The future of life insurance in a post-Covid world

Covid-19 has had a significant impact on the life insurance industry, with a sharp increase in death and funeral claims, as well as income protection claims for people who have stopped working for a few weeks due to illness caused by the virus.

“This has seen many insurers become more cautious in issuing new life and critical illness insurance policies for the elderly and those with co-morbidities until the industry has a clearer picture of the effects. term of the virus, “said Leza Wells, chief product actuary at FMI (a division of Bidvest Life Ltd).

Speaking at an online event hosted by the IMF this week, Wells said it was premature to say what effects Covid-19 would have on the cost of premiums in the future, as pricing actuaries are guided by medical experts on the potential risks of the pandemic. However, it was important to note that any price increase would be based entirely on future risks and would not cover any deficits perceived due to the increase in claims in recent months.

“At the IMF, we are still assessing the long-term impact of the pandemic in a number of areas, so it is too early to say what the effects on premiums will be in the future. The deployment of the vaccine, and whether we can achieve herd immunity and eradicate the disease together, will guide all decisions about price increases, ”Wells said.

Also speaking at the event, IMF consultant chief medical officer Dr Peter Bond said one of the main areas of uncertainty for insurers was the ‘long Covid’, where medical research does not It is still unclear on the long-term effects of the disease. on people’s health.

“Current data suggests that up to 25% of people with Covid will continue to have symptoms, or develop other symptoms four weeks after testing positive. This is naturally a worrying figure for insurers. We have less than two years of experience with this complication of this pandemic, so it will take many more years before the full effect is known, which will then allow the insurance industry to adapt with reasonable confidence, ”he said. said Dr Bond.

Wells added, “Having Covid-19, or long Covid, may affect the insurability of new applicants in the future and is the subject of ongoing research. Most insurers now ask for a Covid recovery questionnaire, and an attending physician’s questionnaire, for any new request. Higher immunization levels will allow us to return to normal and less conservative underwriting for death and critical illness benefits. “

However, no exclusions are applied to IMF policyholders who have to make repeated claims against their income protection policies due to Covid-19 or “long Covid”.

Wells said the pandemic has highlighted the need for South Africans to include income protection in their life insurance portfolios. “Income protection provides security when you need it most. This gives you the peace of mind of knowing that you will be able to afford all of your expenses such as other insurance policies, annuities, household expenses, and tuition, if you are unable to earn an income. income, ”she said.

PERSONAL FINANCES


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