These are the top insurance trends in South Africa

The current economic climate in South Africa is extremely challenging and is affecting almost every industry.

This includes insurance companies, which must navigate various obstacles to remain operationally stable.

Load-shedding, for example, causes many more insurance claims than would otherwise be the case.

Inflation is another major challenge, as it forces South Africans to cut costs — and many choose to downgrade their insurance coverage to save money.

Major challenges

Local insurance companies have had to adjust their business models and embrace innovation to remain sustainable and profitable in this new economic climate.

MyBroadband asked several insurance companies about the trends they’re seeing in the industry, and Oneplan Insurance responded to our request for comment.

Oneplan Insurance CEO Michael Otten acknowledged that economic pressures such as inflation and the effects of load-shedding are affecting the operational efficiency of South African insurance companies.

“Increased cost of claims, increased reinsurance rates, and affordability thresholds are creating a margin squeeze for all stakeholders,” said Otten.

He stressed the affordability threshold issue, highlighting that there has been a lack of growth in the number of potential customers.

“Growth in the number of people who can afford and intend to utilise financial products has stagnated,” said Otten.

Syndicated crime

Otten also highlighted that newer insurance industry segments are currently more vulnerable to syndicated crime.

This is because they are not established enough to benefit from data sharing in the same way that traditional segments are — like motor insurance.

Because of this, these segments are more vulnerable to fraudulent claims, which has a ripple effect on their affordability.

“It ultimately creates inflationary pressure on the cost of claims,” said Otten.

Technology is the way forward

However, Otten remains optimistic about the insurance industry’s future — if companies are willing to use the latest technologies.

Otten explained that over the coming years, customers will expect to have their claims handled, queries answered, and information available on their own terms.

“The response from an insurer’s perspective has been to adopt AI and embrace digital communication — like WhatsApp — as a primary channel rather than an alternative channel,” said Otten.

“The world thrives on instant gratification, same-day delivery of goods, and online shopping at any time of the day or night. The insurance industry is no different.”

Now read: Cars converting to run on LP gas in South Africa — and getting their own fuel stations

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These are the top insurance trends in South Africa