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Gulf insurers paid out only $80m in Covid death claims

Covid-19 appointment in Kabul Rumi Consultancy via Reuters Connect
Insurers says the long-term implications of Covid-19 cannot be ruled out
  • Covid-19 third-highest reason for life insurance claims in Middle East
  • Life insurance penetration in GCC is 0.1%, versus 3% globally
  • Expats and mandatory insurance in some states may increase takeup

Gulf insurance firms paid out only around $80 million in Covid-19 death-related claims over the last three years, according to AGBI calculations based on industry data.

The low amount in the Gulf reflects the low uptake of life insurance policies in the region, where the average life insurance penetration is only 0.1 percent compared with 3 percent globally.

Zurich Middle East, the subsidiary of the Swiss insurer which covers the UAE, Qatar and Bahrain, paid out a total of $160 million in life insurance claims between January 2020 and December 2022.

Among these, Covid-19 was the third highest cause of death after cancer and heart problems. It accounted for 22 percent of death claims.

Life cover accounted for 52 percent of Zurich’s death claims and it said it has a market share of 23 percent in the Gulf. Therefore, the cost of Covid-19 death claims in the Middle East is estimated at $80 million over the last three years.

The World Health Organization reports there have been 6,927,378 Covid-related deaths up to May 8. Around 21,420 of these were in the GCC.

Wilson Varghese, general manager at Zurich Middle East, said life insurance claims related to Covid-19 peaked in 2021 and were now petering out.

“We already saw that impact dissipating quite significantly,” he said. “Our current view would be that we'd see that normalcy returning.”

In terms of other death illness claims, heart conditions dominated for men, and cancer was the primary fatal ailment for women.

While some global observers have claimed that Covid-19 may have caused other health problems to go undetected, as residents stayed home during the pandemic, Varghese said it was too early to tell from the current data what the impact will be.

However S Venkatachalam, regional CEO of insurance provider NLGIC Group, said post-Covid syndrome was a reality for the sector.

“Though it is now no longer a pandemic, its long-term implications cannot be ruled out," he said.

"Either someone had severe Covid and recovered fully or it could have affected the organs, or someone already had an underlying illness and got Covid. All these can have long-term implications.”

Venkatachalam believes that while Covid death claims have decreased, the medical costs may continue for a longer period, especially as during the pandemic elective treatments and surgeries were put on hold and are now being rescheduled, leading to higher claims.

Research by found that the Middle East life insurance market had total gross written premiums worth $16.49 billion in 2022, representing a compound annual growth rate of 3.3 percent over the last five years.

Despite this growth, the claims figures from Zurich show that the uptake of life insurance in the region is still very low. In comparison, data from the American Council of Life Insurers shows that payouts in the US in 2020 alone were $90.4 billion.

The global average penetration rate – calculated as total value of premiums as a percentage of GDP – was around three percent in 2021, but it was much lower in the GCC.

It ranged from 0.5 percent in the UAE to 0.2 percent in Oman and 0.1 in Kuwait and Saudi Arabia, while in Qatar it was even lower and closer to almost zero percent.

Expat influence

Varghese said Covid-19 had led to increased interest in life insurance coverage in the region, but he also believed the fact expats were staying longer had played a part.

The 2022 edition of the 360° Global Wellbeing Survey, compiled by health services firm Cigna, found that the average length expats stay in the UAE is about four years and five months. The global average is three years and three months.

“From a life insurance perspective, we see positive growth,” he said. “There certainly is a tendency for people to look at things like insurance when they're putting down roots in a country longer term.”

Venkatachalam believed this trend will benefit the GCC insurance sector as a whole and he had a positive outlook for the remainder of 2023.

“The introduction of mandatory health insurance in Oman, Bahrain and Kuwait is expected to contribute to this growth, along with an overall increase in awareness about health and rising medical treatment costs,” he said.

Life insurance claims in the Middle East

  • 25 percent of claims submitted were within three years of policy inception
  • 54 years old is the average age for a life cover claim
  • 27 years old is the youngest age for a life cover claim
  • 80 years old is the oldest age for a life cover claim
  • 2 years old is the youngest age of a child critical illness claimant
  • $200,000 was the average amount claimed
  • 35 percent of approved customers who have a pre-existing condition suffer from diabetes, followed by obesity (25 percent), heart disease (9 percent) and cancer (5 percent)

Source: Zurich Middle East

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