Life insurance claims skyrocket: 309,733 more deaths during pandemic

Life insurance statistics show 309,733 more deaths during the pandemic from 1 April 2020 to 31 March 2021, compared to the death claims statistics for the previous 12 months, when 713,350 policyholders died.

According to the Association for Savings and Investment South Africa (Asisa), beneficiaries received R47.58 billion from life insurers after more than a million policyholders died during the 12-month period.

Asisa released the latest death claims statistics on Tuesday, which showed 1,023,083 policyholders died between 1 April 2020 and 31 March 2021. The statistics reflect claims made against individual life, group life (offered by employers), credit life and funeral cover policies.

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Pandemic deaths

“These are staggering numbers and there is no doubt that Covid-19 has caused many of these additional deaths, whether directly as a result of someone contracting the virus, or because people were reluctant to seek medical attention for other serious conditions,” said Hennie de Villiers, deputy chair of the Asisa life and risk board committee.

The beneficiaries of the 1,023,083 policyholders who died would have received death benefits of R47.58 billion across all lines of risk business, which represents a 64% increase in the value of claims paid by life insurers compared to the previous 12-month period when R29.08 billion was paid.

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A ghoulish silver lining

While this is tragic news, De Villiers said this also represented a R47.58 billion injection into the country’s economy during a time when industries, such as the tourism and liquor, were under pressure due to the pandemic, which resulted in massive job losses.

“The reality is that during a period when job losses and salary cuts reduced retail spending, death benefits paid would have played an important role in supporting the economy.”

De Villiers said the R47.58 billion in death benefits life insurers paid became significant when it was compared to the R60 billion government paid in the Covid-19 Temporary Employee-Employer Relief Scheme (TERS) to furloughed workers from March last year to July 2021.

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Biggest increase

“The biggest jump in the value of benefits paid was noted in the individual life space, where life insurers reported a 70% increase. In the period under review, life insurers paid R29.11 billion to the beneficiaries of individual life policies, compared to R17.12 billion in the previous 12 months.”

He said the highest increase in the number of pandemic deaths claims was for funeral insurance, where the number of deaths recorded increased by 216,705 in the 12 months.

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Life insurance industry well capitalised

Although there was a significant increase in claims paid due to the Covid-19 pandemic, De Villiers said the life insurance industry remained resilient and able to support its policyholders and their beneficiaries throughout this difficult time and beyond.

He said the South African life insurance industry held assets of R3.23 trillion at the end of 2020, while liabilities amounted to R2.89 trillion, leaving the industry with free assets of R333.5 billion, which is more than double the capital required by the Solvency Capital Requirements (SCR).

“As an industry we expect the death claims statistics for the current financial year to tell a grim story as they will reflect the severity of the third wave. While the life industry remains well capitalised and in a strong position to continue paying death claims, no amount of money can make up for the loss of a loved one.

“We therefore urge all South Africans to get vaccinated rather than risk death, severe illness or even the potential long-term debilitating side effects often caused by Covid-19.”