Discovery to require all employees to be vaccinated from January

Discovery says it “intends to move to a mandatory vaccination policy” for its employees, effective 1 January 2022. It says its offices and sites will become “vaccination-only zones”. The country’s largest health insurer says this decision is because of the “clear moral and social obligation, as informed by our core purpose to make people healthier and to enhance and protect their lives; and by our values, particularly, acting as a force for social good; and supported by a legal obligation to protect and safeguard all employees from all potential risks”.

It further justifies this move by saying that Covid-19 is an “unprecedented health tragedy; with the fourth wave posing further risk”. There have been 220 000 excess deaths in South Africa since May 2020, with over 14 000 client deaths and 20 employee deaths. It says in excess of 30 000 lives can be saved if more than 60% of the population is vaccinated over the coming months. It highlights that the “issue is no longer one of limited access to vaccines, but one of hesitancy”.

Compared to those who are unvaccinated, those who are have a 50%-80% lower chance of infection, a 70%-85% lower risk of hospitalisation and 90%-95% lower chance of death. It says fewer than one in 20 of its members “showed any signs of side effects”.

The group has helped vaccinate over 890 000 members of Discovery Health administered schemes and 300 000 individuals outside of this. Across its nine Discovery vaccination sites, it has deployed 1000 staff at a cost of R42 million. It expects this programme to cost R200 million in total.

It says 51.2% of total lives in the Discovery Health business are at least partially vaccinated, with this number increasing to 76.2% for those members over 60. Nearly two-thirds (64.4%) of those members over 60 are fully vaccinated. In the life business (both individual and group), over 62% of members over 60 are fully vaccinated. A similar number (61.8%) are at least partially vaccinated across the entire individual life book, while in the group life book this number is 51.1%.

It says 65% of its clients across its base aged 50 to 59 are partially or fully vaccinated (54% for those aged 35 to 49).

Discovery says it is aiming to have over 80% of its members over 60 vaccinated by the end of this month, and 80% of its whole book by the end of the year. It is aiming for a 100% take-up of the (Pfizer) second dose. It has sent over 19 million emails and SMSs and made over 101 000 outbound calls to members.

Of concern is the “slow take up in younger cohorts”, with the 35- to 49-year-old group lagging the uptake seen in the 50-59 and 60+ cohorts.

Source: Discovery annual results presentation

Discovery says the pandemic has been 5 times worse in South Africa than in the UK. It says “given SA’s younger age profile, expect deaths to be 64% lower, but when adjusting for population size (12% smaller) the data indicates epidemic currently 5.5x worse than UK”.

It has provided and will continue to provide incentives in its products for members to vaccinate. It says “Discovery Life recently launched market-first product features recognising the material risk reduction through vaccinations, assisting and rewarding policyholders to get vaccinated”. Vaccinated Discovery Life members will receive “preferred premiums”.

Discovery says “given the expected mortality claims from the run-off of the third COVID-19 wave beyond the reporting year and expected claims from an anticipated fourth wave, an additional provision for the retail business” was raised. The provision was increased in Discovery Life from R2.16 billion as at June 2020 to R2.693 billion at June 2021. Provisions at Vitality Life in the UK were “more than sufficient due to the UK’s effective and early vaccine campaign”. It has released much of this provision (£5.4 million from £28.8 million). Discovery Life saw a R2.5 billion earnings impact during the year to end-June, because of Covid-19.

Year to 30 June 2021	Operating profit	Change vs FY2020
Discovery Health	R3.423 billion	7%
Discovery Life	R1.341 billion	-55%
Discovery Invest	R1.084 billion	31%
Discovery Insure	R250 million	2%
Discovery Bank	(R1.094 billion)	-7%
Vitality Health (UK)	R953 million	15%
Vitality Life (UK)	R644 million	337%
Vitality Group	R417 million	35%
Ping An Health	R411 million	126%
Other new businesses	(R978 million)	-7%

Normalised operating profit was up 7% in the year to R6.5 billion, but normalised headline earnings fell 9% to R3.4 billion. New business across the group grew 11% to R22.6 billion. Excluding the take on of new closed schemes and gross revenue at Vitality, new business was up 9%. It did not declare a dividend for the year.

It says that “due to the combined effect of the future growth prospects of Ping An Health Insurance (PAH) and its expanding product mix, with the evolving prudential regulatory requirements in China, PAH requires additional capital of RMB2.6 billion (approximately R6 billion). Discovery’s contribution, amounting to approximately R1.5 billion, will be required in the near future”.

It says it “has previously responded to fund such growth opportunities through equity rather than debt. If it were to raise equity capital, Discovery would expect to follow a similar strategy as it did in the case of the final buy-out of the FNB credit card book in 2018, for which it raised a specific quantum, ring-fenced for those purposes, to ensure that the discipline of capital allocation within the capital plan remains intact”.

It maintains the “prospects for private healthcare and private health insurance in China provide an excellent long-term opportunity, supported by recent government policies emphasising the development of healthcare and private health insurance”.

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