Virus’s effect on health, financial well-being to impact on insurance

INSURANCE group Liberty believes change is on the cards for South African insurance as a result of the longterm health and financial impacts of the Covid-19 pandemic.

A report into future health risks commissioned by the insurer, the Covid-19 Trends Report: Navigating the Flux, found that the life expectancy of South Africans was projected to decrease with every 1 percent decline in gross domestic product (GDP) because of Covid-19.

National Treasury has already predicted a 5 to 10 percent GDP contraction, while Liberty’s forecast was a 8.6 percent decline for 2020, said Stanlib economist Ndivhuho Netshitenshe in a webinar yesterday.

She said their forecast was slightly below the government’s because South Africa had been slower-than-expected in lifting lockdown restrictions.

Netshitenshe said it might take three years for the economy to reach the already weak pre Covid-19 levels due to rising unemployment (about a 2 million increase this year), closure of many businesses through the pandemic, lower tax collections and higher government debt.

David Jewell, Liberty group executive for retail solutions, said that the pandemic had left many people reassessing what was really important, and the group was seeing more people applying for life and other insurance, which the insurer was granting based on individual assessments, whether they had contracted Covid-19 or not.

Etienne Rossouw, head of life product and pricing at Munich Re of Africa, said there was a great deal of uncertainty about the long-term health consequences of Covid-19, because while it impacted every individual differently, it affected four key body systems: pulmonary, neurological, cardiac and renal, and nobody was sure how these systems might be impacted in the longer term by the disease, or the extent of organ damage that it created.

“Studies have suggested that in South Africa, the years of life lost could range from 26 800 to 473 500, caused by the lockdown and subsequent economic contraction, explained Bronwyn Williams, Trend Translator and Future Finance Specialist for Flux

Trends.

She said that as the world worked towards a 0 percent transmission of Covid-19, it was likely that the virus would lead to an increase in chronic illness, which would have an effect on both citizens and the industries that serve to keep them healthy and secure.

Liberty chief medical officer Dominique Stott said the immediate health effects were already apparent, with co-morbidities placing large swathes of the South African population at risk for the harshest symptoms of the virus.

Among these health morbidities – cardiovascular disease, diabetes, obesity, chronic obstructive pulmonary disease – obesity was of particular concern, as 70 percent of South African women were technically obese and a third of men were overweight.

She said while the lockdown had been of “huge” benefit in curbing the spread of the virus, and apart of the long-term uncertainty on the insurance and health industries of rising mortality and comorbidity, there were also the indirect effects.

She said mental illness had also seen a sharp spike. Between a rise in suicides and suicidal ideation, depression, stress and burnout, the report suggested it had become a necessity for employers to provide the necessary psychological support employees require.

All these presented additional risks, possibly leading to bigger mortality than the pandemic itself, to the insurance and health-care sectors in the longer term, said Stott.