Will 'climate change' keep SA's short-term insurance industry in the doldrums in 2018?
On a global scale, the majority of short-term insurance markets, including South Africa, remain in a phase of below-average profitability. Despite holding 44% of the African market, the South African short-term insurance market experienced sluggish premiums growth in 2017.
The devastation caused by major natural disasters in 2017, comprising of the Knysna forest fires, Durban floods, and Gauteng hailstorms, further contributed to the lower profitability of South African short-term insurance market players. However, there seems to be cautious optimism for the situation improving in 2018.
Insight Survey’s latest SA-Short-Term Insurance Industry Landscape Report 2018 carefully unfolds the short-term insurance landscape in South Africa based on the latest information and research. It describes the market drivers and restraints as well as the relevant global and local market trends to present an objective insight into the South African short-term insurance industry environment, market dynamics, and its future.
Globally, short-term insurance premiums increased by 2.8% to reach a value of US$2.2 trillion (2,234 billion) in 2017. However, the growth of premiums was lower in comparison to the 3.3% growth achieved in 2016. At a regional level in 2017, as illustrated by the graph below, North America remained the largest market in premium value terms amongst advanced markets, despite experiencing significant losses due to numerous natural disasters.
Although value and profit growth were low in 2017, South African short-term insurance premium volumes had increased by 17.8% between 2016 and 2017, and the potential exists for short-term insurance providers to significantly increase their gross written premiums by 2020. Furthermore, market players surveyed in South Africa and other African markets are anticipating reasonable growth in both the life insurance- and short-term insurance markets over the next three years.
The major trends and drivers currently set to drive growth within the local market are centralised around digitalisation. Such trends include the use of drones in the commercial and non-commercial sector, collaborative digitisation between tech companies and insurance companies and AI-powered Insurance.
However, the market is also expected to face major challenges over the next few years. As a result, growth will ultimately be dependent on market players’ flexibility to adapt to the changing market environment, and it will be imperative for local players to take economic, social transformation and the risks associated with climate change into consideration going forward. Furthermore, certain regulatory developments such as the new Insurance Act of 2017, is also set to profoundly impact the local market in 2018 and the potential costs associated with abiding by these regulations is expected to have a negative impact on the market.
The SA Short-Term Insurance Industry Landscape Report 2018 (143 pages) provides a dynamic synthesis of industry research, examining the local and global short-term insurance industry from a uniquely holistic perspective – from global and local trends to analysing the most prevalent market players.
Some key questions the report will help you to answer:
For a full brochure please go to: South African Short-Term Insurance Landscape Brochure 2018
About Insight Survey:
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