Looking back on 20 grinding months of battling COVID-19, it is clear the pandemic has dramatically, and in some cases irrevocably, reshaped the claims landscape for life and health insurers.
From July to September 2021, RGA surveyed 61 major insurers around the world to find what 2020 COVID-19 claims experience may signal for the future. The results reveal a compelling story of swift industrywide adaptation, remarkable achievement – and continuing strain.
About 70% of all respondents reported additional COVID-19 claims in 2020, with more than one-third describing the volume increase as significant. While claims were not distributed uniformly across product lines, the vast majority involved mortality benefits, with health and disability income products accounting for nearly all the rest.
Yet the results also showed short-term – not long-term – effects. Overall, claims acceptance rates climbed through the period, largely due to COVID-19 mortality claims. However, permanent disability, critical illness, and long-term care claims were minimal, and overall increases in health claims appeared only in certain countries. The reasons for this are complex and depend on the individual market structure and the balance between private and state provision of health care services. In some cases, the state commandeered private healthcare facilities and the physicians who were providing care. This led to a reduction in the capacity for private healthcare to provide elective surgeries and other medical services. However, in other, largely insurance-based markets, COVID-19 patients added to the total burden for health care providers.
Overall, claims acceptance rates climbed through the period, largely due to COVID-19 mortality claims. However, permanent disability, critical illness, and long-term care claims were minimal.
Insurers responded to the pressures of this global crisis by amending and digitizing claims processes in a bid to achieve greater efficiencies and offset the disruptions caused by lockdowns and other public health measures. To better manage these disruptions, about one-third of survey respondents extended review periods for in-payment disability income claims and increased the use of tele-claims. About 13% also created dedicated COVID-19 claims teams, and 18% suspended or avoided the use of independent medical and forensic investigations to conserve resources.
Slightly fewer than half of all respondents reduced evidence requirements, waiving some standard documentation, accepting customer-supplied evidence, accepting the results of tele-health consultations, and making other adjustments. While the vast majority of respondents viewed these accommodations as temporary, 14% indicated the changes were permanent.
Longer Lasting Effects
The stresses of the pandemic may have exacerbated longer lasting resourcing challenges. Even with reduced claims requirements, the average end-to-end time for claims rose from 34 days pre-pandemic to 43 days. Survey results suggest a variety of mitigating factors:
- Growth in average durations of disability income benefit claims proved particularly notable and could be linked to a key process change and the extension of in-payment review periods. This trend was exacerbated by the difficulty many consumers faced in visiting healthcare professionals.
- Adjustments to procedures and evidence collection to reduce administration and processing did not appear to be sufficient to outweigh the burden of obtaining and reviewing evidence.
When asked to name key concerns for claims during the pandemic, most insurers cited increased claims volumes and rising case backlogs that overwhelmed internal resources. All respondents expressed interest in introducing fully digital claims services, including claims rules engines, in response to these challenges.
Another negative impact of the pandemic includes long COVID claims and increased disability incidence and duration, prompting additional concern. Almost half of all respondents received long COVID claims during the pandemic, with respiratory impairment, fatigue and deteriorating mental health impacts reported most frequently.
Insurers also are monitoring more indirect effects from the pandemic. As top future risks, most respondents rated mental health claims and the long-term mortality risk of delayed preventative care and medical interventions due to COVID-19.
Despite the difficulties over the last two years, insurers also expressed confidence in the resilience of their staffs, in addition to the importance of innovation. Insurance is designed for protection in a time of crisis, and though insurers participating in RGA’s survey did not escape COVID-19 unscathed, most believed they were well prepared for the pandemic and expressed even greater confidence in their abilities to manage claims for a future health crisis.