Life insurers paid out R578 billion in 2022

The Association for Savings and Investment South Africa (ASISA) released an update on the health of South Africa’s life insurance industry, detailing their assets, liabilities, and amounts paid out to policyholders in 2022. 

According to ASISA, the life insurance industry emerged well-capitalised and in a strong position after navigating “volatile investment markets and a tough operating environment in 2022”.

Life insurers ended 2022 with R3.7 trillion in assets and R3.4 trillion in liabilities, leaving them with R347 billion in free assets. 

This is nearly double the amount required by solvency capital requirements. 

The life insurance industry has bounced back well after Covid, with assets held in 2022 significantly higher than in 2019. 

This, according to deputy chair of ASISA’s Life and Risk Board Hennie de Villiers, is vital in “demonstrating the industry’s resilience”. 

De Villiers also points out that the performance of life insurers mirrors that of the asset management industry and the JSE All Share Index, both of which ended 2022 in a similar position to where they started. 

The life insurance industry paid out R578 billion in 2022, a decrease from the all-time high reached in 2021 of R608 billion. 

A total of 501,785 death claims were paid out in 2022, down 26% from 2021 but still 24% higher than in 2019. 

Assets heldR3 trillionR3.2 trillionR3.7 trillionR3.7 trillion
LiabilitiesR2.7 trillionR2.9 trillionR3.4 trillionR3.4 trillion
Free assetsR360 billionR334 billionR351 billionR347 billion
Solvency Capital Requirements (SCR) ratio2.142.111.961.96
Claims & benefits paidR491 billionR523 billionR608 billionR578 billion

South Africans abandon life cover during economic hardship 

Many South Africans stopped paying their premiums or withdrew their investments from life insurers in 2022 as the economic hardship they faced began to reflect in the data. 

South Africans surrendered 689 888 savings policies in 2022 as clients withdrew their funds before maturity, indicating a need to draw on savings to meet expenses. 

This is less than in 2019, with over 900,000 policies surrendered that year. The number is “still too high and therefore concerning”, according to De Villiers. 

Shockingly, 8.4 million recurring premium policies lapsed in 2022, with policyholders no longer having the disposable income to contribute to their long-term insurance products. 

Further, insurers sold 1.2 million fewer recurring premium policies in 2022 than in 2021. 

The life insurance industry is on the mend

Two of South Africa’s largest life insurers, Sanlam and Old Mutual, have released their results for 2022, which show a recovery in the sales of life insurance products towards the end of 2022.

Old Mutual’s life insurance sales were up 10% compared to 2021, with a total of R12.5 billion in sales, while its annual premium equivalent sales rose by 21% to R4.2 billion, exceeding pre-pandemic levels.

Sanlam increased results from its life insurance unit by 25% in 2022, although its net result from general insurance declined by 32% due to increased claims and market volatility.

The results of these two life insurers, particularly their sales volumes, indicate that South Africans are beginning to take out life insurance products once again.

De Villiers encourages South Africans to prioritise their life insurance as it is an individual’s “most valuable financial asset, which can become impossible to replace as you grow older”.