Media Release

2018: Casting the (Insurance) Net Wider”


2018 proved to be a significant year for the insurance industry, not least of all the introduction of the government’s Insurance Act, which seeks to make cover for lower income households or individuals more accessible.

Under the Act, one of the most important regulations for micro-insurers is that micro-insurance and funeral policy claims must be settled within 48 hours after receiving all the necessary documentation from the client.

Johan Ferreira, legal and compliance officer for African Unity Life (AUL) says the legislation was crucial in accepting that risk needed to be covered across all income groups.

“It is exciting times in the industry. We needed something unique for everyone to manage their risk, irrespective of income group,” says Ferreira. 

Ferreira says the legislation around funeral pay-outs is significant given the robust nature of the funeral industry in South Africa.

He points out that one of the significant changes to the law is that it now stipulates that caps on the maximum benefit for funeral policies offered by both micro-insurers and traditional insurers will be capped at R 100 000 to ensure that policyholders are afforded the same protection.

Earlier this year, the National Funeral Directors Association of South Africa  (NAFDA) was quoted in media saying while funerals can be done for around R9 000, some South Africans spent between R100 000 and R200 000 to send their loved ones off.

The estimated value of the funeral industry in South Africa is between R7.5-billion and R10-billion.

“The Act clearly wants to engage more people and offer protection for policy holders which is fantastic for families who don’t need the extra trauma of uncertainty during a difficult time. It is also an opportunity for the insurance industry to illustrate its value,” says Ferreira.   

The insurance industry in South Africa in general over the past 12 months ended June has seen an increase in payments over the corresponding period to June 2017. 

The Association for Savings and Investment South Africa (ASISA) reported that life insurers paid R63.7 billion to individuals who had experienced death, disability or a severe illness in their family circle in the 12 months ended June 2018.

This marks an increase of more than R6.3 billion from the previous 12 months to the end of June 2017. 

The long-term insurance industry statistics for the 12 months to 30 June 2018, released by ASISA, show that life insurers reported the biggest percentage increase in claims for disability policies. Claims against individual disability policies increased by 14%, while claims against employer disability cover increased by 21%. 

“Over the same 12-month period consumers bought 5.7 million long-term insurance policies for financial protection in the event of death, disability and critical illnesses, committing to premiums of R13 billion. This represents a 12% increase in the number of risk policies bought compared to the previous year,” ASISA reported.

Ferreira says the numbers post the Insurance Act will be telling next year, given that the legislation was passed in July and a clearer picture is expected to emerge mid-year.

“On paper, the Act must be lauded, but on the back of a shaky economy, people tend to dump insurance policies as they see it as a grudge purchase instead of a critical financial umbrella or safety net which it is,” he says.

Ferreira expects that in 2019 the industry and especially the micro-insurance sector will continue to engage with a wider cross-section of the South African population.  

“The Insurance Act and the micro-insurance product standards under the new Policyholder Protection Rules will make this a possibility. It is exciting times in the insurance industry and it will continue to be so in the new year,” said Ferreira.

comments powered by Disqus

This edition

Issue 71


Bluechip_Mag Education - SA should follow UK lead with financial literacy 0 years - reply - retweet - favorite

Bluechip_Mag Carbon Offsetting - Going green a must for sustainable business 0 years - reply - retweet - favorite

Bluechip_Mag Cutting edge - Capitec banks on Altech ISIS to drive innovation 0 years - reply - retweet - favorite