Life insurers paid out R599 billion in 2023

Life insurers paid out R599 billion in claims and benefits in 2023, over R20 billion more than the previous year, but down from the pandemic highs of 2021. 

This was revealed by the Association for Savings and Investment South Africa (ASISA), which said payments included disability, death, critical illness, and retirement. 

ASISA’s data also showed that life insurers held 43.8 million risk and savings policies as of the end of 2023 – a marginal increase of 600,000 from 2022. 

ASISA Life and Risk Board Committee member Gareth Friedlander said the life insurance industry has weathered the pandemic storm well and continues to have large solvency buffers. 

As of the end of 2023, the sector’s average solvency buffer was more than double the Prudential Authority’s regulatory requirement. 

Friedlander explained that strong capital buffers ensure that life insurers are able to pay claims and policy benefits, even during extreme market turmoil and unusually high claims.

This is supported by the industry’s large R4.08 trillion in assets under management, while liabilities amounted to R3.72 trillion – leaving insurers with excess assets of R366 billion. 

The 10.2% growth in assets from R3.7 trillion at the end of 2022 to R4.1 trillion at the end of 2023 was largely due to market performance. The JSE All Share Index delivered a return of 9.3% over the 12 months to the end of December 2023.

Friedlander noted that the industry has now managed to increase its capital reserves to levels last seen in the years before the Covid pandemic. 

“South African life insurers have shown remarkable resilience in a period marked by unprecedented claims due to the Covid pandemic with only a slight dip in solvency levels in 2021 and 2022,” he said. 

Assets heldR3 trillionR3.2 trillionR3.7 trillionR3.7 trillionR4.1 trillion
LiabilitiesR2.7 trillionR2.9 trillionR3.4 trillionR3.4 trillionR3.7 trillion
Free assetsR360 billionR334 billionR351 billionR347 billionR366 billion
Solvency Capital Requirements (SCR) ratio2.142.111.961.962.07
Claims & benefits paidR491 billionR523 billionR608 billionR578 billionR599 billion

Friedlander said the long-term insurance operating environment is slow-growing, with individual life insurers only achieving growth by taking market share from competitors. 

He said this has created a highly competitive market, which is good news for consumers.

“We have also seen an increasing number of industry participants with smaller players joining and banks coming in, which is representative of a competitive and innovative industry,”

Funeral policies remain popular in South Africa, with over half of new individual risk policies being funeral policies. 

Friedlander said 8.25 million risk policies lapsed last year, a slight reduction from the 8.33 million policies lapsed in 2022. A lapse occurs when the policyholder stops paying premiums for a risk policy with no fund value.

“While even a slight reduction in the lapse rate is good news, policy lapses are concerning. With every risk policy lapsed, South Africa’s sizeable insurance gap widens even further, leaving more families financially vulnerable should their breadwinner die or become disabled.”

The 2022 ASISA Life and Disability Insurance Gap Study, conducted every three years, showed that the average South African income earner had a combined life and disability cover shortfall of at least R2.4 million. 

According to the study, South Africa’s 14.3 million income earners had only enough life and disability insurance to cover 45% of the total insurance needs of their households.


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