The persistently tough economic environment, crime, infrastructure risks, and climate change-related weather volatility are the biggest challenges impacting South African households and businesses, according to the 2025 Santam Insurance Barometer Report.
The fourth edition of the biennial Barometer was based on a survey of 881 respondents between January and April 2025. The respondents consisted of 402 consumers, 350 corporate/commercial entities, and 129 brokers.
The research findings, which reflect the market perception of risks, are supplemented with Santam’s insights, which discuss how the insurance industry should respond and/or adapt to evolving market realities and customer needs.
According to Atang Matebesi, the chief executive of Santam Client Solutions, continuous shifts in the local and international risk landscape mean the local short-term insurance industry must continue to adapt and innovate rapidly.
“Once again, weather volatility, infrastructure concerns, and socio-economic challenges have created a tough environment for local insurers. This has been exacerbated by ongoing geopolitical turmoil that is currently fundamentally shifting traditional trade routes and heavily impacting the cost of repair parts, threatening the affordability of the motor and heavy haulage classes of insurance.
“A trend is emerging where vehicles that normally wouldn’t be written-off are being declared total losses because repair costs have skyrocketed due to costly imported parts affected by the geopolitical environment,” he said.
The impact of societal stressors was evident in Santam’s claims statistics. Additionally, there was a notable escalation of claim volumes in Santam’s MTN portfolio, where Matebesi said South Africans claimed for the theft of laptops, smartphones, and tablets because of muggings and petty theft, mainly in shopping malls.
The motor category remains the key driver of personal and commercial lines claims.
Matebesi says that after underwriting actions, Santam was able to gain control of unsustainable claim trends, strengthening the insurance pool.
“The outlier in the personal lines motor book was collision claims (involving two or more vehicles), where claim volumes spiked substantially. This is largely due to road usage in South Africa returning to pre-Covid levels, driven by many companies reinstating five-day office attendance policies.”
Still on the motor class, Matebesi highlighted that infrastructure degradation manifested in the deterioration of road surfaces, with potholes causing loss or damage to vehicles, with the impact felt across the personal lines, commercial lines, specialist heavy haulage, and agriculture business lines.
An emerging risk to watch relates to the decommissioning of 2G and 3G networks that power radio-linked alarm systems and vehicle tracking devices. According to Matebesi, this could introduce an unforeseen risk in the personal and commercial lines motor and property books.
“Close collaboration between insurers, insureds, and telecoms services providers is necessary to ensure the phased ‘switch-off’ of these networks, scheduled for the end of 2027 (with towers already being disabled in some areas), does not cause widespread disruption. There is anecdotal evidence of the potential impact on property owners with those who have already had their alarms ‘switched off’ falling victim to crime.”
Read: Legacy network shutdown puts insurance cover at risk
Households’ main risk concerns
South African households are feeling the impact of persistently high inflation and interest rates, with 84% of consumer survey respondents saying they have had to make adjustments to cope with the increased cost of living. Forty percent of these said they have cut back on non-essential items to relieve financial pressure, while 27% said they have reduced their expenditure on essential monthly expenses, and 21% have dug into their savings.
Positively, short-term insurance remains low on consumers’ radars when it comes to reducing expenditure, with only 1% stating they have cut short-term insurance policies.
Crime is increasingly a concern, with 16% more consumer respondents citing it as a top-three risk for their households, compared with 2023.
According to Matebesi. Santam’s crime-related claims experience has levelled out because of a combination of stricter underwriting measures and enhanced risk-management measures.
Climate change remains heightened this year, with 78% of consumers citing they are in some way concerned about the threat of extreme weather events.
Interestingly, although 24% of respondents said they are taking risk-mitigation steps by improving maintenance (for example, clearing gutters) to reduce the impact of adverse weather events. Santam’s claims experience tells a different story.
The personal lines property class was dominated by geyser claims.
“In the two years since the last Insurance Barometer, Santam has worked on risk management interventions to help mitigate losses. Specific interventions include early detection devices and installing overflow trays to minimise damage. Despite these interventions, there was an increase in loss or damage to geysers, water containers, tanks, or pipes in 2024. Santam believes this is due to the cyclical nature of geyser claims as wear and tear sets in,” said Matebesi.
