Insurers are strong
SA life insurers injected R469 billion into the economy last year through benefit payments to policyholders and beneficiaries. Total benefit payments increased by an inflation-beating 10% from 2016.
The Association for Savings and Investment South Africa’s (Asisa) 2017 longterm insurance industry statistics, released yesterday, show that despite the healthy increase in benefit payments, life insurers remained strongly capitalised.
The industry held assets of R2.84 trillion at the end of 2017, up 6% from the R2.67 trillion held at the end of 2016.
Hennie de Villiers, deputy chair of the Asisa Life and Risk Board Committee, reports that industry assets exceed liabilities by R231.1 billion, which is more than four-and-a-half times the legal reserve buffer required. The legal reserve buffer, referred to as the industry’s capital adequacy requirement (CAR), was R41.5 billion at the end of December 2017.
De Villiers says this indicates that SA life insurers remain well positioned to honour long-term promises to policyholders.
The significance of the R469 billion in benefit payments for 2017 becomes evident when compared to the R528.4 billion in social grants committed by government over the next three years.
Of the total benefit payments to policyholders in 2017, over R60 billion was paid to individuals who had experienced death or disability in their family. This marks an increase of almost R5 billion from 2016.
Policyholders accessed R72.6 billion in benefits in 2017 by surrendering their savings policies. A surrender occurs when the policyholder stops paying premiums and withdraws the fund value before maturity.
De Villiers says while surrenders are always of concern, it is encouraging that the life industry reported a 9% decrease in surrenders from 2016. In 2016, life insurers had seen a very worrying 16% increase in surrenders from 2015. – Asisa