The Life Insurance Industry in South Africa 2024

Challenges

Distribution challenges, including limited access to insurance products in rural areas, underdeveloped distribution networks, and competition from alternative distribution channels. Affordability remains a barrier to insurance uptake. Cybersecurity and data privacy concerns. Fraudulent activities and claims, misrepresentation by policyholders and misconduct and unethical behaviour. High unemployment, income inequality and economic challenges and uncertainty contribute to limited access and low penetration of life insurance products. Market saturation and competition. Outdated legacy systems and inefficient processes requiring adaption to modern technology. Regulatory compliance and governance. Social and demographic changes. Transparency, disclosure of terms and conditions, consumer education and handling of customer complaints. Volatility in financial markets, economic uncertainty and regulatory changes.

Introduction

Despite a two-year disruption caused by the pandemic and volatile global markets, the life insurance industry recorded significant improvements in 2023 and it remains robust, solvent and liquid. The large life insurers have substantial interests across the financial landscape and large holdings in various industrial and commercial entities. South Africa has one of the most competitive insurance markets globally. The role of life insurance in wealth preservation and intergenerational wealth transfer has become increasingly significant. Gross written premiums increased in 2023 and are expected to grow in the near term. Key trends include digital transformation, customer-centric approaches, regulatory compliance, and implementation of proactive risk mitigation strategies. Africa is widely regarded as a key long-term growth market for insurance, providing opportunities for local life insurance companies.

Opportunities

Affinity partnerships with organisations to reach specific customer segments. Collaboration with insurtechs and startups. Demand for innovative, flexible and customisable products. Demand for retirement income solutions and coverage related to aging and healthcare costs. Development of affordable, microinsurance policies. Differentiation through customer-centric approaches. Digital transformation and technology. Emerging markets expansion. Expansion of distribution channels. Focus on wellness and prevention programmes and partnerships with telehealth providers. Integration of ESG factors. Investing in regulatory compliance programmes, consumer protection initiatives and governance structures. Leveraging data analytics and predictive modelling.

Outlook

Life insurers’ results improved significantly in 2023 and industry analysts forecast sustained growth over the medium term. Premium income growth potential will be affected by population growth, innovation, economic conditions, and awareness and education of consumers. Possible adoption of more stringent solvency regulations may potentially affect the industry in the long-term. The industry remains stable and continues to be trusted by customers. Many of the notable players see enormous potential in Asia, for near-term growth, and in Africa in the long term. Cyber risk and data privacy issues continue to be a threat.

Report Coverage

This report on the life insurance industry in South Africa includes comprehensive information on insurance, underwriting, distribution channels, penetration rates, claims, premium income, volumes and profitability. It examines notable players and their performance, corporate actions, and regulatory and compliance issues. There are profiles of 28 companies including major players such as Sanlam, Old Mutual, Liberty and Momentum Metropolitan, local insurance companies such as Assupol, Clientele and Hollard, reinsurers including Munich Reinsurance, General Reinsurance Africa and RGA Reinsurance and major funeral and insurance companies such as Avbob.

Trends

Continued focus on regulatory compliance including enhancing transparency, consumer protection and fair treatment. Diversification of distribution channels such as digital channels, bancassurance partnerships, and direct-to-consumer sales models. ESG considerations are increasingly influencing investment decisions. Expansion of distribution channels. Focus on customer-centricity. Growing demand for parametric insurance cover. Increasing recognition of financial inclusion. Introduction of microinsurance products and simplified underwriting processes. Significant digital transformation, investment in digital platforms, apps and online distribution channels.