07 Jul 2020
Posted in Insurance
Life dominated South Africa’s insurance market to be put under immense strain by COVID-19, says GlobalData
South Africa’s top 10 insurers overwhelmingly depend on the life insurance sector for their premiums, which leaves them exposed to high claims as a result of the COVID-19 pandemic, according to GlobalData, a leading data and analytics company.
Nine of the top 10 insurers have at least 90% of their premiums just in life insurance while eight are exclusively life and personal accident and health. This compares to just two of the top 10 being solely life in the US.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “South Africa has over 200,000 confirmed cases as of 6 July 2020. Therefore, a high exposure to life insurance implies a potential rise in claims, a fall in new business premiums and a decline in returns on investment-linked products.”
GlobalData’s report ‘Covid-19 Company Impact: Insurance – South Africa’ reveals that the top 10 life insurers in South Africa have a strong hold of the market, as they account for 83% of it.
Ms Mitra continues: “The leading life provider in the country, Old Mutual, appears to be the most vulnerable as it generates approximately 99% of its business from life insurance. The recessionary pressure on the economy could impact insurers’ incremental growth in premiums.”
Santam Beperk is the one leading South African company with a majority presence in personal lines. The vast majority of its premiums are in motor and property. Ms Mitra concludes: “This means it may see premiums fall, as customers stay at home and drive less, but it should also see a decline in claims, for the same reasons.”