There has been a lot of noise about the so-called ”victory over insurance companies” for people living with HIV/Aids. The new approach means that a family member or any other nominated beneficiary will be paid out the insurance money when an existing policyholder dies of an Aids-related illness.
Families will no longer have to borrow money to bury their loved ones, even though they had funeral cover. This comes a bit too late for my aunt, who struggled to pay for her husband’s funeral four years ago because an insurance company refused to pay out his funeral policy. They claimed that because he had died from pneumonia, an Aids-related illness, his benefits were forfeited. There are hundreds more families who have been through similar experiences.
While the new development may bring relief for many people, it is not yet time to break out the champagne. You still have to have an HIV test before you get life cover. In some cases, this will be the first time you learn your HIV status. If you test positive, you will either be excluded from insurance cover or be expected to pay a lot more for the same cover.
In other words, the ”milestone agreement” only protects people who test positive after they have taken out insurance. Many people who know their status but do not yet have life cover remain excluded by life insurers unless they meet ”certain requirements”. Where is the cause for celebration for people already living with HIV/Aids? The champagne must remain on ice until all those who need insurance cover can get it at an affordable premium. At the moment it is simply too expensive to live with HIV/Aids and take steps to provide for your dependants after your death.
After this announcement was made, it was downplayed by some members of the Life Offices’ Association (LOA), with companies like Old Mutual and Sanlam quoted in the media as saying that the decision will not have a major impact on them. They claimed that people with Aids formed a small minority of their policyholders, and that they had in any event already changed their policies ”to accommodate people living with HIV”. If people living with HIV/Aids are indeed such a small minority, why is it then so difficult to provide them with affordable cover?
Insurance companies claim to have insurance packages that accommodate people who already know their status. A quotation from one company says a person who has a gross income of about R20 000 a month qualifies for R500 000 life cover. Subscribers are expected to pay about R2 000 per month for that cover for the rest of their lives. That is three to four times the amount a person without HIV would pay for the same life cover. Not many people will be able to afford such a high amount.
In simple terms, insurance companies see people living with HIV/Aids as high risk. But a recent study indicates that people in Denmark living with HIV can expect, on average, to live for about 35 years after infection — provided they have access to good-quality medical care, including antiretroviral treatment.
Studies from elsewhere suggest comparable life expectancy. The very high premiums charged by insurance companies suggest that they would like to recoup their money before we die, rather than provide us with fair cover.
Most insurance companies use selective information to suit their arguments. According to the LOA, there is not enough data on people who are on treatment to speed up the process of creating cheaper packages for people with HIV. Given that insurance companies seem reluctant to find creative ways to address the needs of people living with HIV/Aids, perhaps it is time for government to intervene.
Medical schemes now charge the same premium for all those who choose a particular benefit option, regardless of HIV or health status. This was not the case before the new Medical Schemes Act of 1998 was promulgated.
In the same way, the state needs to regulate insurance companies so that the risk associated with covering the lives of people living with HIV/Aids is shared equitably among all those who want life cover.
The state has a duty to do this as life cover is a form of private social security, and the state has positive obligations in terms of Section 27 of the Constitution to ensure that people have access to social security.
South Africa has a high rate of HIV infection and the solution is that we must recognise this reality. It is time life insurers start thinking outside their pockets for the greater benefit of society. If the insurance industry does not respond appropriately, it will only have itself to blame when it is forced to do so.
Pholokgolo Ramothwala is a field researcher at the Aids Law Project