Longer HIV survival triggers insurer payout

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As people with HIV live longer than expected, Old Mutual plans to release reserves it has built up in its funeral insurance policies, to the benefit of lower-income customers, reports Business Day.

The reserves had accumulated due to the success of the government’s antiretroviral roll-out programme in the 2000s, which has increased the longevity of policyholders living with HIV, said Old Mutual group CEO Julian Roberts. The insurer’s models, which consider the life expectancy of people older than 15, have found a “dramatic reduction” in the probability of its customers dying in the markets worst affected by HIV and Aids. Old Mutual estimates the probability of a 15-year-old dying before the age of 60 has dropped 30%. A 40-year-old is now 15% less likely to die before the age of 60.

A study by the Actuarial Society of SA estimates life expectancy at birth for males has improved from 51 years in 2005 to 56 in 2014. Similarly, that of women has improved from 56 in 2005 to 62 in 2014. Old Mutual considers this a conservative estimate as it does not take account of the government’s recent policy change, allowing for earlier treatment of HIV patients. Various studies have found that the improvement in life expectancy can be attributed to the wide-scale roll-out of the antiretroviral treatment.

Old Mutual first introduced funeral policies that did not need to be underwritten in the 1990s. This was in response to demand from clients living with HIV/AIDS who did not want to be tested for the virus. “The assumptions we made in the 1990s about mortality were correct, but what we had not anticipated was that the longevity of policyholders would be boosted by the ARV (antiretroviral) roll-out in the 2000s,” Old Mutual emerging markets CEO Ralph Mupita said.

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