THE headwinds in the South African economy have weighed on both life and non-life insurers in 2014. However, we see the life sector as being able to ride out the storm better due to the more diversified footprint of the larger life insurance players across the whole of Africa. Over the 2015-2018 per iod, we expect total gross premiums to average 16.0% annual growth and we see the life segment outperforming the non-life segment during this period.
The South African market is facing a myriad of headwinds in the short term, which has hurt margins of insurers and slowed the industry’s gross premium growth. Some of these short-term challenges include a sluggish economy, industrial action, an erosion of consumers’ purchasing power due to rising inflation, and a weakening local currency.
While we forecast total gross premiums to grow by 2.6 per cent in 2014 in ZAR terms, the market will actually contract 7.5 per cent in USD terms. This is due to the continuation of the depreciatory trajectory of the South African rand (against the US dollar), which first began in 2011.
Over the 2015-2018 period, we see gross premiums growing at an average annual rate of 16.0% (in USD terms), hitting USD90.3mn by 2018. While we see g growth in both life and non-life segments, the life segment will remain an outperformer in the coming years. The life insurance market accounted for 82% of total gross premiums in 2014 and we expect the segment to maintain its market share over the coming years. The development of micro-insurance as well as the rapid expansion of financial services in rural areas will provide support to the life insurance market.
We see life insurance remaining the dominant segment in the country’s insurance sector (with its market share consistently remaining north of 80%) over our 2014-2018 forecast period. While we see g growth in both the life and non-life segments, growth in the life segment will outperform due to the importance of the sector as a conduit for…
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Source : The Guardian