Will insurers and reinsurers ask for employees’ vaccination profiles at EB renewals?

26 January 2022

With death claims soaring in the wake of the Covid-19 pandemic, employer and fund schemes offering employee benefits (EB) have not escaped unscathed and this is likely to affect pricing at renewal. That’s according to Francois Schaap, Managing Executive, Guardrisk Life.

“Current vaccine data shows that the higher the vaccine rate in a specified group, the lower the risk of serious illness and death and it makes sense that insurers and reinsurers will price accordingly,” said Schaap. With no end in sight for the pandemic, and yet another new variant of Covid identified in South Africa recently, Covid is going to be a challenge that insurers and reinsurers (and employer and fund schemes) are going to grapple with for the foreseeable future.

Schaap predicts that, “in terms of EB risks impacted by Covid, it is not inconceivable that insurers and reinsurers could start asking for employees’ vaccination profiles; and those entities that are able to extract this type of risk mitigating information will reap the benefits because it will be used to determine exposures and pricing, and assess underwriting structures.”

One way that employers can mitigate price increases is to self-insure their EB schemes, which allows for EB programmes to be customized according to prevailing internal and external risks.

“During times of uncertainty and volatility such as Covid-19, self-insurance of benefits through a cell captive structure allows for EB programmes to be structured periodically with different protection covers being offered by professional life reinsurers to lay off some of the client’s high exposures. Then, when normality returns to the market and the client’s circumstances, the self-insurance component can be increased again,” said Schaap.

There is a misconception that self-insurance means that the cell takes 100% of the risk for its own account. The degree of self-insurance depends entirely on the client’s risk appetite, claims’ experience and external market factors, of which Covid is one example. Most employers and funds may start their journey conservatively by taking minimal risk and then increase self-insurance levels as they get comfortable with the concept and as reserves grow.

Reliable updated data lies at the heart of the cell captive model; the more data that is available regarding the risk profile and claims experience, the more accurately the risk can be priced. This determines self-insurance appetite and, when outsourced, often leads to lower rates.


Contact: Melanie Webb | 083 225 7450

About Guardrisk and cell captives
Guardrisk Life became South Africa’s first life cell insurer in 1999, after its sister company, Guardrisk Insurance, pioneered the cell captive concept in the non-life sector in 1993. Today, Guardrisk is South Africa’s largest cell captive insurer, providing tailor-made risk financing and insurance solutions for corporates, small enterprises and municipalities. The option of a third-party insurance offering lets clients sell insurance cover to their customers, boosting their business’ earning potential and building their brand.

Essentially, a cell captive facility gives clients all the benefits of owning their own insurance company without the inherent cost and administrative implications. Cell captives provide underwriting, reinsurance, claims management, investment and accounting functions for clients (cell owners), which keeps costs down and gives clients access to a broad base of insurance skills.

Guardrisk is a subsidiary of Momentum Metropolitan Holdings Limited, one of SA’s largest insurance-based financial services groups. The company is listed on the Johannesburg Stock Exchange in South Africa and on the Namibian Stock Exchange in Namibia.