By: Discovery LIfe

Discovery Life has announced a ‘first-of-its-kind’ underwriting determinant for the South African life insurance market, stating that being vaccinated against COVID-19 is now an additional consideration in determining life insurance premiums for new clients, effective from the 29th of July 2021.

“We want to reward our clients who have helped the country by getting vaccinated. Through our premium PayBack reward mechanism, we are offering all qualifying clients their maximum possible PayBack, given their selected PayBack option and Integrator type, for the first year of their new policy,” says CEO of Discovery Life Riaan van Reenen. He adds: “Clients are asked upfront if they have already, or if they plan to get vaccinated as soon as circumstances allow. If they answer yes they will get the offer”.

Clients with new polices who indicate that they refuse to get vaccinated may, unfortunately, be subject to higher premiums due to the increased risk. Refusal to be vaccinated is treated similarly to smoking or lifestyle diseases such as diabetes, which receive a higher premium. This premium will be adjusted should an unvaccinated client later decide to get vaccinated.

“COVID-19 has touched every facet of our society, and we have received claims from clients of all profiles. However, clear trends have emerged over the last year. These relate to gender, age and occupation, which influence the number and severity of COVID-19 claims,” says van Reenen. COVID-19 adds significant risk to the health of life insurance clients across all age groups.

Mortality rates also rise far above the average population mortality rates once a client has tested positive for COVID-19.

“Our research reveals that middle-aged clients have the highest relative increase in mortality risk once becoming infected with COVID-19. The mortality risk is more than 10-times higher for people in their mid-40s, emphasising that the risks caused by contracting COVID-19 cannot be ignored in any age group,” van Reenen adds.

He elaborates that risk due to COVID-19 is two-fold – mortality and morbidity risk. While life cover will always be essential throughout the pandemic, morbidity risks manifest through benefits such as the Income Continuation Benefit and Severe Illness Benefits which are associated with severe cases of COVID-19. By reducing their risks arising from COVID-19, Discovery Life clients create savings which can then be returned to them and their immediate families.

Healthy behaviours are proven to lower a client’s risk. A healthier client exhibits lower mortality, morbidity and lapse rates. When our clients lead a healthy life, it allows us to derive insurance savings over a longer period. Through engagement with Vitality and their financial advisers, we can determine a client’s individual level of risk and pass these insurance savings back to them through rewards such as lower premiums and PayBacks.

This same concept applies to vaccinations, since they result in healthier clients. Van Reenen adds “Our internal data suggests that an average 75-year-old who is vaccinated has the same risk of dying from COVID-19 as a 40-year-old who has not been vaccinated.” He continues to explain:“Vaccinations are also extremely effective in preventing hospitalisations. Even if only 8% of a population does not get fully vaccinated, that 8% will experience more hospitalisations than the other 92%. This follows from the fact that vaccinated individuals experience a 94% lower real rate of admission than those who are not vaccinated.”

“If a client is vaccinated against COVID-19, we’ll return this value to them through incentives such as the Vaccination Max PayBack Offer. This offer provides clients who are vaccinated, and who qualify for PayBacks, the maximum PayBack percentage available to them for the first year of their policy” says Discovery Life Deputy CEO, Gareth Friedlander.

The vaccination status of the main client on the policy is considered for the offer. This decision comes on the back of the insurer paying its highest ever amount in claims, in a single month, during January 2021.

Friedlander adds: “Despite it being necessary for people to be more prudent with their money in the current economic climate, life insurance remains essential. Our clients have demonstrated the value they place on their life insurance during this time through lower lapses, with January 2021 having the lowest ever lapse rate.”

Hospitalisation rates depend heavily on risk factors such as age and existing medical conditions. Data analysis shows that individuals with these risk factors can control their elevated COVID-19 mortality risks by adopting healthy behaviours and engaging with the Vitality programme.

“These positive outcomes have manifested for Discovery Life clients. At a high level, Discovery Life has continued to reap the benefits of positive health behaviours and, therefore, improved outcomes during the COVID-19 pandemic,” says van Reenen.

Discovery Health data further highlights that people infected with the Delta COVID-19 variants have a 95% lower risk of being hospitalised after having both doses of the Pfizer vaccine, with significant benefits even after a single dose. This research also reveals that clients have a 47 percent lower risk of contracting COVID-19 three weeks after taking their first dose of the Pfizer vaccination.