The world is changing fast and to keep up you need local knowledge with global context.
In episode 32 of Inside Covid 19, we crunch some numbers with an actuary to find exercising regularly and eating healthily dramatically drops the prospect of being hospitalised for Covid-19; former finance minister Trevor Manuel joins a chorus calling for changes to some irrational lockdown regulations; we unpack organised business’s call to drop the lockdown level from 4 to 2; a Wits professor asks whether SA has indeed flattened the Covid-19 infection curve; and we catch up with the Bali-stranded SA doctor who has finally made it home to her four children. – Alec Hogg
In the Covid-19 headlines today:
- South Africa’s Covid-19 testing has been significantly stepped up with almost 15,000 tests now being conducted daily. The tests have turned up increased number of confirmed cases with Monday’s 637 new positives the second highest daily number behind the 663 of last Friday. Total confirmed cases are now 10,652 with a further 12 deaths on Monday taking mortalities to 206. Roughly four in ten of the confirmed cases, more than 4,300 in total, are now formally described as having recovered. Worldwide, total confirmed coronavirus cases now exceed 4.2m with 285,000 deaths, around 81,000 in the US, followed by 32,000 in the UK, 30,700 in Italy and over 26,000 in both Spain and France. In Sweden, where a lockdown was resisted, there were 31 mortalities yesterday taking the total to 3,256, the equivalent of 32 people for every 100,000 population. Sweden’s number is well behind the worst per capita hit country, Belgium, at 76; and other European nations Spain at 57; Italy at 50, the UK at 48 and France at 39. The US is currently at 24 deaths per 100,000 population while South Africa, which is at the early stage of the pandemic, has a death rate of 0.34 per 100,000 population.
- As South Africa’s lockdown approaches its eighth week, there is growing criticism against apparently heavy handed application of regulations, some of which appear to be irrational. Latest to add his voice is straight talking former finance minister Trevor Manuel who told SAFM’s Stephen Grootes on this morning’s Sunrise show that a number of the regulations fail the test of rationality.
- A modelling group convened by the World Health Organisation and UNAIDS estimates a massive increase in AIDS-related deaths if efforts are not made to mitigate and overcome interruptions in health services and supplies during the Covid-19 pandemic. They say a six-month disruption of antiretroviral therapy could lead to more than 500,000 extra deaths from AIDS-related illnesses in Sub Saharan Africa, including from tuberculosis, in 2020–2021. The WHO says a disruption of antiretroviral therapy could effectively set the clock back to 2008 when Sub Saharan Africa recorded more than 950 000 AIDS-related deaths.
- Also featured in this episode is evidence that living and eating healthily is a powerful shield against Covid-19. Discovery Life’s deputy MD Gareth Friedlander, an actuary, says data shows that Vitality Diamond members are almost half as likely to be hospitalised as everyone else.
Gareth Friedlander is the Deputy Chief Executive Officer of Discovery Life and an actuary, so he’s got to be able to give us some insights into how Covid-19 is affecting the life insurance industry. The mortality rates around the world for this virus are all over the place. As an actuary, you would be able to guide us better than most. Have you got any thoughts on that?
It’s something we’re spending an enormous amount of time on. We’ve got our team of actuaries running models like crazy to try and get a sense of what to expect. There’s been a lot of coverage in the news around the world around the mortality rates. One of the early things that’s coming out of the modelling which is particularly encouraging on our side is that Vitality does seem to have an impact. We are starting to see early data certainly from a hospitalisation perspective that for all other risk factors being equal, the higher your Vitality status the lower the rates of hospitalisation. Lifestyle factors and the ability to change people’s behaviour is as important if not more important than ever. We do expect spikes in deaths and we’re modeling out all the various scenarios around that so that we’re prepared.
So becoming healthier by exercising more, eating more sensibly, not smoking, not drinking too much that’s already starting to show up in your data on mortality?
Not necessarily mortality because there just aren’t enough deaths yet for that to be credible. We’ve got enough hospitalisations at the moment on the Discovery Health side. We’re seeing what looks like significant shifts. We’ve already seen a 43% lower hospitalisation rate for Diamond Vitality status members. All other things being equal, that’s encouraging and talks to the importance more than ever driving that behaviour change and people continuing to be healthy, be active, and eat healthily during these difficult times.
Are Discovery Life clients covered for Covid-19?
That’s the key question that we keep getting asked. The answer is categorically, yes. We’ve got no Covid-19 exclusions. The key thing to understand is, you’re not just covered for getting the illness, you still need to meet your normal claims criteria. So on life cover if you died due to Covid-19, that would be a claim.
If you become severely ill due to Covid-19, and one of the definitions is actually meaning ICU stay with ventilation which is particularly relevant in the Covid-19 space, that would qualify for a severe illness payout. If you get Covid-19, and therefore can’t work and earn an income that would qualify as an income protection path. You still need to meet your claims criteria. There’s no exclusion on meeting those claims criteria as a result of Covid-19. Obviously, just getting that illness isn’t a claim in itself. Many people will get Covid-19 and be completely fine. That wouldn’t be a life insurance.
What about the ability to postpone premiums? We’ve seen this happening in various other areas including in the Discovery medical aid area because of economic impacts of Covid-19. Is there a similar package with Discovery Life?
yes, there are. We’ve spent a lot of time over the last few weeks fleshing this out. Obviously, the impact of Covid-19 on the economy is well documented and there’s an enormous cash flow strain on many of our clients. We’ve looked for innovative ways to assist them.
