High COVID-19 claims dampen BIHL’s results
The country’s largest and most diversified financial services group, BIHL, paid out more than P380 million in COVID-19 related claims in the year ended December 2021, a period in which the country witnessed the worst of the pandemic.
In total, the group paid out gross claims of P2.46 billion over the period, compared to P1.69 billion in 2020, putting pressure on its bottom line.
BIHL, whose subsidiaries include Botswana Life and Bifm, saw its pre-tax profits for the year ended December 2021 drop to P476.6 million from P666.2 million in 2020. Presenting BIHL’s financial results recently, group CEO, Catherine Lesetedi said despite the higher claims, the group remained solvent and liquid with a strong balance sheet.
BIHL’s net insurance premium rose seven percent during the year due to a 37% growth in the value of new business in the retail and corporate business portfolios. Despite the knock on the group’s books, Lesetedi said
BIHL was not considering imposing a vaccine mandate on its policyholders. “During the reporting period, about 10% of our clients had taken the first dose while about 73% were fully vaccinated,” she told BusinessWeek.
“We will continue paying claims to both
vaccinated and unvaccinated policyholders. “Those who are not vaccinated will pay slightly higher premiums. “We cannot compel policyholders to be vaccinated, but we can only plead and encourage them to do so because it benefits the individual as scientifically proven.” Botswana Life is a key revenue driver for BIHL and in the six months to June 2021, the group’s pre-tax profits dropped 24% due to a jump in claims. Botswana Life is the country’s oldest and largest life insurance company holding approximately 300,000 active policies. Many policyholders hold multiple policies, which in turn heightens the impact of the pandemic on claims. Besides COVID-19, BIHL has also expressed concern about the economy’s below-par performance, particularly high unemployment amongst the youth, which is impacting the insurance industry.
Lesetedi said the group would consider being innovative around product development to be able to accommodate some of the realities it is coming across.
“Demographically Botswana is made up of young individuals and as the book ages, it is important to get younger lives to be insured with us.
“However, our ability now to on-board young people is lost because the majority of them are unemployed which also tends to limit our ability to grow as the insurance industry,” she said.