South Africa

Vaccine status checks and price hikes as Sanlam manages huge Covid bill, limits virus-related losses

Vaccine status checks and price hikes as Sanlam manages huge Covid bill, limits virus-related losses

Sanlam has paid out R22bn in death claims since the start of last year, due to the Covid-19 pandemic.

Of this, R8bn was paid in the first half of this year in SA alone, the group said on Thursday, presenting its half-year results.

Santam also continued to settle contingent business interruption (CBI) claims and paid R700m to policyholders in addition to the R1bn paid in interim relief in August last year, bringing the total CBI payments to R1.7bn at the end of August this year.

The group expects that existing reserves should largely mitigate the Covid-19-related excess mortality impact on operating profit for 2021.

“There however remains a significant amount of uncertainty regarding the impact of future waves, possible variants and the progress made with the vaccination rollout,” it cautioned.

The group expects to retain modest reserves to mitigate any mortality losses after 2021.

Sanlam said the near-term economic outlook in SA deteriorated with the onset of the third wave of Covid-19 and the civil unrest in Gauteng and KwaZulu-Natal that resulted in loss of lives, livelihoods and damage to property.

“There is likely to be a negative impact on consumer and business confidence as a result of these events, so that although the SA economy will continue to recover, the recovery has suffered a setback.”

The rate of rollout of vaccinations also has a significant bearing on the prospects for SA's economic recovery, said the group.

The impact of Covid-19 on mortality experience in the group’s Africa operations, where excess reserves are more limited, increased over the first six months of this year, and this trend is expected to continue for the rest of the year.

Sanlam has identified several initiatives aimed at limiting the future impact of Covid-19 on future mortality losses in its operations. These include:

  • “fair and appropriate” increases in annually renewable group risk premiums, some of which have already been implemented; and
  • implementing underwriting changes in the latter part of 2021, by following a risk-based approach that takes vaccination status into account for certain product lines for those clients with particular risk profiles.