While COVID-19 deaths in Botswana are arguably lower at just over 2000, Botswana Insurance Holdings Company (BIHL) says it paid 12,600 claims between January and June 2021 through its subsidiary, Botswana Life.
According to the CEO of BIHL, Catherine Lesetedi, P119 million worth of claims were classified as COVID-19 claims across different product lines.
The statistics disclosed by the mother company reflect the burden that the country’s health system has endured occasioned by the COVID-19 pandemic. Hospitals operated at full capacity as transmission rates spiralled out of control. During the period, the highest level of infections was 17,000 active cases with the country witnessing rising mortality; deaths clearly identifiable as COVID-19 as depicted by Lesetedi’s slides while presenting the group’s results last week.
Explaining the high number of claims in relation to COVID-19 deaths, Lesetedi pointed out that Botswana Life has a broad suite of products and that clients have three to four policies on average. “Not only that, there are instances where children may be covering one parent, and therefore the business paying seven claims per one life,” the CEO explained.
But it is important to note that while COVID-19 deaths were ticking up, there was an increase in some causes of death, representative of the pressure on Botswana’s health systems. Lesetedi noted that individuals who normally would have had access to healthcare were not able to get that attention at the right time, leading to substantial excess mortality. In other words, Botswana had a lot more people pass away during the second wave but not just as a result of COVID-19 but other diseases because of lack of access to healthcare as a result of the overwhelmed health system.
Against that background, over P354 million was paid out in excess mortality, according to BIHL’s presentation. While P119 million claims were COVID related at Botswana Life, P235 million claims were due to other causes which arguably were not properly attended to perhaps as a result of health facilities prioritising COVID related risks. The P354 million accounts for the growth in the claims versus the first six months of the prior year, which stood at P763 million. As at June 30, the group stood at P1.117 billion claims paid.
Lesetedi emphasised that the group has not declined a single case of COVID-19 death in contrast to the time of the outbreak of HIV. “During that time, there were many exclusions in our policies, not just them but worldwide, and many policyholders were not covered,” she pointed out. “This time around, as a business, we made a decision that we will cover COVID-19 deaths.”
Despite this excess mortality, the group said it stands in “a very financially strong position and solvency remains very strong”. According to Group Chief Financial Officer, Kudakwashe Mukushi, capital levels increased from 6.0x to 7.8x cover. In addition to this strong liquidity position, the group’s services increased during the reporting period. The value of new business increased by 47 percent to P91 million compared to the prior year. New business volumes for individual life retail and group funeral portfolios were higher compared to the prior year. As opposed to just individuals contributing to this growth, Mukushi said the group won a few significant schemes through business development efforts that have contributed to the group funeral growth.
“It’s people that would have been insured elsewhere that would then come with a scheme to our group and that’s some of the significant growth that we’re seeing in terms of our carrying premium as well,” he responded to a question from this publication. On the individual premium side, the credit life was really people that have borrowed from banks who then come through to insure. Mukushi believes this is actually sustainable growth which will continue to impact the group’s numbers beyond the pandemic.
“For us as the BIHL group, I think we have talked on several occasions that we exist to create legacies for families,” said the CEO, Lesetedi. “So whereas a number of it will be funeral products, what we’re asking and what we’re educating the public is to actually take up life cover.” She added that internal targets that were set have actually been achieved. This means that the group is increasing the penetration of live cover purchases. It is also the CEO’s view that going forward, the public has seen the need to be better prepared because of COVID-19. Therefore, BIHL expects to be “well received when we now talk about the Life cover”, she noted. Prior year new business sales were lower due to COVID-19 lockdowns.
The annuity portfolio also performed “very well” with better VNB margins and improved volumes compared to the prior year.