One of the perks of having our model – you might be familiar with our shared value insurance model – whereby as clients demonstrate healthy behaviour they accrue what we call paybacks of their policy premiums and those are payable over periods of time during the policy’s duration. What we have allowed qualifying clients who have demonstrated health and wellness behaviour in the past is to actually access their future paybacks to pay for up to three months of premiums. So, keep full cover in force by effectively accessing your future good health, which is quite a unique capability and something that we’ve seen tremendous take up of already.
There’s been nearly R40m worth of premiums effectively accessed by clients using this particular option and that’s allowed over R3bn worth of cover to be kept in force for clients who would have otherwise probably had to lapse those policies due to lack of cash flow and lack of liquidity. That’s been a really positive outcome for clients using their unique features within the model to allow them to keep cover at this most important time.
It seems like a very quick take up, is this because people are panicking or is it by need i.e. small business owners who just have run out of revenue?
It really is need. I don’t think it’s panic per say. There is genuine need out there. People are running unbelievably low on cash flow. We’ve seen that they were able to probably pay for the March premium, but when it came to the April premium and the May premium, their reserve had run out. What this pandemic has shown many people is how close most South Africans and probably global citizens run to financial distress. Most businesses are not sitting with enough cash flow reserve to overcome these types of emergencies. We’ve seen it hit pretty hard and pretty broadly as well.
The good news is that, we aren’t seeing spikes and lapses. People are making plans to keep their cover enforced. This is the last time you want to be letting life insurance go. It’s not the way to create cash flow for other things is by letting life insurance go right now.
But where you can make a plan and engage with your financial adviser and they will be able to give you the different options that we’ve got on the table in terms of premium relief. We’re seeing broad usage of it and that’s been really positive for clients at a time when they need it most.
Are you also getting people asking for life Insurance cover, many people who perhaps hadn’t been thinking about the mortality? Are you seeing any uptake on that side?
We are seeing a lot of people getting a rude awakening. This has been a wake up call for many who perhaps had been putting off relooking at their life insurance needs and now in the face of global pandemics and the likes are quickly scrambling to get their affairs in order – look at wills, and look at beefing up their cover. That is something that we’re seeing. The difficulty from our side has been actually finding new ways to put the cover on the books when there’s a state of lockdown in terms of doing medicals and the whole new business process.
We’ve spent a lot of time really digitising the entire process using our assets to ensure that we’re activating policies as quickly as possible without necessarily requiring medicals. We’ve got in place pretty quickly and at this point in time clients can apply for increased and new life cover to beef up their protection that they’ve got in place. So it’s an important time to do that.
We have no Covid-19 exclusions on new business either. That is something that some players in the market have started to look at introducing this point in time. We have full cover for Covid-19. Clients who haven’t yet done that should certainly be engaging with their advisers and looking to ensure that they’ve got sufficient protection going into the peak of this pandemic over the next few months.
But what we have got in place is a process called lockdown cover, so what it does is it allows clients to actually get cover put onto the books and be activated and then post lockdown when it is more appropriate to get the medical tests, we then perform the medical underwriting at that point in time. Where we can’t get medicals for clients, those clients can still access cover and then we almost do the medical underwriting afterwards.
Something else worth mentioning at a time like this is, we’ve seen enormous economic volatility and no less currency volatility. The rand has obviously blown out quite a lot against all the major economic currencies, particularly, against the US dollar. That is something that we focused quite heavily on is ensuring that clients are protected and diversified in terms of their risk protection and we provide a product called a dollar life plan which is authentic offshore protection. Something that we think that is unbelievably important at a time like this. People tend to recognise the importance of diversifying their investments perhaps not enough to think about diversifying their risk cover.
What about the post Covid-19 world? Is life insurance going to be impacted much?
Every single industry is going to be impacted dramatically by this. We believe this has given a lot of opportunities in terms of the digital revolution. It’s a buzzword that’s flown, and thrown about quite a bit. It’s something we’ve been moving towards at a rapid pace over many years now. But what this has allowed is a forced acceptance by society. Many companies have been trying to digitise, but at the end of the day if you can’t get clients and advisers to move away from the old paper based approach of doing business you can digitise all you want,you’re not going to get that broad take-up. There’s a moment in time now where society has been forced into that. Companies who are at the cutting edge of digital innovation have an opportunity to really entrench that digital movement with their client base, with their adviser base and so that’s something we’re focusing heavily on now before launching a number of new products over the next few weeks that we believe are particularly relevant in the times we find ourselves in. It’s an opportunity to capitalise on a shift in the general modus operandi of society. Hopefully, once we’ve all come through this, we are all operating at a far more efficient and digital level. We see that as a major opportunity and the whole experience around doing insurance for consumers and making that a far more engaging experience is something that we’re going to see a lot post Covid-19.
Has it accelerated the move by months or by years?
What it’s done is accelerated the stubborn movers. We already had an incredibly well engaged base of digital users. What we were struggling with, is getting the strugglers off the old approach. This has helped with that. What we’re seeing is that, your typically stubborn paper-based clients have had to adapt and have had to move to digital. That’s going to make a big difference in terms of how we can operate going forward – given that you’ve really moved a far larger percentage of your base into using your digital channels – you don’t need to continuously co-develop for the traditional approach and the new age approach. Post Covid-19, we’re going to be moving rapidly into real broad take up of digital channels by our clients.
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