The moment I spotted Discovery Life’s media release in my inbox, I knew the anti-vaxxers would go beserk, including and perhaps especially those who don’t have policies with that insurer, or any other, for that matter.
I put out a series of tweets summarising the news that anti-vaxxers who don’t take the Covid-19 jab could, as Discovery puts it, “unfortunately” be hit with higher premiums, while those who are vaccinated will benefit from lower premiums.
“Satan @ work!!’ was one of the first responses. Then came a bunch along the lines of Lauren Friedman’s “I knew they would start that!!! So where is our democratic right…with our bodies!!!”
As Andrew Fraser pointed out: “You have freedom of choice. Not freedom of consequences.”
By reducing their risks arising from Covid-19, Discovery Life clients create savings that can then be returned to them and their immediate families.
When I chatted to Discovery Life CEO Riaan van Reenen on Friday morning, he said responses to the company’s decision, from existing clients, had been overwhelmingly positive: 92% positive, 8% negative.
“But those against the Covid-19 vaccine are incredibly vocal about it,” he said.
Ain’t that the truth.
The thing about insurance is that it’s based on risk; risk informed by cold, hard data, not sentiment.
And Discovery Health’s extensive claims data reveal that Covid-19 adds significant risk to the health of life insurance clients across all age groups.
The medical scheme’s data also reveal that people infected with the Delta Covid-19 variants have a 95% lower risk of being hospitalised after having both doses of the Pfizer vaccine, with significant benefits even after a single dose.
And three weeks after taking their first dose of the Pfizer vaccination, people have a 47% lower risk of contracting Covid-19.
“Our research reveals that middle-aged clients have the highest relative increase in mortality risk once becoming infected with Covid-19,” Van Reenen said.
“The mortality risk is more than 10 times higher for people in their mid-40s, so the risks caused by contracting Covid-19 cannot be ignored in any age group.”
Risk due to Covid-19 was two-fold, Van Reenen said — “mortality and morbidity risk”.
“While life cover will always be essential throughout the pandemic, morbidity risks manifest through benefits such as the Income Continuation Benefit and Severe Illness Benefits which are associated with severe cases of Covid-19.
By reducing their risks arising from Covid-19, Discovery Life clients create savings that can then be returned to them and their immediate families.
In short, they could get up to 100% of their first year’s premiums refunded – that’s quite a compelling incentive.
Discovery’s data reveal that vaccinations are also extremely effective in preventing hospitalisations: even if only 8% of a population does not get fully vaccinated, that 8% will experience more hospitalisations than the other 92%.
“This follows from the fact that vaccinated individuals experience a 94% lower real rate of admission than those who are not vaccinated,” he added.
If one company charged non-smokers a lower rate than smokers, those who charged both smokers and non-smokers the same rate would quickly pick up all the smokers, creating a very high risk pool.
— Discovery Life CEO Riaan van Reenen
This vaccination incentive only applies to new policies. So where does that leave existing clients who opt to get vaccinated, thus reducing their risk – how do they benefit?
“Legally, we can’t change the contractual terms of a policy,” Van Reenen said. “But an existing client can take out an additional policy.”
Yes, of course they can.
Those who choose not to be vaccinated will get a fair risk rating, the CEO said: they’ll just be missing out on the added benefits that the vaccinated will get.
“It’s very similar to smoking,” Van Reenen said. “It’s universally accepted that smoking increases a person’s risk, so smokers pay higher premiums.”
That’s when I thought I had stumbled on to something: “But if an existing client stops smoking, their premiums would be lowered in line with their lowered risk,” I said. “So why would existing clients’ premiums drop when they are vaccinated?”
Van Reenen was ready for that. “Actually,” he said, “the physical damage caused by smoking can’t be reversed. And lot of people stop smoking because they have already developed a health condition that puts them in the high risk category.
“So we don’t adjust the premiums of those who quit smoking.”
Covid-19 has elevated everyone’s life insurance risk, Van Reenen said.
“Statistics across the industry reveal that the cost of life cover has doubled in the past year.”
So even the vaccinated, given that the vaccines have proved to be 95%, not 100%, effective, carry more risk than they did pre-Covid.
“That’s why it’s in your interests to keep your existing policy,” Van Reenen said.
“I would imagine most prudent life insurance companies will have to rate risk accordingly.”
And are Discovery Life’s competitors likely to follow suit?
“Well, let me put it like this,” Van Reenen said. “If one company charged non-smokers a lower rate than smokers, those who charged both smokers and non-smokers the same rate would quickly pick up all the smokers, creating a very high risk pool.”
Makes sense.
So why introduce this incentive now as opposed to a few months ago? “Vaccine supply is not longer an issue, the data is now showing very clearly that vaccines are effective and resistance to them has sharply diminished.
So there you have it.
You take your risks, you pay the price.
Smoke, drive a sports car, don’t get the Covid vaccine - there’s nothing stopping you from doing any of those things.
But in doing them, you make yourself more of a risk to insurers, and you’ll pay higher premiums as a result.
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