important to keep this in mind, as insurers may have to make adjustments as they seek to manage risk and solvency on their insurance book.” The industry has already seen what can happen if it is not prepared when last year the top five players in the industry made a loss of R8bn in value. Just one year earlier, they had created R32bn in value. Industry players also reported significant increases in claims related to respiratory illness and retrenchment which far exceed typical year on year increases. In some cases, claims related to deaths caused by respiratory illness tripled during the first wave. Sickness income cover claims also tripled, showing as double digits for the first time.

Although it will take some time for the effects of the vaccine rollout to mitigate the impacts of the Covid waves, Baker is anticipating similar trends in claim numbers for the third wave and as the South African adult population mulls over whether to vaccinate or not. “Again, the best way consumers can arm themselves against any changes which occur as the industry tries to protect itself is by purchasing adequate cover now,” he reiterates.

Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za