While this is the second year that the majority of the world has had to deal with the impact of the COVID-19 pandemic, we not too long ago completed the first round of audits of insurance companies. The COVID-19 pandemic has affected insurance companies in many ways. In addition to customer, people and operational considerations, volatile markets have affected investment portfolios on balance sheets, all of which unsurprisingly has had a tax impact. The pandemic has resulted in the loss of lives globally over the past eighteen months.

Many individuals lost their jobs and many businesses have suffered losses, with some even closing down. As a result, many insurance companies throughout South Africa had to settle claims ranging from death and disability to business interruption. The impact of this can be seen in the financial results released by many insurance companies. In general, policyholder behaviour has arguably also changed as a result of COVID-19. For instance, cash flow or financial constraints may force the early surrender of policies or even increase the probability of insurance fraud being committed.

Furthermore, lockdown regulations would have stifled new business sales thereby affecting the premium income of insurance companies. At the start of the pandemic we speculated what themes and trends would emerge for the insurance industry. We set out below highlights of our key observations for life insurance companies.