Sanlam Limited · JSE:SLM
Sanlam — Conference Presentation (2019)
25 slides from Sanlam's conference presentation, 2019
Slide 1: Climate change in the Group Risk Industry
Climate change in the Group Risk Industry by Michele Jennings CEO: Group Risk Sanlam Employee Benefits
Slide 2: Slide 2
Slide 3: Top advice themes re group risk
TOP ADVICE THEMES RE GROUP RISK Increase Increases in Introduction funeral cover insurance of Severe rates Illness Benefits 52% indicated that their clients experienced large rate increases over the past 3 years 19% have experienced a trend towards more claims being declined
Slide 4: Increases > 50% accepted
Increases > 50% accepted All Insurers All Stakeholders
Slide 5: Group disability insurance about much more than the premium price, expert warns
Group disability insurance about much more than the premium price, expert warns fin24 Group disability insurance in South Africa is highly commoditised. As such, purchasing decisions are often largely driven by price. It is important to remember, however. that while offering group disability insuran
Slide 6: It's a new dawn in group disability insurance
It’s a new dawn in group disability insurance by MoneyMarketing on June 26, 2018 in Insurance, long-term insurance, News The time has come to change perspectives around group sustainability of this key employee benefit and unlocks the value of healthy, productive employees. This was the message from
Slide 7: Body blow to group disability benefits
¢ Sunday Times Business Cimes The Choice is Yours... I = ae Ge Co Be @ MONEY Body blow to group. disability benefits Employers cut back on benefits you may need should you fall ill C
Slide 8: Deconstruction
DECONSTRUCTION Pricing Behavior Economic Stagnation Change to PHI Tax Treatment Member Behavior Policyholder Protection Rules National Health in Decline
Slide 9: Race to the bottom
RACE TO THE BOTTOM Competitive Market Lower Premiums & Higher FCL Pressure to ‘buy to build’ or ‘buy to retain’ Experience Turned Unsustainable Rates
Slide 10: Change to taxation of disability income replacement (PHI)
CHANGE TO TAXATION OF DISABILITY INCOME REPLACEMENT (PHI) From 1 March 2015 Tax Disability Income … PHI Benefits not taxable Salary after tax Increase in benefit received Increased incentive to claim Reduced incentive to rehabilitate
Slide 11: Net replacement ratio vs recoveries
Menninger Centre for Applied Behavioural Sciences Net replacement ratio vs recoveries (return to work after 2 years) Net replacement Returned to work ratio ≤ 25% 84% 25% – 50% 70% 50% – 75% 52% 75% – 100% 38% 100% – 150% 26% ≥ 150% 6%
Slide 12: Net replacement ratio vs recoveries
Menninger Centre for Applied Behavioural Sciences Net replacement ratio vs recoveries (return to work after 2 years) Net replacement Returned to work ratio ≤ 25% 84% 25% – 50% 70% 50% – 75% 52% 75% – 100% 38% 100% – 150% 26% ≥ 150% 6%
Slide 13: Survey of disability benefit practices
Question Yes No Consider level of pre-existing impairment/disability before joining the group scheme to determine benefit payable 38% 62% Link disability income benefits to the % of the job description that the employee cannot perform 22% 78% Considered reducing the disability income benefits due to
Slide 14: Survey of disability benefit practices
Question Yes No Consider level of pre-existing impairment/disability before joining the group scheme to determine benefit payable 38% 62% Link disability income benefits to the % of the job description that the employee cannot perform 22% 78% Considered reducing the disability income benefits due to
Slide 15: Policyholder protection rules
POLICYHOLDER PROTECTION RULES Policyholder Definition includes Members Increased Communication Increased costs Increased awareness and member expectations Increased claims = Increased premiums
Slide 16: Economic stagnation
ECONOMIC STAGNATION Consumer confidence index and unemployment rate per quarter 30.00 30 25.00 25 20.00 15.00 Uneqmployment (%) 20 10.00 CCI 5.00 15 - 10 (5.00) (10.00) 5 (15.00) (20.00) 0 Quarter CCI Rolling 5yr average CCI Unemployment Rolling 5yr average unemployment
Slide 17: Economic stagnation
ECONOMIC STAGNATION Employers under pressure Uncertain vs Certain Income Aging working population Economy link to PHI claims
Slide 18: Member behaviour
MEMBER BEHAVIOUR Financial stress Longer working hours Single parenting Unhealthiest nation in the world Excessive alcohol consumption Lawlessness
Slide 19: Impacts everybody
IMPACTS EVERYBODY Cancer , psychiatric and neurological cases increase as income bands increases Musculoskeletal higher in lower income bands SwissRe Cause of Claims 2018
Slide 20: National health in decline
NATIONAL HEALTH IN DECLINE Indigo Wellbeing Index - Unhealthiest in the world Chronic deterioration in public health facilities Private healthcare unaffordable for most Critical shortage of medical specialists Effective treatment is a scarce commodity
Slide 21: International experience USA & AUS
INTERNATIONAL EXPERIENCE USA & AUS Insurers withdrew from the market Premium increases Benefit restrictions Limitations on causes and occupations Investment & focus on claims management
Slide 22: International experience USA & AUS
INTERNATIONAL EXPERIENCE USA & AUS Insurers withdrew from the market Premium increases Benefit restrictions Limitations on causes and occupations Investment & focus on claims management
Slide 23: Moving ahead cautiously: Government
MOVING AHEAD CAUTIOUSLY Government Economic growth Public Healthcare Access to quality healthcare Medical Specialists
Slide 24: Moving ahead cautiously: Employers
MOVING AHEAD CAUTIOUSLY Employers Employee wellness Early intervention Occupational Health Clinics Integration of Healthcare & Insurance Claims management
Slide 25: Moving ahead cautiously: Insurers
MOVING AHEAD CAUTIOUSLY Insurers Sustainable pricing Selective risks Stricter application of policy conditions Product refinement Member support Member engagement