Liberty halts sale of income protection, but its existing clients are still covered

Liberty Life, one of the country’s largest insurers, said on Tuesday that it will suspend the sales of certain types of insurance on loss of income due to the uncertainty created by the coronavirus pandemic.

The company will temporarily suspend selling its income protector products related to retrenchment and business overheads and its loan protection package with immediate effect. Income protector products provide cover to people who endure a loss of income if they become sick or injured.

David Jewell, managing executive for retail products at Liberty, said the cover associated with this type of product has greatly increased due to the coronavirus outbreak.

“Our primary obligation is to our existing clients, so it’s critical that we maintain a very strong capital position and be able to meet all valid claims,” he said.

Insurers are also expected to price products responsibly as set out in consumer regulations, something that Jewell regards as impossible given the unprecedented uncertainty created by the pandemic and the government’s measures to impose a lockdown.

“In the current environment it is very difficult for us to assess the risks around retrenchment and related cover for new clients, which have obviously increased materially. So that is why we have taken the decision to begin pulling back on offering those products,” Jewell said.

Jewell added that part of the decision had already begun being taken out of its hands due to dynamics with the company’s reinsurers. “We have also received communication from our reinsurers, who have also communicated their declining appetite to underwrite such risks,” he said.

RISK COVER

Existing clients will continue to enjoy the same benefits and level of cover. Liberty is continuing to facilitate risk cover in other products, including extending life cover before medical tests can be performed to free up laboratories with capacity to perform Covid-19 tests.

IT IS VERY DIFFICULT FOR US TO ASSESS THE RISKS AROUND RETRENCHMENT AND RELATED COVER