The Short-Term Insurance Industry in South Africa 2024

Challenges

Degradation of infrastructure that increases severity of damage and losses from insured events. Increasing frequency and severity of natural catastrophes. Poor economic environment making insurance less affordable.

Introduction

The short-term insurance industry has been affected by the pandemic, riots and natural disasters. Experts have predicted that there will be pandemics in future and the severity and frequency of natural disasters will increase. The market share of the top four non-life companies, Santam, Guardrisk, Hollard and Old Mutual, has declined slightly. Santam has maintained its dominant position. New entrants to the industry such as insurtechs are still relatively small and are underwritten by traditional players. The industry faces continued challenges of affordability and risks from natural disasters compounded by insufficiently maintained infrastructure.

Opportunities

COFI Bill may help to simplify regulatory and legal compliance. Leveraging advanced technology to make insurance accessible to the uninsured.

Outlook

Challenges such as constrained household incomes and natural catastrophes, are unlikely to materially improve over the next few years, putting upward pressure on premium pricing. Despite the challenges, the industry has managed to grow gross premiums received and recover profitability. Increasing pressure on household budgets may increase the need for customised solutions. The sector is expected to continue to make use of technological advancements to diversify revenues, lower costs and remain competitive. The increased use of technology could expose companies to cyberattacks and ransomware.

Report Coverage

This report on the short-term insurance industry includes information on the size of the industry, number of insurers, claims, industry performance measures and notable players. It provides information on the increase in climate-related risks, natural disasters and other major risks, and new technology and innovation, including the rise of insurtech. There are profiles of 52 companies including well-known players such as Santam, Old Mutual, Hollard and OUTsurance, state-owned insurers such as South African Special Risk Insurance Association, Eskom’s Escap and Land Bank Insurance Company, and tech-driven companies such as Pineapple and Naked.

Trends

After a decline in net profit before tax and dividends between 2019 and 2021, there has been a recovery to 2023. Concentration levels have remained steady with the top 5 companies making up around 44% of total gross written premiums. Large traditional insurance companies have invested in insurtech companies that have entered the industry. Net written premiums have declined as reinsurance costs have increased due to the growing severity and frequency of natural disasters. South Africa continues to be the largest insurance market on the continent. The number of companies has declined slightly. Turnover in non-life insurance has grown at a CAGR of 10. 3% between 2017 and 2022.