• Jonathan Faurie - FAnews Journalist

Claims show a shift to the left

Medical research is big business. Globally, billions of rands are spent every year to improve the treatment of critical illnesses such as cancer, cardiovascular and musculoskeletal diseases.

As a result, a person’s chance of surviving these diseases have dramatically improved. A recent study by the University of Cape Town points out that if a person gets to a hospital within four hours of suffering a heart attack or stroke, their chances of survival is between 90% and 95%.

These increased chances of survival has a major impact on the life insurance industry. Liberty recently released their 2018 claims statistics which shows that there is an important shift happening in the market where clients are becoming increasingly interested in insurance products that will provide cover for their life after surviving a critical illness/disability event.

Crunching the numbers

Liberty reported that in 2018, the company paid out claims to the value of R4,7 billion. This equated to an estimated R18.8 million rand’s in claims being paid out on a daily basis.

The company adds that the 2018 payments reached 28 453 individuals and their beneficiaries.

Looking at the types of cover where the claims came from, the company paid out R3,3 billion in life cover, over R758 million in lifestyle protection, over R455 million in income protection on a lump sum basis and over R177 million in income protection on a monthly recurring basis.

A shift to the left

Ursula Torr, Lead Actuarial Specialist: Liberty, pointed out that a lot more can be read into the claims statistics than meets the eye.

“Times have changed, medical advancements have improved survival rates when it comes to critical illnesses which means that clients have an improved life expectancy. Critical illnesses are no longer a death sentence,” said Torr.

She added that, traditionally, clients prepare for death and leaving a legacy for their families. “There needs to be a shift in the industry, and we are seeing it,” said Torr.

Data from 2015 to 2018 has shown an increasing need for multi-benefit package of cover. As a result of this emerging trend in survival, life insurers and financial advisers are increasingly considering offering advice on a good balance of lifestyle protection cover and not just death insurance.

Further, insurers and consumers should be looking for new solutions to improve the quality of life and survival in line with evolving trends and in accordance with clients’ ever evolving lifestyle changes.

Changes over time

While this is an important industry shift, the change will only occur over time.

Torr points out that of all of the claims received in 2018, 68,79% claimed against life insurance policies while 31,21% of the claims in 2018 were for disability cover.