Moribund economy is a top concern for corporate clients
Socio-economic challenges remain top-of-mind for corporate and commercial entities, with theft emerging as the primary concern for commercial respondents. However, according to Matebesi, concerns over theft have steadily declined over the past five years (from 34% in 2020/21 to 21% in 2025).
“Persistent economic malaise remains a top concern for businesses, at 19%. Interestingly, growing concerns over operational costs have emerged, with machinery/systems breakdowns having increased by 6% over the last five years. This is likely related to economic pressures on the increased costs of doing business,” he said.
Matebesi points out that an interesting disconnect in this year’s Insurance Barometer survey is the lack of perceived business interruption (BI) risk.
“The 2024 Allianz Risk Barometer ranks BI second on its top 10 global risks. Meanwhile, only 7% of commercial respondents mentioned it in their top three. The biggest threat to the economic viability of a business is a disruption that causes it to halt operations, resulting in a loss of profits. BI cover ensures business continuity, whether the interruption is caused by machinery breakdown, fire, or a cyber-attack.
“The lack of emphasis placed on loss of profits is concerning. We believe business interruption is a massively underestimated risk,” said Matebesi.
Concerns around currency fluctuation emerged strongly this year, with an increase of 10%, likely because of policy uncertainty in the United States and the conflict in the Government of National Unity over the tabling of the Budget.
Loadshedding, although still within the top 10 risks identified by businesses, saw a significant decrease in terms of the severity of the concern.
Government and private sector initiatives to stabilise the grid saw South Africa experience a consecutive 300 days without loadshedding in 2024. “Together with underwriting actions, this resulted in a favourable claims experience. Santam’s commercial lines power surge claims showed a considerable decrease compared to 2023,” said Matebesi.
Climate change also continues to weigh on the minds of businesses, remaining in the top 10 commercial concerns at 16%. “The agriculture sector is disproportionately concerned about climate risk due to its inherent exposure to the impacts of inclement weather,” he said.
From Santam’s perspective, Matebesi said commercial lines weather and water claims saw a 5% increase in claims volume. Storm and flood damage is often exacerbated by inadequate infrastructure maintenance or poor town planning, resulting in higher-value claims despite no major catastrophes occurring over the past year.
The top 10 risks identified by corporate and commercial businesses were:
- Theft: 21% (2023: 27%)
- Machinery/systems breakdown: 20% (2023: 16%)
- Economic downturn: 19% (2023: 19%)
- Loadshedding/power surge: 18% (2023: 41%)
- Loss of profits: 18% (2023: 20%)
- Currency fluctuations: 18% (2023: 8%)
- Fire (electrical/accidental/wildfires): 16% (2023: 19%)
- Climate change: 16% (2023: 16%) – agriculture sector: 64%
- Staffing issues: 14% (2023: 10%)
- Crime: 14%
Businesses are cutting back
The economy has been challenging over the past two years, with interest rates and inflation increasing significantly. All businesses have been impacted by this tough environment, with higher operating costs (54%), low profits (51%), and increased prices to the customer (46%) having emerged as the key impacts.
Almost all businesses have been impacted by the increased price of fuel. Sixty-one percent said that operating costs have increased as a result, while 51% have had to raise customer prices to remain profitable. Notably, 25% said they had seen less business coming in as a result of fuel price increases.
Corporate and commercial entities reduced their expenditure on these business costs over the past 12 months:
- 43% reduced transport/fuel costs (2023: 21%)
- 26% cut salaries/wages (fewer staff or salary freeze) (2023: 25%)
- 21% reduced domestic travel (2023: 13%)
- 17% reduced debt repayments/restructuring (2023: 13%)
- 14% reduced expenditure on commercial property/rent payments (2023: 6%)
- 12% reduced expenditure on vehicles (sold/gave up lease) (2023: 11%)
- 12% reduced international travel (2023: 10%)
- 11% reduced expenditure on warehousing (2023: 4%)
- 6% reduced expenditure on employee benefits (retirement, life, disability, medical) (2023: 7%)
- 3% reduced expenditure on short term insurance policies (2023: 2%)
