Deaths, loss of income and retrenchment saw SA banks paying out billions in life insurance and death-related claims in 2021 as a result of the COVID-19 pandemic.
Absa Life Insurance recorded a 61% increase in death claims in 2021 compared with 2020 with a 49% growth, amounting to R2.7bn.
The Cape Argus reports that FNB Life insurance also paid out more than R2.4bn in life insurance and policies in 2021. The bank said that of the R2.4bn, R2.3bn was death-related claims and more than R81m was for disability. Other claims included retrenchment relating to income.
According to the National Institute for Communicable Diseases, 100,070 people have died in South Africa of COVID-19 since the pandemic began.
Tsietsi Mahlasela, FNB PR manager, said claims were in the billions. “FNB Life has paid out more than R2.4bn in life insurance and policies to its customers in the past year. Most pay-outs (R2.3bn) were for death-related claims, followed by retrenchment and/or inability to earn an income (R190m) and disability (over R81m).
“Death-related insurance claims have decreased over the fourth wave of COVID-19, compared with spikes recorded during the first, second and third waves. Similarly, claims relating to retrenchment and/or inability to earn an income have begun to normalise as lockdown restrictions are gradually eased.”
Eugene Strauss, managing executive at Absa Life Insurance, Retail and Business Bank, said their death and income claims also increased sharply last year, a growth of 49% to R2.7bn as mortality claims increased 6% compared with the previous year, he told Weekend Argus.
“As a result, we increased our specific life insurance reserves for COVID-19 to R423m, which affected headline earnings. This included claims made by Temporary Employee/Employer Relief Scheme (TERS) beneficiaries.
“While TERS is a temporary income for the employee, we decided to not consider this as an income and to allow customers to claim for loss of income on their credit life policies over and above TERS.”
Cape Argus Pressreader article – Covid-19 lockdowns cost banks billions (Open access)
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COVID linked to year’s 43% surge in policyholders' death claims
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