The COVID-19 pandemic is certainly keeping number crunchers busy and will for some time. And, says a Business Maverick report, as a health insurer, Discovery, which also operates in the UK, is exposed in a direct way to the health impacts of the pandemic.
“The COVID-19 provision has been calculated to estimate the future mortality, morbidity and economic effects of the pandemic by estimating excess mortality and excess lapses expected to arise in 2021 and 2022 on a variety of scenarios by setting a stressed, central (prudent best estimate) and light scenario. The central scenario has been used to set the provision, while the stressed scenario used to test capital and liquidity; the light scenario would result in a material release of provisions in future years,” the company said in SENS statement on Monday, 15 June.
“… approximately two-thirds of the R3.3bn COVID-19 provision is made up of mortality and morbidity impacts, with a third from economic impacts. The provision is the aggregate value of these effects expected in 2021 and 2022.”
Business Maverick says that aside from its sheer size, the provision is interesting because Discovery sees the pandemic’s direct effects potentially lasting into 2022. There are plenty of people who want to wish it away, including certain political leaders, but companies are digging in for the long haul. Discovery does not want to be blind-sided by claims.
Despite consumers struggling with job and salary cuts, Discovery said lapses had actually been low in March and April, given the importance of health and life insurance. Business Day reports that the company has had fewer car accident insurance claims and its medical scheme has seen a drop in claims as people delay seeking medical care both in the UK and South Africa.
It said it expects a surge in claims in its UK health insurance business as many have delayed medical procedures due to Britain’s National Health Service (NHS) “co-opting” private facilities.
Its overall business outlook is positive as it says after COVID-19, health, wellness and resilience will remain important to global consumers.
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