The Future of the South African Insurance Industry

December 9 - 2008 comes to a tumultuous close, with the global economy as unstable as ever, and the local market reacting as it does to the volatility of things. Several experts in the South African insurance industry came together to discuss what elements will affect the market next year.

One thing that is sure to impact the industry, especially short term insurance, is legislation. "Ongoing legislative changes related to the short term industry could impact on a number of common practices currently in place in the industry," explained the chairperson of the Financial Intermediaries Association (FIA), Barry Taylor. "The ever increasing cost of governance and compliance with regard to legislation continues to be an issue for the industry."

The global economic conditions will definitely influence the insurance industry next year. Losses incurred by huge insurance companies such as AIG have brought into question the of stability of these giants and will continue to cause waves in the industry. "In addition," said Anton Ossip, the CEO of Alexander Forbes Risk and Insurance Services, "the effect of the ownership of AIG and how the US government deals with their investment going forward, will also have an impact."

Local cost pressures caused by growing crime rates, vehicle insurance claims and high inflation will continue to affect the insurance industry next year. Experts believe that as the cost of living continues to rise in South Africa, less people will be able to afford premium payments, and the industry will see a rise in fraudulent claims.

The weather, though difficult to predict, may very well impact the industry next year, especially if major catastrophes such as floods or violent storms occur. Even events abroad may impact the global - and therefore the local - market.