14 Jul 2020
Posted in Coronavirus
South African insurers biggest concern is the faltering economy as lockdown eases, says GlobalData
GlobalData’s revised post-COVID-19 forecasts for South Africa’s insurance industry sees a significant shift towards negative growth in both the life and non-life segments. GlobalData now expects the South African life insurance market to see premiums decline by 3.1% in 2020, compared to 3.4% growth previously. Similarly, the company expects to see a 6.5% decline in premiums in non-life in 2020, compared to 5.9% pre-COVID-19.
South African insurers need to brace for not just potential claims but a decline in general business due to the adverse effect on the economy. South Africa reopened its economy on June 1, under strict health measures. While travel is now permitted the pandemic is still expected to have an impact on the economy due to impacting exports.
GlobalData insurance analyst, Deblina Mitra, comments: “A decline in vehicle sales is expected to impact the sale of new motor policies in the near term. In the longer term a large section of small and medium-sized businesses remain very vulnerable. Business interruption policies in the country generally only cover physical damage. While this may be positive for insurers in the short-term, it puts a lot of business at severe risk, and could hurt the insurance industry in the long term.”
Mitra continues: “One positive is the surge in insurance jobs available in June 2020. GlobalData’s Job Analytics database shows that there has been a 271% increase in the number of active jobs in the last 30 days. This is based on the jobs’ data tracked across 48 entities in the country. It shows that the industry is opening up for business again.”