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The Guardian Life building in New Kingston, Jamaica (File photo)

Big bill: J’can insurance companies paying more death benefits

The Guardian Life building in New Kingston, Jamaica (File photo)

Even as life returns somewhat to normal in various parts of the world, the damage from the novel coronavirus has left insurance companies paying out more death claims which has been compounded by medical inflation in the health sector.

Sagicor Group Jamaica Limited (SJ) and Trinidad-based Guardian Holdings Limited (GHL) both mentioned this increased expense in their most recent third-quarter results ending September 30. Both companies saw their insurance segments record a decline in performance due to the increased deaths being recorded in Jamaica along with sharper costs in health claims. SJ’s main life insurance company is Sagicor Life Jamaica Limited (SLJ) while GHL’s main subsidiary in Jamaica is Guardian Life Limited (GLL).

“What we have seen in 2021 was an increase in claims due to the impact of COVID-19. Perhaps, 20 to 30 per cent of death claims in excess of normal levels. Of course, that is something sad on a human level and it certainly affected our business. However, not only at Guardian, but in the life insurance industry generally across the world. We don’t see it necessarily as a long-term trend. We believe mortality will return to normal level in due course,” stated GHL Chief Executive Officer Ravi Tewari at the NCB Financial Group Limited investor briefing held recently.

Guardian Holdings Limited Chief Executive Officer Ravi Tewari

GHL’s insurance segment saw a 37 per cent decline to TT$630.44 million (JM$14.34 billion) for the nine months which was attributed to the US$10-million loss from its reinsurance business and higher mortality claims in Jamaica. GLL’s net death claims for 2020 grew by 27 per cent to JM$1.45 billion which pushed the overall benefits paid up to JM$8.43 billion. Scotia Jamaica Life Insurance Company Limited saw its new claims rise by 31 per cent to JM$351.73 million up to the end of October 2020.

Though both companies noted increased death claims for their policies, deaths in Jamaica have been trending down, according to data from the Statistical Institute of Jamaica (STATIN) and the Registrar General’s Department (RGD). Preliminary data from the RGD showed total deaths in 2020 hitting a new low of 18,073 persons which is a five-year low from the 19,761 persons who died in 2016 according to STATIN data. Deaths for the first six months of 2021 showed a decrease in registered deaths from 8,833 to 8,133 persons.

However, murders and road fatalities have been on the rise for 2021. Total murders remain 10 per cent higher at 1,250 persons up to November 13, per data from the Jamaica Constabulary Force. Road fatalities remain six per cent higher at 350 persons up to the end of September with the last two years seeing 30-year highs in terms of deaths on the nation’s roadways.

Road fatalities have been on the rise for 2021. (Photo: The Factorialist)

Apart from higher deaths being recorded, there is a rise in medical inflation being observed in the last year. This has arisen from things such as increased cost of goods and medical facilities, plus specialists charging more for services rendered during the pandemic. The depreciation of the Jamaican dollar over the last year has influenced this increase as well.

“What we’ve seen is that the pricing for the medical coverage of drugs and hospitalisation has not been adequate to cover the cost that has been coming through the system. When you go to the doctor, the doctor may be charging you JM$7,000 instead of the pre-COVID JM$5,000, and that would not have been what was included in our contract at the start of the period. It’s particularly noticeable in hospitalisation costs and procedures. Some of the hospitals have retooled during COVID and are charging higher prices for their services,” stated SJ Chief Financial Officer Andre Ho Lung in a media briefing on Monday.

SJ’s employee benefits earned JM$21.04 billion in revenue for the nine months, but saw a 26 per cent reduction in net profit to JM$2.56 billion. Though the individual lines segment has been affected by increased death claims, cost control and higher business sales saw a 14 per cent improvement in net profit to JM$6.74 billion. Ho Lung confirmed that they saw more death claims related to COVID-19 in their books in the first four months of 2021, but it has somewhat tapered off at this point. SJ has paid out JM$25.2 billion year-to-date in claims across all its insurance businesses including Advantage General Insurance Company.

(Photo: Facebook @AdvantageGeneral)


Tewari contended that although GHL might not increase premiums for the health insurance segment in the short term, medical inflation might force the company’s hand. Though SJ didn’t provide any insight about increasing premiums, posts by clients on Twitter show that SLJ has sent them letters noting that premiums being paid aren’t adequate to maintain the sum insured. Some of the proposed measures to keep the policy in place include decreasing the basic sum insured, increasing the premium and changing the death benefit in order to maintain coverage between ages 75 and 100. The letters stated that if nothing is done before the next policy anniversary, the coverage would be terminated or lapsed. Surrenders and withdrawals marginally increased to JM$641.58 million for SLJ in 2020, but ran up by 58 per cent to JM$620.03 million for GLL. Tewari noted that lapses were 20 to 40 per cent above normal levels at the start of the pandemic but have started to normalise in recent times.

Though both insurance giants have been advocating for greater vaccination take-up, Jamaica’s fully vaccinated rate for eligible persons currently stands at 20.36 per cent from a population of 2,376,993. Despite total doses surpassing 1 million, this does not account for the fact that only the Pfizer-BioNTech vaccine has been approved for kids 12 years and older and that Janssen (Johnson & Johnson) is single-dose. Despite persons 50 and older accounting for most of the vaccinations to date, this age group accounts for more than 80 per cent of the 2,300 COVID-19 deaths recorded to date.

Death benefits in the USA jumped by 15 per cent to US$87.5 billion for 2020. Some companies like Delta Airlines have started adding US$200 onto unvaccinated employees’ health insurance plans while other businesses have threatened to deny life insurance benefits to unvaccinated staff.

— David Rose