Sean Hanlon | Types of insurance businesses should be prioritising in 2025

As South Africa navigates 2025, businesses are confronting a complex economic environment marked by a projected budget deficit increase to 4.55% of GDP for the fiscal year starting in April, up from the previous 4.30% forecast. This widening deficit is attributed to rising debt-service payments, social spending programmes, and ongoing support for state-owned enterprises. Such fiscal pressures underscore the importance of comprehensive insurance solutions that can help businesses mitigate financial risks.

Tailored Insurance Solutions as a Response to Emerging Risks

In response to these challenges, the South African insurance industry is evolving to offer more flexible and tailored solutions. The 2024/25 Deloitte Africa Insurance Outlook highlights a transformative period influenced by changing economic landscapes, rapid technological advancements, and regulatory reforms. New-generation life insurers are focusing on creating tailored products to better address specific business needs, such as contingent liability insurance for major debts, buy-and-sell agreements for seamless ownership transitions, and key person insurance to protect against the loss of essential personnel. These customised life insurance offerings are designed to provide businesses with financial protection against the impact of unforeseen risk events, like the sudden exit of a business partner because of a serious illness or injury.

By working with a skilled financial adviser to proactively adopt insurance strategies as part of their risk management plans, South African businesses can better position themselves to ensure long-term sustainability. Below are three critical components that businesses should consider when consulting with their financial adviser regarding their insurance needs:

1. Long-term and Short-term Insurance for Businesses

Business owners need both short-term and long-term insurance. While short-term insurance covers immediate risks such as property damage or operational disruptions, long-term insurance plays a crucial role in ensuring business continuity by securing the financial future of a company in the event of unforeseen circumstances. Products such as buy-and-sell agreements, key person insurance, and contingent liability cover are designed to protect businesses from the financial strain caused by ownership changes, outstanding debts, or the loss of essential personnel due to disability, death or severe illness and injury.

• For example, contingent liability insurance is crucial for businesses where shareholders or directors sign surety or provide personal security for business loans. If a key shareholder or director becomes permanently disabled or passes away, this insurance ensures the business can pay off the outstanding debts, preventing financial strain.

Similarly, buy-and-sell agreements, backed by life insurance policies, help remaining co-owners purchase the shares of a deceased or incapacitated partner. This ensures the business’s continuity and fair compensation for the deceased owner’s estate, while also settling any outstanding credit loan accounts.

• Another essential long-term insurance solution is keyperson insurance, which protects businesses from financial losses resulting from the death or permanent incapacity of a critical team member. By compensating the business for potential revenue loss or operational disruptions, keyperson insurance supports stability and long-term resilience.

2. Affordable and Flexible Insurance Solutions for Sustainable Growth

Traditional one-size-fits-all insurance policies are no longer sufficient in addressing the unique risks faced by modern enterprises. BrightRock stands out in the insurance space by offering tailored solutions that align with a business’s specific needs. Whether it’s structuring flexible payment options or ensuring cover adapts as the business grows, customised insurance is key to building financial resilience.

3. Adapting to an Evolving Risk Environment

The insurance landscape is shifting to meet the demands of businesses navigating an increasingly uncertain world. The latest reports indicate a growing need for adaptive risk management solutions, integrating technology, and more responsive cover models. As regulatory requirements evolve and businesses face new challenges, insurance providers must continue to innovate, ensuring that businesses remain protected against both current and future risks.

*Sean Hanlon is Executive Director at BrightRock Insurance.