- On average group says it pays out P1.6 billion annually
- BIHL CEO says COVID-19 has raised appetite for life cover
- “It does protect us as a business,” she says of vaccination success
Botswana Insurance Holdings Limited (BIHL) has paid P2.4 billion in death claims during the 12 months ended 31 December 2021, nearly P750 million more than its average pay-out, the group revealed.
On average the group says it pays out P1.6 billion annually. The increase in claims was triggered by excess mortality in COVID-19 and non-COVID-19 claims which were footed by BIHL’s subsidiary, Botswana Life. Said CEO Catherine Lesetedi: “I do not believe that there is any one policyholder who can say they were turned away. We paid all our claims within the stipulated time given the sheer volume and limited staff who were working in the office.”
She was speaking during presentation of the company’s full year results in Gaborone this week. The results show that over P380 million was paid in COVID-19 claims alone in 2021, meaning the difference is due to other causes, some of which were indirectly related to COVID-19. Lesetedi observed that there were more deaths because hospitals were operating under pressure while people were refusing to go to hospitals for fear of contracting the virus. “When we look at mortality, we do not look at COVID-19 alone,” she pointed out.
According to her, a key lesson to draw is that COVID-19 exposed the vulnerability of Botswana’s health system. “Hence, we lost a lot more than the individuals that we talk about when we talk about COVID-19 deaths,” she said. “We need to learn from this pandemic and strengthen our infrastructure.”
But she is delighted that Botswana’s vaccination rate stands at 67 percent for fully vaccinated and 76 percent for the first dose. “Science shows that when you are vaccinated and catch COVID-19, the severity is not that much,” Lesetedi noted. “We are thankful we have this vaccination rate at country level. It does protect us as a business.”
This is against the background of the magnitude of deaths from the Omicron not being even close to that of the Delta variant. Had the scale of Delta deaths continued with Omicron, “I am very sure we would be talking a slightly different story”, Lesetedi said. Related to this remission is that the group is able to meet claims that may arise because it remains solvent and liquid. The business is well capitalised, with required capital for the group subsidiaries covered 6.8 times (December 2020: 6.3 times).
”It is not many businesses that can actually talk about that,” the CEO noted. “It is a true testament to our approach to how we manage risk, the prudence that we give, thoughts, pricing and everything. It is a great achievement. Whilst we are experiencing less COVID-19 deaths, our experience from a mortality perspective is a lot higher than the previous COVID-19 era.”
For sustainability of the business and for ensuring that the group is able to pay claims going forward, BIHL concluded: “It’s quite necessary that we actually reprice products.” The group announced that it had embarked on an exercise to review its products and pricing to factor in the current risks, given that some of the products are not really returning the money the group wants. “Repricing conversation continues with various clients. It is an important thing to do as business,” Lesetedi said. “Managing measures is something that we are going to be doing.”
But she also noted increased policy lapses that she said began to creep up towards the last few months of the year, especially at the end of the year and are continuing into 2022. “There is work that is ongoing to manage that risk because it is a big risk,” she said. “There is a way that we have to retain clients, especially during the period when they do need that.”
She noted that BIHL policyholders actually do not have life cover. “With COVID-19, what we have seen is there is now appetite from policyholders and that is where some of the opportunity lies.”