Old Mutual underestimated Covid-19 death claims in 2020 - has it provided enough this time?

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Old Mutual has been forced to raise an additional R4 billion provision for Covid-19 claims as actual deaths among its customers exceeded its expectations.
Photo: William Horne
Old Mutual has been forced to raise an additional R4 billion provision for Covid-19 claims as actual deaths among its customers exceeded its expectations. Photo: William Horne

Old Mutual became the first insurer to put more money aside this year for Covid-19 deaths after its claims exceeded the reserves that the insurer had set aside in 2020.

The company - which presented its 2020 financial year results on Tuesday - put aside just over R1.3 billion as a reserve for excess deaths resulting from the virus in June 2020. But Covid-19 death claims for 2020 hit R13 billion and after its reinsurers covered their share of the liability, Old Mutual's reserve fell short by R204 million to cover the insurer's share of the claims burden.

"Our wave two experience was significantly worse than that of wave one with infections and deaths accelerating in the fourth quarter," said Old Mutual CEO Iain Williamson during the presentation.

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