Absa Life, the first bank insurer to predict that the fifth wave of Covid-19 infections might be around the corner, says it nonetheless expects the trend of milder illness to continue.
The insurer set aside R423 million Covid-19 provision for the fourth and fifth wave at the end of 2021, but only one-third of that is for the coming wave.
Absa Life CEO, Eugene Strass and his team, predict that it will likely be less severe than any other waves SA has passed.
“Actually, the experience has been very, very positive,” he said, referring to the fourth wave claims.
He said excess deaths are not as high as they used to be. The Omicron was the first to introduce a variant with a surprisingly low death rate while being more infectious.
“The big unknown now – and there’s a lot of writing about it – is whether we are now at the point where the virus has gone from a pandemic to an endemic. I think it’s too early to tell. But we’ll closely monitor what the next wave does,” said Strauss.
If insurers see a continuation of fewer deaths despite the rise in infections in the next wave, it might be signs that Covid-19 is becoming endemic, a state in which our bodies learn to live with the virus, and fewer people die from it – more like bad flu.
The Council for Scientific and Industrial Research (CSIR) has predicted that the next surge in infections will happen around the same time as Absa expected.
Strauss said the bank-owned insurer has built a rigorous model to predict waves. It considers infection rates, daily Covid-19 deaths, excess deaths statistics, the level of full vaccinations, and the proportion of SA’s population estimated to have had Covid-19 before.
An even less severe wave coming?
To plan how much Covid-19 provisions it should set aside for the envisaged waves, Absa Life also considers its policyholders’ age, which Strauss said is seven to nine years below the industry average.
While the company paid R1 billion in excess claims in 2021 – largely due to high policyholder death rates in the third wave – it hopes this won’t repeat.
Strauss said this is why Absa has lower protection for the fourth and fifth waves, despite those excess claims.
To try and insulate itself more, Absa Life has included more Covid-19-related questions in its underwriting questions, and many of its customers are not fully underwritten. But because new policies only make up about 15% of its total book every year, it still didn’t know the vaccination and prior infection status of the majority of its client base.-fin24
