Strong solvency buffers position insurers to honour R297bn in claims for first half of 2025.
South Africa’s life insurance sector ended the first half of 2025 in a robust financial position, with assets under management rising to R4.8 trillion, up from R4.5 trillion at the end of 2024, according to data released by the Association for Savings and Investment South Africa (Asisa).
The industry’s solvency capital ratio stood at 1.89, nearly double the regulatory requirement set by the South African Reserve Bank’s Prudential Authority, underscoring the sector’s resilience despite sustained economic pressures.
Asisa members collectively managed 45.6 million risk and savings policies on behalf of individuals by the end of June 2025, a marginal increase from 44.4 million six months earlier. In addition, about 85 000 group schemes were administered for employers and other organisations.
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Gareth Friedlander, a member of the Asisa Life and Risk Board Committee, said strong solvency buffers remain central to the industry’s ability to meet its obligations.
“The key indicator of the industry’s health is the average solvency buffer, which has consistently been around double the Prudential Authority’s requirement. Strong capital buffers ensure that life insurers are in a position to pay claims and policy benefits, even during difficult times,” he said.
During the first half of the year, life insurers paid R297 billion in claims and benefits, including life, disability, critical illness, and income protection policies, as well as pension and endowment payouts.
Friedlander noted that these payments often follow “a tragic event like death, disability or diagnosis of a severe illness,” but also form part of planned life events such as retirement.
Asisa data shows the industry settled 95.6% of death claims in 2024, paying beneficiaries of life and funeral policies R39.5 billion in benefits.
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Mixed performance across policy categories
At the end of June, insurers held 36.8 million active risk policies, comprising 17 million funeral policies, 7 million credit life policies, and 12.8 million life, disability, and income protection policies. Recurring premium risk policies grew modestly by 1.6% over the period.
However, around 4.5 million recurring premium risk policies lapsed in the first half of 2025. While some lapses may reflect policyholders switching to alternative providers, Friedlander cautioned that financial strain remains a major factor.
He warned that those cancelling cover may struggle to obtain new policies on the same terms, leaving families vulnerable in the event of a crisis.
The number of recurring premium savings policies, including endowments and retirement annuities, declined from 5 million at the end of 2024 to 4.9 million by mid-2025, largely due to maturities and policy surrenders. More than 233 000 policies were surrendered, often as consumers drew on savings to cope with financial pressure.
“Consumers are more likely to surrender their savings policies during tough times to cope with financial hardship,” Friedlander said.
This article was republished from Moneyweb. Read the original here.
