The Life Offices Associations’ Paul Truyens responds to Cheryl Carolus’ criticisms of the industry’s policy on HIV testing
THE insurance industry is very aware of the whole issue surrounding Aids and the plight of HIV positive people. In order to put the industry’s dilemma into perspective though, it is necessary to go back to the basic premises on which insurance is based.
The very basis of insurance is the pooling of risks and, except in certain instances such as the old third party motor insurance scheme, all individual insurance is transacted as a voluntary agreement between the proposer for insurance and the insurance company, the latter being, in effect, the agent for the rest of the existing policyholders. Cheryl Carolus accepts this premise. She did not say she was coerced to buy life assurance from the bank. She also appreciates “that the insurance industry needs to protect its viability if it is going to continue providing services” to as many South Africans as possible.
The service that life assurance companies provide is the option for a person to ask the life office to take over a large uncertain future cost, such as support for dependants on the death of a breadwinner, in exchange for a very much smaller certain cost, namely, the premiums that the insurance company charges.
Should the individual know with some certainty or even with a good deal of probability that he is more likely to die than the average applicant, then he can be expected to buy as much life assurance as he can afford, since he will in effect be subsidised by the rest of the policyholders. On the other hand, people who know that they have a very low likelihood of premature death would tend to only insure themselves if they felt that the premiums were low enough, otherwise they would do without insurance and carry the risk
So it is imperative for the continued survival of the life assurance system that when companies underwrite applicants for life assurance, whether to cover home loans or for other purposes, they ensure that appropriate premiums are charged for the likelihood of
Since a person who is HIV positive is some forty to fifty times more likely to die than an HIV negative individual, testing for infection with the virus is an absolute necessity for the above purpose. Not to do so would be discriminatory in the extreme to all the policy applicants who are not infected. There is indeed a strong case for the existing policyholders of a life assurance company to sue that company if it did not screen new applicants for HIV, since that would clearly be negligent and a breach of the implicit undertaking they had with the company when they were underwritten and accepted.
Carolus rightly questions why a person with HIV cannot be offered life assurance with a clause excluding all causes of death related to the infection. This has been available in the past, and some companies still offer this as an alternative to going for an HIV test. However, the problem with this is that unless one knows of the individual’s HIV status at the time of death, it is difficult to establish the true cause of death. People do not die of Aids, but from opportunistic infections like TB and diarrhoea.
>From the policyholder’s point of view, an exclusion clause is also untenable. The chance that he will die other than from his infection is very remote, therefore as he becomes Aids sick and realises that the policy will not pay out, he will be increasingly tempted to hide his HIV status from the insurance company or even to contemplate a violent death such as suicide or an automobile accident in order to defraud the life office and its policyholders.
We do not like the fact that HIV is the killer that it is. The industry is not happy that an ever-increasing number of people will not be able to obtain life assurance. We hope that, as was the case with diabetes long ago, we will learn more about the progression route from HIV infection to death in the hope that we will be able to offer some level of life cover to certain HIV positive individuals, albeit at a higher
We do not yet have sufficient data on which to base such decisions. But if we are ever to reach that goal, the life assurance industry must continue to thrive and provide its valuable services to the rest of society. And to do this, policyholders must not be burdened with an unfair proportion of the financial burden of dealing with the trauma of people discovering that they are HIV positive, simply because an HIV test is a normal underwriting requirement for life assurance. Nobody has ever expected the life industry to pay for the intense counselling required if a person discovers that he has cancer as a result of a routine medical examination called for by the life company.
Nevertheless, we do recognise the current lack of publicly-sponsored counselling resources available and have agreed that one counselling session for HIV positive applicants will be paid for by the life assurance company. We are also hoping to come to an arrangement with the professional counselling bodies so that they can become part of the counselling process and we can help with their funding in return.
I agree with Carolus that people with HIV are responsible and productive members of our society. But all the recognition in the world of this fact cannot negate the awful consequence of the virus on their life expectancy and this has to be recognised by the life assurance industry.
Paul Truyens is Chief Actuary of The Southern Life Association Limited and convenor of the Aids Study Standing Committee of the Life Officer’s Association of Southern Africa
# Letter from Cheryl Carolus
I SHOULD inform you that I have received thirty eight letters in response to the article which appeared in your newspaper last week. It has sparked off a whole debate about how we respond to the Aids pandemic.
South Africans clearly need a platform to debate the issues. I hope that the Mail & Guardian will make itself available!
I must however indicate that the headlines which you gave to my story were a bit misleading and sensationalist. It caused unnecessary anxiety to a number of people who love me very much and who got the impression that I was dying of Aids. It is a pity that even a newspaper like the Mail & Guardian cannot resist a sensational headline when dealing with Aids and HIV.
I have had a very constructive discussion with senior representatives of Old Mutual last Thursday. We will continue to differ about a number of aspects, but I found the discussion very useful. There was a willingness to listen and the company had by then already initiated processes to critically evaluate their practices.
They also indicated their current financial support for public sector and NGO initiatives around Aids and HIV which they have chosen not to publicise. One must obviously ask whether what they are doing is adequate or not, but there is some acceptance of the need for the private sector to work in partnership with the public sector in dealing with the pandemic.
A lot of work has been done to keep abreast with issues which confront us as human beings, as business as government etc. The ball is in our court now. Let us engage constructively.
It will also be useful and fair to hear the views of the industry. – Cheryl Carolus