The life insurance industry remains well capitalised and in a strong position to pay claims arising from Covid-19-related deaths, the association representing the savings and investment industry said on Wednesday.
The Association of Savings and Investment SA (Asisa), which represents most asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies, reached this conclusion on the basis of the half-year statistics of life insurers that belong to the association.
The statistics show that the life insurance industry held assets of R3.43-trillion at the end of June while liabilities amounted to R3.09-trillion. This has left the industry with free assets of R334.6bn, almost double the reserve buffer required by the solvency capital requirements (SCR) imposed by the Prudential Authority.
Deputy chair of Asisa’s life and risk board committee, Hennie de Villiers, said in a statement that a healthy reserve buffer enabled insurers to pay claims and policy benefits even in times of extreme market turmoil and/or unusually high claims.
“The Covid-19 pandemic is considered a once in a lifetime event, which has resulted in unprecedented death claims for our industry and yet life insurers are able to weather the fallout because of the reserve buffers that are in place,” De Villiers said.
Despite the higher than usual death claims recorded by most life insurers over the 18 months since the start of the pandemic, the SCR ratio dropped only slightly, indicating the resilience of the life insurance industry, which remained in “robust financial health and well capitalised to honour the long-term contractual promises made to customers”.
De Villiers said the statistics clearly showed that the Covid-19 pandemic had had a devastating effect on millions of South Africans. From January 2020 to end-June 2021 the industry paid out R839bn in claims and benefits including for retirement annuity and endowment policy benefits as well as claims against life, disability, critical illness and income protection policies. In the first six months of 2021, R315.4bn was paid.
The annual death claims statistics released by Asisa recently showed that 1,023,083 death claims were submitted between April 1 2020 and March 31 2021. The statistics reflected claims made against individual life, group life, credit life and funeral cover policies. Beneficiaries of the policyholders who died in this period received death benefits of R47.58bn compared with the R29bn paid in the previous 12-month period.
“Our industry has never before recorded such high numbers of death claims, and while life companies remain in a strong position to continue paying claims to grieving families, the money paid cannot make up for the life that was lost,” De Villiers said.
“We therefore urge all South Africans to get vaccinated rather than risk death or the long-term debilitating side-effects often caused by Covid-19. Evidence from other countries with higher vaccination rates shows clearly that while Covid-19 cases might still be relatively high in some of these countries, deaths have reduced materially.”
He noted that compared with the first and second half of 2020, there was a significant increase in new risk policies bought, while time lapses were much lower.
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