Higher life insurance premiums for the unvaccinated on the cards

Some of the country’s biggest life insurers say new customers who refuse to get vaccinated may be classified as higher risk and as such might incur higher premiums.
Insurers have suffered significant profit losses as a result of the pandemic. Image: Brendon Thorne/Bloomberg

Major insurers like Momentum Metropolitan, Old Mutual, Discovery and Sanlam share similar sentiments that new customers who seek life insurance cover but are unvaccinated are in for higher premium costs, depending on the outcomes of their combined risk profile.

Of course several factors are considered when assessing one’s risk profile, such as age, health and existing comorbidities, however not being vaccinated against the Covid-19 virus could count against new life insurance policy seekers.

Proof of vaccinations

Momentum Metropolitan’s head of retail life insurance marketing George Kolbe told Moneyweb that the insurer began asking new clients seeking life cover for proof of vaccination in December 2021.

“Depending on their individual risk profile [age, health, comorbidities and so on], their vaccination status may have an impact on their premiums and premiums may be loaded for non-vaccinated clients,” Kolbe said.

Old Mutual general manager of protection solutions Kavir Ramjee had similar sentiments: “Old Mutual will consider new customers’ vaccination status to offer differentiated pricing for underwritten life and funeral cover products.”

Read: Covid-19 related death claims continue to hammer life insurers

“We will assess each customer’s risk against a cross-section of relevant factors including age and the presence of comorbidities,” he said.

Old Mutual’s stance on the matter is that the vaccinated should not be expected to cross-subsidise their unvaccinated counterparts.

“In the same way that non-smokers should not have to cross-subsidise the insurance premiums of smokers, we believe the same principle should apply to vaccinated customers, who should not have to cross-subsidise their unvaccinated counterparts,” Ramjee said.

Read:

Discovery, which has taken a clear position on vaccine mandates in recent months, says new clients who refuse to get vaccinated may be subject to a premium loading in line with increased risk.

Sanlam takes a slightly conservative position

Meanwhile, Sanlam is taking a slightly more reserved position on premium costs for its new unvaccinated life insurance clients, saying it will not treat people’s choice to vaccinate in the same way as people’s choice to smoke. However, the group did not specifically come out and say that unvaccinated new clients won’t face higher charges.

“We are not taking a view that we are going to divide you like smokers and non-smokers into two categories with different premium rates,” Sanlam group CEO Paul Hanratty tells Moneyweb.

In an operational update for the 10-month period ending October 31, the group recorded excess claims of R3.42 billion within its Sanlam Life and Savings business for the period, which it said was above its initial long-term assumptions.

Read: Sanlam seeing ‘significantly more death and funeral claims’

However, the release of the group’s discretionary reserves did assist in offsetting the impact of excess mortality claims and as such the insurer said it will take a risk-based approach to determining premiums for its unvaccinated new clients.

“We are pricing at quite a granular level and it isn’t a simple, you’re vaccinated or you’re not vaccinated [approach],” Hanratty said.

“What we know about vaccination is that it’s actually more important for people with comorbidities and at older ages, so we are taking very much a risk-based approach to this thing.

“It’s not to say Covid-19 won’t kill you if you are unvaccinated at age 25 but the probabilities of it are much lower than for an older person with comorbidities.”

Insurers can refuse cover in some cases

All the insurers mentioned noted that determining the premium costs for new clients will be determined on a case-by-case basis and that not getting a vaccine jab will not automatically see life insurance costs for new clients increase dramatically.

However, in light of this, Momentum Metropolitan has made it clear that it may decline to cover potential clients should their combined risk profile necessitate this.

“The [vaccination] impact on the premium will range from no impact for certain customers, to a health loading, or we might decline cover depending on the combination of the factors mentioned,” Kolbe said.

Costs of Covid-19

The decision by insurers to start considering new clients’ vaccination status when assessing the client’s risk profile comes as the likes of Momentum Metropolitan and Old Mutual recently reported significant profit losses as a result of Covid-19-related mortality losses.

In November, Momentum Metropolitan reported a 63% decline in operating profit for the three-month period ending September 2021, while Old Mutual reported that Covid-19-related death claims wiped an estimated R6.6 billion off its profits for the nine months ending September 30.

Read:

This position also comes as more employers announce vaccine mandates in the workplace and the National Economic Development and Labour Council (Nedlac), at its 26th annual summit on Tuesday, expressed support for mandatory vaccinations.

Listen as Fifi Peters speaks to Michael Evans of Webber Wentzel about the legal side of vaccine mandates (or read the transcript): 

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Lol… people think this will work… imagine if Airlines did the same (will never happen)… imagine if liquor stores did the same (will never happen)…

If you are unvaccinated you are a larger liability to the insurer, so of course you should pay more, obviously it is your right to refuse to get vaccinated, but then you need to be prepared to pay the price (You don’t have freedom from consequences)

I have a Discovery life policy and due to one of my hobbies I also have to pay more for life insurance, I don’t go around complaining about Discovery infringing on my rights, my own choices have put me in a higher risk category, that is not their fault, its mine.

Yep …. it’s called risk / reward, basic logic which the masses seem unable to understand. Why should an insurer take the risk of an average R84,000 hospital treatment when it can be avoided with a cheap vaccine? Duh …

Next step is the extra risk loading also applies to existing policy holders. Same as if I take up paragliding again as a hobby.

I would be surprised if hospital plans and top-up plans don’t reprice immediately. The statistics on difference in hospitalization rates per 100,000 for vaccinated and unvaccinated are compelling : runs 5X in the US. ICU works out around R50k per day! Death rates run 13X in the US, probably similar increase in risk to paragliding

@beachcomber I know right, it feels so obvious that having to highlight this to people with access to the internet (For better or worse I guess) pains me.

@Johan I would also not be surprised if existing policy holders get a rerate at some point, I think if the unvaccinated had to pay the true economic cost for their freedom to choose we would see a whole lot of people getting over their fear of needles.

PJJ Beachcomber:

Stand back, this will get big 🙂 🙂

Medical Aids need to wake up. A fund is a closed group that share premiums and claims. Why must our fund deplete my reserves for the unvaxxed risks? Either their premiums should double or the fund must exclude cover for Covid-related treatment for unvaccinated people.

It is basically same as HIV+ member that refuses ARV but expects me to share his other treatment costs. Stuff that! Smokers pay more, so should the unvaccinated.

We should start treating obese people same as smokers and the unvaccinated – higher premiums on all insurance. That might encourage them to get off the couch and avoid KFC.

I got my booster this week, Profmed will probably give me extra discount on our premium.

End of comments.

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