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Sunday, April 1, 2007
Big move

From this month life companies will no longer apply existing HIV/Aids exclusions to life and disability policies. This a general agreement ratified by the Life Offices’ Association (LOA).

Gerhard Joubert, CEO of the LOA, says even though the best practice recommendation is not binding, all LOA member offices have agreed to waive the exclusions. He explains the exclusion clauses will be waived for all types of life and disability cover that pay lump sum benefits, including group life, credit life and funeral cover.
The waiving of exclusions does not apply to:
• Income protector policies and hospital cash plans;
• Policies requiring regular HIV retesting; or,
• Cases where policyholders committed material non-disclosure. This is particularly relevant to low premium policies like funeral policies that often rely on disclosure rather than HIV testing.

Fatima Hassan, senior attorney with the Aids Law Project (ALP), believed the decision was “one of the biggest moves the life industry has ever made.”
She believed that uncertainty about this disease resulted in the industry imposing an outdated model on people living with HIV/Aids. “For years the ALP has been representing beneficiaries who did not receive any payout because the policyholders died after contracting the virus although they were HIV negative when they took out their policies.”
Mr Joubert says after doing away with HIV/Aids exclusion clauses for policies issued after 1st January 2005, LOA member offices also scrapped HIV/Aids specific waiting periods for new business as from 1st June 2006.”
The LOA regulates HIV testing for insurance purposes through the LOA HIV Testing Protocol, which sets out the methodology to be used and also addresses aspects such as personal pre- and post-test counselling.
Dr Pieter Coetzer, convenor of the LOA’s Medical and Underwriting Committee, says over the past decade vast improvements have taken place in the treatment of HIV/Aids. “Initially, there was no treatment so the disease was uninsurable. Now, provided there is full compliance with ART (anti-retroviral treatment) prescriptions, HIV/Aids is considered a chronic treatable disease like diabetes and other class of diseases and therefore should be insurable.”
He says although most existing cover options remain fairly expensive, 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. The history of diabetes is a good example of how cover becomes available and cheaper as sustainable treatment options are introduced and insurers gain a better understanding of a disease.
“Before the 1950s diabetes was not treatable and therefore also not insurable. Thereafter treatment options became available, but because initial outcomes remained uncertain insurance was very expensive. As treatment and outcomes improved, insurance for diabetics has become very affordable for those who comply with treatment regimes.”

Copyright © Insurance Times and Investments® Vol:20.3 1st April, 2007
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