The stresses brought about by the pandemic have long-term effects, including a mental health crisis because people lost loved ones, were retrenched and are struggling to get by because of the economic upheaval.
In 2021, Liberty paid out a total of R10.12 billion in claims under its flagship Lifestyle Protector policy to 43 600 individual clients and their beneficiaries. These payments represent a 59.6% increase over 2020, when Liberty paid out R6.43 billion in claims. The substantial rise was due to the cumulative effects of the two most damaging waves of COVID-19, the Beta wave in late 2020 and the Delta wave in mid-2021.
"The effects of the COVID -19 pandemic became very real during the year," says Liberty Executive for Retail Solutions, David Jewell.
"This was something we had anticipated and we were able to be there for our clients during this difficult time. The pandemic demonstrated the value of insurance in that it was a completely unexpected event and a reminder that life doesn't always follow a predictable course."
In total, COVID-related claims amounted to R3.47 billion, paid out to clients and their families who were affected by the pandemic. Over 61% of these claims were related to life cover for mortality events, including funeral claims as people grieved their loved ones.
Cancer and cardiovascular claims
While COVID-19 claims made up 21.2% of all claims in 2021, cancer remained a significant disease as well, making up 20.7% of all claims during the year.
For men, prostate cancer was the most common, making up almost 29% of all male cancer claims. For women, breast cancer was the most common, making up almost 46% of all cancer claims.
After cancer, various heart related conditions also took their toll, making up 17.4% of all disease related claims.
"Cancer and many heart conditions can in part be understood as lifestyle-related conditions, and this reflects on the health challenges faced by many South Africans," says Liberty's Chief Medical Officer, Dr Dominique Stott.
Retrenchment
In 2021, retrenchment numbers started stabilising, staying mostly constant throughout the year. The numbers were not as high as in 2020, but rates of retrenchment remained higher than in 2019, before the pandemic, as many ordinary people battle tough economic conditions.
"Unemployment in South Africa remains high and this weighs heavily on many South Africans, but the rate of increase has reduced from what was seen in 2020 during the early lockdown stages," says David.
Retrenchment claims in 2021 made up 7.2% of all Lifestyle Protector claims, compared to 8% in 2020.
Individual Liberty insurance product payouts:
Life protection R8 734 222 000
Lifestyle protection R799 905 000
Income protection (lump sum) R345 885 000
Income protection (monthly) R240 683 000
Mental health claims
Liberty saw a spike in mental health claims from its clients during 2021, particularly among working people between 35 and 54 years. This has been attributed in a large part to the stresses brought on by COVID-19.
Liberty paid out numerous claims for conditions like major depression, which accounted for 45% of all mental health claims, and for schizophrenia, which accounted for 15% of all mental health claims.
Other causes of mental health claims included things like anxiety, inability to work and grief.
"The stresses brought about by the pandemic have long-term effects, including a mental health crisis because people lost loved ones, were retrenched and are struggling to get by because of the economic upheaval," says Dr Stott.
Liberty Corporate claims
For Liberty Corporate, the claims payout was R3.43 billion, - 40% higher than in 2020. The main cause of the increase was Group Life Assurance claims, which increased by 84%. COVID-19 made up 8% of all claims.
Education
The Educator benefit ensured that almost 600 children were able to stay in school in 2021 where their parents or caregivers died or could not work due to a disability or critical illness. At least R25 million in claims was paid out through this benefit last year. Added to that, 14% of all claim amounts paid covered supplementary allowances to make sure the provision for textbooks, uniforms and transport to school were taken care of.
Giving back to clients
Liberty paid R114 million in ADDLIB Bonus pay-outs, a benefit offered to qualifying clients who receive cash back on their premiums under the Lifestyle Protector product suite. This pay-out gave clients the protection and provision they needed in a year where the economic impact of the pandemic was hard felt. Since its inception in 2012, the programme has paid over R714 million in bonuses.
Unpaid claims: The importance of full disclosure
Liberty paid out 93.6% of all claims received from clients during the year, offering relief in a time of vulnerability. Claims not paid were as a result of unmet claim criteria such as non-disclosure, which is when medical, financial, lifestyle or occupational questions are answered incorrectly or when important information is omitted during underwriting.
Lisa Gibbon, Divisional Executive for Onboarding at Liberty, says, "The importance of full disclosure should be a priority conversation that all insurers should be having with their clients and advisers as often as possible. Not only will it help to reduce the occurrence of non-disclosure claims, it will also ensure that clients receive their pay-outs when they need them most.
"At Liberty, we've placed a strong emphasis on ensuring that advisers and clients focus on providing true and accurate information during the underwriting process – as a client, it is your responsibility to read through everything carefully before signing. We also encourage advisers and clients to continuously keep us informed of any life-altering medical and lifestyle changes that would impact their policies."
This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material has been created for information purpose only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Please consult your Financial Adviser should you require advice of a financial nature and/or intermediary services.
Liberty Group Limited is a Licensed Life Insurer and an Authorised Financial Services Provider (no 2409).