Long Term Insurance Passes R1 Billion Milestone

April 15 - South Africans spent R103.6-billion on premiums for life and disability insurance, as well as savings policies in 2007, according to long term insurance sales statistics that were released last week. This represents a 13% increase over statistics from the previous year, when spending of R91.9-million was reported.

CEO of Life Offices Association (LOA), Gerhard Joubert, said that a significant factor of these long term insurance statistics was that new individual recurring premium business increased by 22%, while there was a 12% growth in new individual single premium business. "In total, the life industry managed to attract new individual premiums of R57.2-billion during 2007, an increase of 14% over the R50.2-billion attracted in 2006. This is a very healthy growth rate, indicative of renewed consumer confidence in the life insurance industry."

Joubert noted that this growth was seen across the board, experienced by small and middle sized companies as well, and not only limited to large long term insurance companies.

Despite these numbers, individual studies show that the South African public is still grossly uninsured and there is still enormous room for growth. An LOA study recently revealed that a cover gap of over R10-trillion exists.

Other statistics shown in the 2007 sales report were that the life insurance industry paid individual policy holders out an estimated R90.7-billion - up by 13% from the previous year.

Due to the tough economic environment, as was expected, a greater increase of lapses and surrenders occurred in 2007. All in all, from June to December 2007, the sales report showed an increase in 14% in lapsed premiums from the first half of the year, and a 31% increase in a year on year comparison.