In a claims experience analysis, Discovery Group Risk has reported claim payouts to the value of R2.10 billion in the year to June 2021, which reflects a 42% increase compared to the previous year. The company offers group risk benefits that include life cover, global cover for the education of employees' children, severe illness cover, lump-sum and monthly disability protection, and funeral cover. 

The release of Discovery’s Group Risk claims data follows the release of the Group’s Life claims data earlier this week.  

“The 2021 financial year saw large increases in our Group Risk claims profile as well as large variances against expectations. This experience reinforces the devastating impact the pandemic has had on mortality and morbidity. Large shifts were observed within both the total number and value of claims paid with the biggest increases being observed within our death benefits,” Guy Chennells, Head of Products for Discovery Employee Benefits said.  

“The COVID-19 pandemic has changed the world forever. Since 2020 we have been living in a constant state of flux, fear, loss and chaos. It’s been a trying time for everyone, and Discovery Group Risk and the insurance industry at large has not been spared. The claim numbers show that Discovery Group Risk has faced an unprecedented year in claims experience,” he added. 

An overview of our Group Risk claims experience for the 2021 financial year 

A total of 8 840 claims were paid out in 2021. These included: 

• R1.28bn in Life Cover Benefit
• R579m Income Continuation Benefit
• R97m paid out under the Severe Illness Benefit
• R47m Capital Disability Benefit
• R59.8m in Funeral Cover Benefit
• R37.6m Global Education Protector

Discovery’s data also revealed the following: 

• The value of Life Cover and Funeral Cover Benefit claims almost doubled in the year to June 2021 in comparison to last year’s value. 

• The largest single Life Cover Benefit claim payout was R19.7 million for a cardiac arrest event. Unnatural deaths increased by 42% over the year and natural deaths by 82%, with a 16% and 84% split between natural and unnatural death causes over the period. “COVID-19 was the main cause of death across males and females with the second highest being respiratory diseases for females and heart and artery conditions for males. These conditions may be related to COVID-19 as they are often exacerbated by the virus. Surprisingly, motor vehicle accidents accounted for most of the increase despite lockdown restrictions. The number of suicides also increased, attesting to the strain on mental wellbeing caused by the pandemic,” Chennells said. 

• Over the course of the COVID-19 pandemic Discovery incurred 490 COVID-19 Life Cover Benefit claims totalling over R700m. Excess death claims over this period totalled R1.3 billion. Death rates due to COVID-19 were higher in males and as expected increased by age. “In September 2021, following the third wave of the COVID-19 pandemic, we paid the highest amount of claims in a single month since our inception over 13 years ago. The second wave was the most severe, with the highest number and total value of death claims related to COVID-19 at R221 486 478,” Chennells said.  

• “When we looked at the increase in suicide claims experienced, we observed that suicides by month showed an upward trend with peaks roughly correlated to stricter lockdown periods. Males still account for most suicides, but females saw an increase this year. Interestingly, most suicides occurred within the financial services industry for 2020 and 2021, and the rate of suicide increased the most within the youngest age band 0 – 30 when comparing to last year,” Chennells noted. 

• When unpacking the increase in motor vehicle accident claims experienced, the following was observed: Average car accidents by month dropped during lockdown levels 5 and 4 (nearing zero in absolute terms), but then started to pick up to levels higher than before. This aligns with trends seen globally where there have been reports of more reckless driving on account of less congestion, and impaired driving as alcohol consumption increases once lockdown restrictions are eased. The increase in motor vehicle accidents was observed in male members. 

Understanding excess deaths  

“We define ‘excess deaths’ as deaths observed over and above what we would usually expect in a given year. COVID-19 increased our excess deaths in 2020 and 2021. However, not all excess deaths in these years could be directly attributed to COVID-19 infections,” Chennells said. 

To explain these deaths, Discovery Group Risk analysed its claims data in conjunction with additional data from Discovery Health, which showed the death rate in members with no registered co-morbidities and no positive COVID-19 test doubled from 0.08% in 2020 to 0.16% in 2021.  

Furthermore, Discovery’s models suggest that registration for oncology benefits has become a less reliable predictor of death, while gender has become a more significant predictor outside of contracting COVID-19. With further analysis, Discovery found the following reasons for excess deaths, some helping to explain why members with no sickness or no COVID-19 infection may have experienced higher mortality: 

• Increased rates of suicide and motor vehicle accidents, particularly in male members 
• Delayed cancer registrations and treatment 
• Delayed detection and management of chronic conditions 

Discovery Group Risk was also able to pick up unreported COVID-19 deaths where members tested positive for COVID-19 but the cause of death was not reported as due to COVID-19. 

According to Chennells, COVID-19 has had a significant impact on health risk: a direct impact on mortality risk for individuals that contract COVID-19 and an indirect impact on reducing engagement in healthy living globally.  

“The future expected increased insurance risks resulting from this COVID-19 pandemic could manifest in increased death and disability Group Risk claims. It is therefore imperative that we prepare for this as best we can to ensure future sustainability and to maintain our commitment to future stable prices going forward. There is still so much uncertainty and so many factors at play in respect of how the future unfolds. Therefore, we cannot predict the true impact of COVID-19 with great certainty; we can only prepare for it using the resources that we can control and that have proven their effectiveness. This is core to Discovery’s purpose, that is to encourage a shift in behaviour to make people healthier,” he added 

Read an overview of the possible shifts in insurance here