'It'll take time to appreciate what Covid-19 did', Sanlam says as claims almost double in 2021

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Mortuaries began using refrigerated cargo containers as the funeral homes ran out of coffins due to Covid-19 deaths.
Mortuaries began using refrigerated cargo containers as the funeral homes ran out of coffins due to Covid-19 deaths.
Felix Dlangamandla
  • Sanlam's retail life insurance unit recorded a six-fold increase in Covid-19-related claims in 2021 compared to 2020.
  • The insurer says it will take time to fully appreciate the long-lasting impact of the pandemic.
  • Like other insurers, Sanlam also flagged the rise in cancer and other serve illnesses potentially caused by skipped checkups and delayed diagnosis during the lockdowns.

From R459 million paid towards Covid-19 claims in 2020 to R3.2 billion in 2021, the pandemic hit Sanlam's retail insurance business much harder last year. All other major insurers who recently released their claims statistics were not prepared for how brutal the pandemic would be in its second year.

Sanlam Individual Life paid R8.24 billion in claims last year, a 71% increase from the R4.8 billion paid out in 2021, and almost double the quantum of claims it paid in the two years leading to the pandemic. Death and funeral claims shot up 82% in 2021 compared to the year before.

"It will take time to fully appreciate what Covid-19 did – and did not – impact directly. For example, deaths resulting from cancer and heart conditions increased somewhat between 2020 and 2021. This may be related to the indirect effects of Covid-19," said Sanlam Individual Life's product actuary, Petrie Marx.

Marx sounded the same alarm that other insurers' actuaries and medical teams have been ringing -  the lower levels of routine health checks during the hard lockdown might have contributed to this rise in serious cancers and cancer deaths.

"Or it may be caused by another factor. This is a trend we will have to watch closely," he said.

READ | Researchers fear more in SA could die from other diseases owing to delays caused by Covid-19

Marx points out that while the 2021 claims payouts are a testament to the havoc Covid-19 caused to society, the pandemic is not the sole driver of the increases.

Of the R7.2 billion Sanlam Individual Life paid for death claims in 2021, only R2.6 billion was for confirmed Covid-19 claims, making up 36% of those claims. The other 64% of death claims arose from other conditions. After the "diseases of the respiratory system", heart diseases, cancer and other causes were responsible for most of the death claims.

Outside of death claims, Marx pointed out that younger policyholders are claiming more for severe illnesses and disability cover. In 2021, 61% of severe illness claims were from people under 55 years, with cancer making up the bulk of the total claims in this category

READ | As Covid-19 claims break records, it's the late diagnosis of serious cancers worrying Liberty

As for disability claims, 63% were paid to clients under 55 years. The leading causes of disability claims related to bones, back, joints and connective tissue (19%), diseases of the nervous system and sensory organs (19%), and cancer (14%). 

Finally normalising

However, insurers are starting to put the last two years' trauma behind them now. FNB Life says its customers' death-related insurance claims have returned to pre-Covid 19 pandemic levels in the last six months.

Deaths started normalising in the fourth and fifth waves as they proved to be less severe compared to the first three waves. Before the pandemic, FNB Life paid out an average of R99 million in death-related claims per month. This peaked at around R300 million each month during the first to third waves of infection.

"While we have been able to assist beneficiaries during this difficult time, we are also pleased to see that the impact of Covid-19 on loss of life is starting to fade. This is also reflected in our monthly death-related claims across all of our life products," said FNB Life CEO, Lee Bromfield.

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