South Africa’s life insurance market continue to flourish

3 Mar 2016

The life insurance sector in South Africa accounts for almost 80% of premiums in the country’s insurance market. As expected for a country with one of the largest and most developed economies in Africa, its life insurance market is penetrated much higher than other countries in the region, increasing from 10% to 11.4% during 2010-2014.

According to the Timetric report, although the life insurance sector grew at a CAGR of 12.1% over the last four years, the lower economic growth that is expected over the forecast period (2014-2019) will mean that the life insurance sector won't expand as quickly as in previous years. However, more extensive coverage of critical illnesses and growing awareness of and investment into microinsurance will ensure growth will continue at a healthy annual rate of 7.4%.

Life insurers enter the HIV and Diabetes insurance space

Insurers in South Africa have begun to expand their coverage of life and disability insurance for individuals with chronic diseases such as HIV/AIDS and diabetes which are both very prevalent amongst the South African population. In cases of diabetes and other chronic conditions, life cover is either for a specific period, or is unlimited. These policies mature in the event of death due to the ailment, or accidental death, with cover for chronic diseases going up to ZAR5.0 million (US$413,781.2). These voluntary policies are expected to boost premium volumes in the life segment, and increase confidence and insurance awareness.

Microinsurance is gaining traction among life insurers

To spread the benefits and availability of life insurance to a larger number of South Africans - particularly the large proportion of the population on very low incomes - the government implemented a microinsurance regulatory framework at the beginning of 2016. This framework is expected to lead to an increase in new entrants to the market as there is now a stable, established regime in place.

As a result of greater support and awareness of microinsurance coupled with the higher levels of insurance cover against the risk of contracting HIV/AIDS or diabetes; the new business direct written premiums are expected to grow from ZAR130.2 billion in 2016 to ZAR 143.3billion (US$1.3 billion) in 2019 at a CAGR of 3.2%.

All information is based on the Timetric report: 'Life Insurance in South Africa, Key Trends and Opportunities to 2019'.

Source: Company Press Release