CAPE TOWN, Dec 22, 2006 (AFP) - As AIDS continues to reap a grim toll among South Africans in their prime, life insurers are being forced to re-evaluate the products and services they offer.
"HIV is not a death sentence anymore," said David Patient, among the first to take out life cover with new company AllLife which caters exclusively for HIV-positive people traditionally shunned by long-term insurers.
"Thanks to improved access to ART (anti-retroviral treatment), HIV today is a manageable disease like diabetes. HIV-positive people who adhere to their drug regimen should have a life expectancy of 25 to 30 years."
Few companies provided life cover to people with HIV, and those that did charge excessive premiums, said Patient.
This meant thousands could not get a home loan, provide financially for loved ones after their death or borrow money to start a business.
AllLife co-founder and managing director Ross Beerman said the time has come for a change in the long-term insurance industry.
"Our clients are investing in their future -- buying a house, starting a business, furthering their studies," he told AFP.
"People are accessing financial services products they were not able to before. They are investing in themselves."
South Africa has the world's second heaviest caseload of HIV/AIDS, with about 5.5 million in a population of 47 million infected.
Average life expectancy in the country has dropped 13 years since 1990 to 51.
The handful of established South African insurers that offer full life cover to HIV-positive people charged rates up to nine times those of standard policies, but pay out regardless of whether the client was on ARV treatment.
Now new products offered by companies like AllLife and AltRisk, a subsidiary of Hollard, charge rates only around four times higher than standard life cover.
In return however, the policies require adherence to an appropriate treatment regime.
"Over the past decade, vast improvements have taken place in the treatment of HIV/AIDS," said the Life Offices' Association of South Africa, a grouping of long-term insurance companies.
"Provided there is full compliance with ART prescriptions it is now considered a chronic treatable disease," it said in a written response to queries.
"Therefore, some life insurers are in the process of developing new generation products that will offer competitive premiums for HIV positive people on an ART programme."
Insurer Sanlam is one of those not yet offering comprehensive life cover.
"It is about finding ... the correct business case to give the best return to your shareholders," product actuary Petrie Marx said.
Sanlam has only one product for HIV positive clients -- an endowment policy with limited life cover. The policy runs to a maximum of 10 years and coverage is limited to 100,000 rand (about 14,000 dollars, nearly 11,000 euros).
The monthly premiums were "quite expensive", said Marx, adding the company would consider introducing new generation products in future.
"It is a market segment we want to service with the best product we can put on the table."
AllLife was launched a year ago, targeting five percent of a potential client pool of about two million HIV-positive South African residents earning a minimum monthly salary of 2,500 rand.
Clients have to commit to treatment once their CD4 count (a measurement of the strength of the immune system) falls below 200, with the company monitoring and encouraging adherence. Defaulters have their cover slashed.
"Unlike traditional insurance companies, your history is almost irrelevant to us. It is how you are going to behave in the future that is important. We tell you exactly what you must do to live a long life," said Beerman.
The company's client base, not yet 1000, include anyone from domestic workers to directors of companies. Most belong to medical aid schemes that pay for their anti-retroviral treatment.
Cover can be taken out for a maximum of three million rand, 450,000 rand being the average policy size. Monthly premiums average 300 rand per 100,000 rand of cover, and can go up to 700 rand for high risk clients.
"Up to four or five years ago, there was a large amount of truth in the belief that if you were HIV positive you were simply going to die," said Patient.
"It is not the reality today. People on ARTs can live a long life and there is no reason why somebody like me can't get a 20-year mortgage on a property."
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