Slow First Half for Life Insurance Industry

September 30 - From January to June 2009, individual business in the South African life insurance business dropped 14%, attracting income of R27.7 billion.

In comparison to the second half of last year, the numbers dropped from R32.4 billion.

While the industry was expecting a slowdown, experts believed that it would be more intense overall.

"Given the magnitude of bad news that consumers have had to absorb over the past 12 months, we are surprised that the slowdown did not prove more intense," said the Deputy Chief Executive Officer of Savings and Investment South Africa (ASISA), Peter Dempsey.

"Until the end of last year, the industry was still seeing a growth in new business. But when the outlook for global financial markets and the local economy had not improved by early this year, consumers put on the brakes."

Dempsey said that despite the slowdown, life insurance groups were still healthy and well positioned to serve their clients.

Other good news showed that there had been a 26% reduction in policy surrenders.

This not only served the industry as a whole, but also the individual insurance policyholders who managed to protect the value of their investments in this way.

"Faced with a lower sales rate, a number of companies intensified their focus on business retention," said Dempsey. "We also believe that policyholders who really felt the pinch probably surrendered their policies in the second half of last year."

"Those that could hold on to their policies would have done so given the lower fund values caused by volatile markets and falling interest rates," he said.

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