At Allianz Global Benefits we help multinational companies to manage their employee benefits globally. This concerns risk, medical and pension insurance offered to employees around the world. We are specialized in implementing local employee benefits products, insurance solutions and services into global programs, such as captive, global underwriting and pooling, and operate a network of more than 110 Allianz insurers and partners in over 90 countries.
Over the last year we have had many queries from our clients on whether the pandemic is covered and have been in regular contact with our network insurers, first to show our clients which policies have epidemic and pandemic exclusions and now to demonstrate the impacts we are seeing on claims and policies. Whilst it is still early to measure the overall effect the pandemic will have on employee benefits, and the situation is ever changing in particular with a second and third wave hitting Europe, we have noticed some early impacts and concerns. These impacts have effected all, companies, employees and insurance providers: The employers with concerns on loss ratios, policy exclusions and coverage extensions. The employees with concerns about their treatment and delays in treatment. The insurers with challenges in calculating renewal quotations but also in a positive way as it has made them develop new products and apps.
Impact on Life and Disability Insurance
As the members of life and disability insurance policies are typically of working age, and COVID-19 has more of an effect on older people, there is limited effect on risk policies. Whilst we have seen some life insurance claims where COVID-19 is on the death certificates, these have been minimal and it is still too early to predict what the long term effects will be on life expectancy.
“We started receiving COVID-19 claims from June onwards, and received 28 claims until October. 22 million EGP were paid extra in claims due to COVID-19 this year, but so far this is not a scary amount of claims and therefore only minimal renewal premium increases are expected,” said Maged Shawky, Head of Corporate Life Operations at Allianz Egypt.
So far it is also too early to tell the impact of the pandemic on disability policies as these typically have deferred periods of 3 to 6 months around the world. This also applies for the effects on disability policies for those who suffer with long COVID-19 and the impact on mental health.
Allianz Global Benefits’ UK group insurance partner, Legal and General (L & G) have reported that COVID-19 has led to many challenges for Income Protection policies, with delays in the National Health Service and increased cases of mental health issues due to the pandemic leading to more claims. “However on a more positive note, Legal and General have been working to tackle these challenges through their cognitive behavioural therapy (CBT) Clinics and Vitality 360 partners. Where appropriate, L & G are targeting people with psychological symptoms due to experiencing long COVID and providing mental health support via Psychological therapies. The Vitality 360 package is an early intervention program delivered by an Occupational Therapist which provides a graded exercise program and enables employees to manage their symptoms and return to work. It is still early days but L & G have already had someone complete a Long COVID program and return to work, thus preventing a claim,” said Charlotte Bray, Clinical Lead for Rehabilitation and Jo Elphick, Marketing Director at L & G.
Insurers are starting to ready themselves for COVID-19 disability claims but it is largely still too early to predict.
We have seen a large increase in interest for life and disability policies in Europe and Asia especially. Clients have been enquiring about the provision of base level life insurance, either as fixed amount or 1x salary for all employees around the world, with higher amounts for senior staff and in countries where they already have higher levels of life insurance. We have also seen an increase in enquiries about income protection disability benefits rather than fixed lump sum benefits.
Impact on Health Insurance
The pandemic has had huge effects on health insurance around the world with the impact expected to last many years. As governments across the globe have imposed lockdowns, private health insurance claims have decreased massively as people delay treatment and testing. We have seen loss ratios that are up to 50% lower than previous years. In Thailand, “The significant decrease of health claims in March to July last year due to COVID-19 has resulted in an approximate 14% drop in total health claims compared to the same period in 2019. And there is a slow increasing trend since September 2020 as people are more comfortable going to clinics and hospitals,” said Chanittha Panyasomprasong, Group Operations at Allianz Thailand. This has made renewal pricing difficult as there is expected to be a bounce back in claims once lockdowns are eased and people become more comfortable visiting clinics and hospitals.
In multiple countries claims started to bounce back in the summer as lockdown measures eased but have again fallen as countries are battling a second wave of the virus. For example in Central America, “At the moment the general population has relaxed the security measures regarding COVID-19, which represents a latent risk, and the claims trend for COVID-19 is currently lower than normal. Despite this all, insurance companies continue to expect a similar loss ratio to previous years once a bounce back in claims is factored in,” said Alejandro Aquino, Commercial Management at Aseguradora General.
One of the main concerns with the downturn in claims is the decrease for routine testing and diagnostics. The worry is that with members not going for routine tests and check-ups that there may be a surge in high cost cancer claims in the coming years. With chances of early intervention and cancer treatment being missed, this will lead to more large claims. Our international medical provider Allianz Care have seen around a 20% drop in claims for routine testing. Studies by Cancer Research UK show “that more than 350,000 people in the UK missed out on urgent referral to hospital with suspected cancer symptoms since the COVID-19 pandemic struck the nation at the end of March.” (https://www.covermagazine.co.uk/news/4022837/covid-patients-limbo-pandemic). In some countries, the amount of claims have decreased as members delay treatment, while there are surging up higher severity non-COVID claims and additional costs to treatment because of pandemic measures such as extra personal protective equipment (PPE).
