South Africa has been hit hard by the COVID-19 pandemic, with over 1.6 million confirmed cases and more than 55,000 deaths as of May 2021. As a result, insurers in the country are facing a significant number of pandemic-related death claims. In this article, we will discuss the recent announcement that insurers in South Africa will pay a total of $1.2 billion in pandemic-related death claims.
In March 2020, the South African government declared a national state of disaster due to the COVID-19 pandemic. Since then, many individuals and families have experienced financial hardship due to the loss of their loved ones. In response, several insurance companies in the country launched special products to cover COVID-19 related deaths.
In April 2021, the Financial Sector Conduct Authority (FSCA) released a statement requiring all life insurers in South Africa to report on the number of COVID-19 death claims they had received and the amounts paid out. The FSCA is responsible for regulating the conduct of financial institutions in the country, including insurance companies.
According to the FSCA, the total amount of pandemic-related death claims reported by life insurers in South Africa was $1.2 billion. This amount was paid out for 32,000 claims between March 2020 and February 2021. The FSCA also noted that the average claim size was approximately $37,500.
The largest payout was made by Liberty Group, which paid out $135 million in COVID-19 death claims. Old Mutual and Sanlam each paid out around $120 million in claims, while Discovery and Momentum paid out $70 million and $60 million respectively.
The FSCA stated that it would continue to monitor the situation and take action against any insurer found to be acting unlawfully or unfairly. It also encouraged policyholders to submit any complaints or disputes to the relevant ombudsmen.
While the pandemic has been challenging for many South Africans, the insurance industry has played an important role in providing financial support to families affected by COVID-19 related deaths. The $1.2 billion payout is a significant amount of money that will undoubtedly make a difference in the lives of many people.
However, the FSCA’s announcement raises questions about the long-term impact of the pandemic on the insurance industry in South Africa. It is unclear how much insurers have set aside to cover pandemic-related claims and whether they will be able to sustain this level of payouts in the future.
The pandemic has also highlighted the importance of having adequate life insurance coverage. Many South Africans do not have life insurance or are underinsured, leaving them vulnerable to financial hardship in the event of a family member’s death. As a result, there has been increased demand for life insurance products in the country.
In response, some insurers have launched new products specifically designed to provide coverage for COVID-19 related deaths. For example, Sanlam has introduced a product called “CoverUp” which provides up to $18,000 in coverage for COVID-19 related deaths. Other insurers have waived waiting periods for COVID-19 related claims or offered premium relief to policyholders.
Overall, the $1.2 billion payout for pandemic-related death claims highlights the significant impact of COVID-19 on the insurance industry in South Africa. While insurance companies have played an important role in providing financial support to families affected by the pandemic, there are still concerns about the sustainability of these payouts in the long term.
As South Africa continues to grapple with the pandemic, it is critical for individuals to ensure they have adequate life insurance coverage to protect themselves and their families. Insurance companies must also continue to adapt to the changing needs of their customers and provide innovative products that meet the challenges posed by COVID-19.
