Claim statistics a good indicator of health trends
If you’re healthy and over 40, you have a one-in-four chance of reaching 100, according to life assurance company Momentum.
In 2015, Momentum paid R3.1 billion to the group’s retail clients for death, disability, income protection and critical illness claims.
We’re getting good at living longer, but, as our life expectancy has increased, our health has not. It is therefore important that we have cover for critical illness and disability, Thys Nieuwoudt, the chief executive of Swiss Re Life and Health Africa, says.
Nieuwoudt says that a 40-year-old who suffered a heart attack in 2000 is would probably have died, whereas a 40-year-old who has a heart attack today will probably survive, thanks to advances in medical technology.
Incidence of critical illness remains high and is expected to increase, with cancer cases forecast to rise by as much as 78 percent by 2030.
Momentum paid R398 million in critical illness claims in 2015. The largest of these claims was R5 million to a 45-year-old man who suffered a stroke.
Just over half (54 percent) of Momentum’s critical illness claims were for cancer and cardiovascular conditions. Add in nervous system conditions, and 68 percent of claims were for what is known as the “big four”: cancer, heart attack, stroke and coronary artery bypass graft.
Momentum has seen a decline in the proportion of claims for these four conditions over the past four years, illustrating the need for cover for a wider range of diseases. In 2013, 78 percent of claims were for the big four, decreasing to 71 percent in 2014.
Two increasingly common illnesses not included in the “big four” are Alzheimer’s and Parkinson’s disease.
As well as needing cover for many diseases, we may also need more cover than we anticipate. Stephen van Niekerk, the head of retail life insurance products at Momentum, says a minimum figure for critical illness is about R1 million. This figure is based on both experience and costs. Even a good medical scheme is unlikely to pay for treatment that costs upwards of US$100 000 (over R1.5 million at the current exchange rate), an easy figure to reach when immunotherapy is involved.
Professor Michael Herbst, the head of health at the Cancer Association of South Africa, said that immunotherapy is used to assist the body’s immune system to help fight cancer. A 12-week course can cost US$130 000 (about R2 million).
How likely are you to get cancer? One in eight men in South Africa and one in nine women run the risk of being diagnosed with cancer according to Herbst. The latest statistics from the United States show that if you are a man aged 80, there is an 80-percent chance you will suffer from prostrate cancer.
When it comes to the causes behind disability claims, musculoskeletal conditions head the list. These are anything to do with muscles and bones, and account for 27 percent of Momentum’s lump-sum disability claims and 25-percent of its income-benefit disability claims.
The assurer paid a total of R242 million in disability claims and R91 million in income protection claims in 2015. The largest disability claim paid was R7 million; R593 000 was the largest monthly income disability benefit claim paid.
Van Niekerk shared a case in which malaria led to complications that resulted in the amputation of both the legs of a policyholder. The one-off initial costs amounted to R1.89 million with the recurring annual costs coming in at R238 750.
As important as it is to be covered for permanent disability, temporary disability is far more common. Van Niekerk says that, of every 10 people who are off work because of an accident, only one will be left with a permanent disability.
Momentum paid more than 95 percent of claims received in the year. Of the remaining claims, 0.4 percent were repudiated, mainly because of non-disclosure, and 4.3 percent were not paid because they did not meet the policy’s criteria – for example, cover was for permanent disability and the claim for temporary disability.
The statistics illustrate the need for cover and highlight the costs of illness and disability. You should interpret the statistics with caution because they are only the experience of the insurer’s clients, and not the wider South Africa.
But they are often a good indicator. When it comes to cancer, Momentum’s statistics are one of the more up-to-date sources of information, given that cancer became a reportable disease in South Africa only in 2011, the most recent year for which official statistics are available.