The Short Term Insurance Industry in South Africa 2024

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.

Key Market Insights

• 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.

Market 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.

Opportunities

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

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.

Market 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.