South Africa Insurance Report Q1 2016
BMI View: South Africa is home to a large and well developed insurance industry, with life insurance inparticular boasting high rates of penetration and density. Both life and non-life are expected to recordhealthy growth in premiums over the forecast period through to 2019, barring short term contractionscaused by currency movements. Some significant structural challenges remain: widespread poverty haslead to high rates of underinsurance in the non-life sector and low household income has also hampered thelife sector where most households which can afford to purchase cover already do so. The dominance ofdomestic firms, particularly in the life sector, also reduces scope for new or greater entry by foreignmultinationals.
Key Updates And Forecasts
Large domestic insurers are pursuing overseas growth potential: Sanlam recently announced it wasbuying a nearly one-third share of Saham Finances in Morocco from the World Bank's InternationalFinance Corporation and buyout firm, The Abraaj Group. The acquisition is reported to have costUSD375mn.
A new report assessing the potential for introducing Compulsory Third Party Motor Property Insurance isdue to be released by The South African Insurance Association (SAIA) by the end of 2015. As little as35% of the national fleet is currently insured and the Road Accident Fund covers some costs, meaninginsurers' exposure remains high.
Absa has reportedly agreed to acquire a 75% stake in Instant Life - an online base life insurer. The costhas not been released.
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