ASISA reports that, despite strong economic headwinds, South African life insurers honoured claims by policyholders and beneficiaries worth R458 billion in the year ended 30 June 2017. This represents a 9% increase in benefits paid, compared to the previous 12-month period. At the same time life insurers managed to grow assets by 2% to R2.7 trillion.
In addition, industry assets continue to exceed liabilities by more than four times the legal reserve buffer required.
There was a significant increase of 21% in claims against individual disability policies in the 12 months to June 2017. Hennie de Villiers, deputy chair of the ASISA Life and Risk Board Committee, comments:
“An unusually high increase in disability claims is usually indicative of consumers under severe strain. Financial stress leads to both mental and physical illness, which invariably results in higher disability claims.”
According to Statistics South Africa, there was a decline of 48 000 formal jobs in the first quarter of this year alone combined with a R19 billion drop in total earnings paid to employees over the same period.
De Villiers says fragile consumer confidence due to low economic growth, political turmoil and the risk of credit rating downgrades also reflected in the new premium income for the year ended 30 June 2017.
Total new premium income for recurring and single premium business increased by only 2% while the number of total policies sold decreased by 12%.
De Villiers says surprisingly, recurring premium savings policies and retirement annuities showed the most resilience and actually achieved growth in policy numbers.
He says the 11% increase in the number of recurring premium savings policies sold is most likely driven by consumer demand for the tax-free savings and investment products launched in March 2015.
The number of recurring premium retirement annuities sold over the 12 months period to the end of June 2017 increased by only 2%.
De Villiers says the lapse rate experience for first year policies is interesting in that lapses of risk policies and retirement annuities showed a strong decline of 12% and 34% respectively. First year savings policies, on the other hand, experienced an increase in lapses of 16%.
Click here to read the full article on the ASISA website.