The South African general insurance industry is set to grow at a compound annual growth rate (CAGR) of 4.8% from ZAR159.5 billion ($9.4 billion) in 2024 to ZAR192.7 billion ($10.4 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the South African general insurance industry is expected to grow by 3.9% in 2024, supported by motor and property insurance lines, which together accounted for an estimated 83.6% share of the total general insurance GWP in 2023.

Sravani Ampabathina, Insurance Analyst at GlobalData, comments: “The South African general insurance industry’s growth rate slowed down by 2.8 percentage points (pp) in 2023, driven by weak business sentiment, as the country’s real GDP grew marginally by 0.5% last year. While the slowdown is expected to continue in 2024, general insurance industry growth is poised to gain traction from 2025 onwards in line with the economic recovery.”

Motor insurance is the leading line in the South African general insurance industry, accounting for a 42.6% share of the general insurance GWP in 2023. It grew by 4.8% in 2023, despite a flat growth in new vehicle sales. A depressed economy, higher cost of living, and delays in vehicle production resulting from semiconductor chip shortage impacted new vehicle sales in 2023, which grew by 0.5% as compared to the previous year, according to the National Association of Automobile Manufacturers of South Africa (naamsa).

As per naamsa, the outlook for vehicle sales looks buoyant in 2024, supported by gradually decreasing inflation levels, which will in turn support motor insurance growth.

Motor insurance growth is also expected to be driven by increased premium rates due to high instances of vehicle theft. According to Statistics South Africa, vehicle theft incidences increased to around 98,000 in 2022–23 from around 42,000 in 2021–22. GlobalData forecasts motor insurance to grow at a CAGR of 4.9% over 2024–28.

Property insurance is the second largest line of business, accounting for an estimated 41.2% share of the GWP in 2023. Natural catastrophe (nat-cat) hazards are the primary driver of property insurance in South Africa, and high losses from the increasing frequency of these events have supported the demand for nat-cat insurance policies. For instance, flood-related claims surged with the Orange and Vaal rivers flooding in early 2023, as well as due to the extensive flooding in the Western Cape in June 2023.

Ampabathina adds: “Increasing claims from nat-cat events have also prompted reinsurers to increase reinsurance rates. This will increase the premium rates of home and construction insurance policies, which will support property insurance growth.”

GlobalData forecasts the construction industry in South Africa to grow by 1.9% in real terms in 2024, supported by the government’s focus on infrastructure development to provide access to basic services. Construction and engineering insurance is expected to support the demand for property insurance, which is projected to grow at a CAGR of 5.5% over 2024–28.

Liability insurance is the third largest line, accounting for an estimated 5.4% share of general insurance GWP in 2023. GlobalData forecasts liability insurance to grow at a CAGR of 2.1% during 2024–28, supported by rising incidents of cyber-attacks. According to the South African Council for Scientific and Industrial Research (CSIR), South Africa was the eighth most targeted country for ransomware in 2023, with an estimated economic impact of ZAR2.2 billion ($131.5 million) due to cybercrimes.

Marine, aviation, and transit (MAT), personal accident and health (PA&H), and other general insurance products accounted for the remaining 10.8% share of GWP in 2023.

Ampabathina concludes: “Premium rate increases for property and motor insurance lines are anticipated to continue in 2024 due to increased reinsurance costs and claims inflation. An increase in motor vehicle sales, rising demand for nat-cat insurance policies, and a gradually recovering economy will support the growth of the South African general insurance industry over the next five years.”