Sanlam will not charge higher life insurance premiums for clients who are not vaccinated against Covid-19 because its analysis shows that age and the existence of comorbidities are the bigger risk factors.
The decision was revealed by Sanlam CEO Paul Hanratty on a Wednesday call after the market close, in which he also discussed the operational performance of Africa’s biggest insurance group for the 10 months to October 31. While Sanlam’s operational update showed headline earnings per share rose 8% in the first 10 months of 2021, the group also said it is repricing its life policies to offset the impact of excess mortality claims linked to Covid-19, a virus it said will become “endemic to the world”.
“We are not taking a view that we are going to divide you like smokers and non-smokers into two categories with different premium rates,” said Hanratty. “What we know about vaccination is that it’s actually more important for people with comorbidities at older ages. So we’re taking very much a risk-based approach to this thing.”
The revelation comes as many countries in Europe begin moving towards imposing mandatory Covid-19 vaccinations, while President Cyril Ramaphosa has said his administration is considering whether such a policy might be required in SA. World Health Organisation (WHO) European director Hans Kluge told a media conference on December 7 that mandatory Covid-19 vaccinations should be considered only as “an absolute last resort”.
Sanlam’s change in pricing and underwriting procedures for its life insurance policies comes as it battles ongoing Covid-19 mortality claims payments, which in the 10 months totalled R14bn across its SA operations. That was an 88% increase over the mortality claims payouts made in the first 10 months of 2020.
A similar trend has been seen among its competitors, which have had to set aside billions of rand to cover a spike in deaths due to the virus. Excess death data indicate that fatalities from Covid-19 infection could be about three times the official number of just more than 90,000.
This has led to a debate about whether insurance companies should consider a potential client’s vaccination status when determining their risk profile and premiums. With studies having shown that people who are vaccinated are more than 90% less likely to end up in hospital or dead after contracting Covid, some have argued that differential pricing may help boost take-up, with just more than a third of adults fully protected.
Hanratty said Sanlam expects to see a higher level of deaths among clients well into 2022 despite vaccinations, though its pricing and underwriting changes are designed to mitigate the impact of the claims.
“It’s not to say that Covid won’t kill you if you are vaccinated at age 25 but the probability of it is much lower than for an older person with comorbidities,” said Hanratty. “So we are pricing at a granular level; it isn’t as simple as [whether] you’re vaccinated or not vaccinated.”
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