Life insurers paid R599bn in claims and benefits in 2023

Cape Town - Policyholders and beneficiaries received R599 billion in 2023 from life insurers that are members of the Association for Savings and Investment South Africa (ASISA) following tragic life events like death and disability or significant life stage changes like retirement. Payments made to policyholders and beneficiaries included retirement annuity and endowment policy benefits, as well as claims against life, disability, critical illness and income protection policies.

The long-term insurance statistics released today by ASISA also show that members managed 43.8 million risk and savings policies on behalf of policyholders at the end of December 2023. In-force policies increased marginally from 43.2 million at the end of December 2022.

Gareth Friedlander, a member of the ASISA Life and Risk Board Committee, says the health of the long-term insurance industry is of significant importance to the policyholders of these 43.8 million policies. The key indicator of the industry's health is the average solvency buffer, which was just more than double (2.07) the Prudential Authority's Solvency Capital Requirement (SCR) as at the end of December 2023.

Friedlander explains that strong capital buffers ensure that life insurers are in a position to pay claims and policy benefits, even in times of extreme market turmoil and unusually high claims.

The life insurance industry managed assets of R4.08 trillion at the end of December 2023, while liabilities amounted to R3.72 trillion. This left the industry with excess assets of R366 billion, while the SCR was R176.7 billion.

Friedlander notes that the industry had managed to shore up capital in 2023 to levels last seen in the years before the COVID pandemic. "South African life insurers have shown remarkable resilience in a period marked by unprecedented claims due to the COVID pandemic with only a slight dip in solvency levels in 2021 and 2022," he adds.

He also points out that this is the first time the long-term insurance industry has reported assets above R4 trillion. The 10.2% growth in assets from R3.7 trillion at the end of 2022 to R4.1 trillion at the end of 2023 was largely due to market performance. The JSE All Share Index delivered a return of 9.3% over the 12 months to the end of December 2023.

Friedlander describes the long-term insurance operating environment as slow-growing, with individual life insurers achieving growth by dipping into the market share of competitors by offering better value and product innovation. He says this has created a highly competitive market, which is good news for consumers.

"We have the picture-perfect competitive industry with an enormous amount of innovation and a lot of digitisation," says Friedlander.

"We have also seen an increasing number of industry participants with smaller players joining and banks coming in, which is representative of a competitive and innovative industry."

Friedlander says despite the competitive pressures, the South African life industry remains a responsibly managed industry, delivering value without undermining the ability to pay claims and benefits, especially during tough times.