For example in India, “The COVID-19 pandemic has led to a reduction in non COVID-19 health claims since 1st April 2020. The fall is observed in both medical and surgical claims. The decline was sharpest in months of April and May and has steadily gone up. The decline is mainly due to apprehension amongst the policyholders/claimants in visiting the hospitals, wherein surgeries (especially elective surgeries) have been postponed. COVID-19 claims per se have a higher severity (2x) of the non COVID-19 claims, which has resulted in a sharp rise in overall health claim severity. Additionally, due to mandatory COVID-19 checks before every hospitalization and additional administrative expense incurred by hospitals (e.g. sanitation, waste disposal norms, PPE kits, bed re-arrangement, etc.) the cost of non COVID-19 claims has also gone up,” said Kunaal Chawathe, Vertical Lead – Group Health Underwriting at Bajaj Allianz General Insurance Company Limited.
Allianz Partners’ international health line of business has also seen a downturn in claims as many countries stopped certain treatments, but a bounce back to pre-covid levels and also an increase in the cost of claims, “We have noted a trend with certain hospitals increasing their prices to recoup 2020 losses, and this is something we are keeping a close eye on,” said Patrick Lawlor, Head of Sales & Distribution UK & Northern Europe at Allianz Partners, International Health.
Unfortunately not all areas have seen a downturn in claims and some countries have only seen a small decrease in claims. In Egypt for example, “Claims decreased in March, April and May as people were afraid of going out. Afterwards claims have bounced back higher than normal from August and so, increases in renewal premiums are still expected as overall loss ratios are expected to be near or over 100%,” said Ayman Omar, Director of Health at Allianz Egypt.
One of the countries hardest hit by the pandemic is Mexico as government health schemes have struggled to cope which has led to pressures on the private insurance industry. “The government (social security) is not bearing the direct costs of COVID-19 and with the limited nature of lockdowns in Mexico, there has been no drop in utilization. As a result, more challenging renewals are expected. Unfortunately Mexico has not emerged from the first wave of infections. The drop in claims frequency was only pronounced in the months of April and May 2020, but it does not compensate for the impact of COVID-19 claims since the insured are in a serious condition at the hospitals, some even being admitted to the intensive care unit (ICU) directly, increasing the average claims cost, according to the figures of AMIS (Mexican Association of Insurance Institutions). COVID-19 is already in place 7 of the 10 most relevant catastrophes in the Mexican insurance sector. Due to the comorbidities of the population (mainly diabetes) and the need of the population to work, we have not seen a decrease in the cases claimed by COVID-19, but the severity is expected to decrease in 2021 once vaccines begin to be applied and possibly due to herd immunity,” said Verónica Santoyo Martínez, Benefits Manager at Allianz Mexico.
Furthermore, the pandemic has had an effect on the demand for health insurance. We have seen clients that in some countries only provided private health insurance to their senior employees, have been looking at providing coverage to all employees. This shows an increase in interest in lower level benefit plans, so that all employees have at least basic coverage. We have also seen our clients look more closely at the benefit designs of their medical policies and making tweaks and additions to their policies, with a particular focus on wellbeing options.
Impact on Wellness and Mental Health
Wellness and mental health benefits have been increasingly more popular prior to the pandemic, and this has increased further as employers are concerned about the long term effects the pandemic may have. With many employees round the world moving towards working from home, the stress of managing both home and work life is on the rise. EAP (Employee Assistance Programme) services have been around a long term and previously had a low usage amongst employees but since the pandemic these services have become more in demand.
For a number of years we have been seeing an increase in mental health claims on both life and disability policies, and we are expecting that this will increase further with the pandemic. Whilst we are seeing employers taking a greater interest in wellbeing and providing more EAP services, wellness initiatives and financial wellness services, we are still expecting that mental health conditions will be the most claimed conditions on disability plans in many countries.
Impact on Technology
Tele-consultations were becoming available in several countries with some apps able to prescribe and deliver medicines. The pandemic, with employees increasingly working from home, has increased the demand for this with insurers releasing these apps early to try and encourage members to still seek treatment where needed. As well as encouraging employees to seek medical treatment and get early treatment there is also a positive cost impact to tele-medicine. A video GP consultation is significantly cheaper than seeing a GP in person, this can help reduce the cost of claims on insurance without preventing members seeking treatment.
Allianz Partners has stated that in Dubai, tele-medicine costs around 40% less than an in-person GP appointment. Over the past few years Allianz Partners has been working with numerous partners to produce telehealth and digital solutions for customers. “In 2019, we launched a UAE-based telehealth solution through LiveDoc, allowing patients to access the highest quality of medical expertise from the comfort of their own homes. In 2020, we have increased our digital services offering with numerous initiatives, including a new telehealth service in Singapore, and the launch of Olive, a health and wellbeing program aimed at corporate group clients, NGOs and IGOs, that integrates several digital health tools. As we know, Covid-19 has accelerated the supply and use of health technology solutions in many parts of the world. During the initial wave of the pandemic, we saw a spike in the use of our own digital health services. This was in part due to the accessibility challenges in healthcare settings, but also a reluctance among patients to present to their GP or similar,” said Patrick Lawlor, Head of Sales & Distribution UK & Northern Europe at Allianz Partners, International Health.
This article was created with the support and collaboration of Allianz Egypt, Aseguradora General (Central America), Legal and General (UK), Allianz Thailand, Bajaj Allianz General Insurance Company Limited (India), Allianz Mexico, Allianz Partners and the AGB Communication Team.