More South Africans are realising the value of life cover, with purchases of risk policies up significantly in the first six months of this year, while there has been a marked reduction in lapses. However, there has been a decline in individual recurring-premium savings policies. This is according to the Association for Savings and Investment South Africa’s half-year long-term insurance statistics.
At the end of June, 40.3 million individual recurring-premium policies were in force, of which 33.2 million were risk policies (life policies, funeral policies, credit life policies, disability policies, severe illness policies and income protection policies), Asisa said in a statement on Wednesday.
This table shows the number of new and lapsed risk policies for the three reporting periods since the onset of the pandemic:
| Jan to June 2020 | July to Dec 2020 | Jan to June 2021 | |
| New risk policies | 4.6 million policies | 4.4 million policies | 5.9 million policies |
| Lapses | 5.4 million policies | 4.8 million policies | 3.7 million policies |
Hennie de Villiers, the deputy chairperson of Asisa’s Life and Risk Board Committee, said the increase in the uptake of risk policies and the decrease in lapses in the first half of this year “indicates that more than ever, South Africans are realising the value of risk cover”.
Solvency ratio
Asisa’s statistics showed that the life insurance industry held assets of R3.43 trillion at the end of June, while liabilities amounted to R3.09 trillion, leaving the industry with free assets of R334.6 billion, which is almost double the reserve buffer required by the Solvency Capital Requirements (SCR).
“Despite the unprecedented claims and benefit payments made to policyholders and beneficiaries as a result of the Covid-19 pandemic, the life industry remains in robust financial health and well capitalised to honour the long-term contractual promises made to customers,” Asisa said in a statement.
The life industry in numbers
| Jan to June 2020 | July to Dec 2020 | Jan to June 2021 | |
| Assets held | R3.10 trillion | R3.23 trillion | R3.43 trillion |
| Liabilities | R2.76 trillion | R2.89 trillion | R3.09 trillion |
| Free assets | R330.2 billion | R333.5 billion | R334.6 billion |
| Solvency Capital Requirements (SCR) ratio | 2.13 | 2.11 | 1.97 |
| Claims & benefits paid | R229.5 billion | R294.2 billion | R315.4 billion |
Savings policies
De Villiers said the number of individual recurring-premium savings policies (endowments and retirement annuities) declined from 6.1 million policies at the end of December 2020 to 6 million at the end of June 2021. Although 340 126 new policies were sold during the six-month period, 316 023 policies were surrendered.
De Villiers said this was not surprising, given the impact of the Covid-19 pandemic on the earning ability of thousands of South Africans.
Annuities
There was a 3.4% increase in the number of single-premium policies (annuities), from 2 million at the end of December 2020 to 2.1 million at the end of June 2021. De Villiers said the increase might largely be due to people taking early retirement or investing retrenchment packages.
Claims
De Villiers said the R315.4 billion paid to policyholders and beneficiaries in the first six months of this year brought the total amount injected into the economy over the past 18 months to R839.1 billion.
According to Asisa’s recent death claims statistics, 1 023 083 death claims were submitted between 1 April 2020 and 31 March 2021. The statistics reflect claims made against individual life, group life, credit life and funeral cover policies. Beneficiaries received death benefits of R47.58 billion compared to R29.08 billion in the previous 12-month period.
De Villiers said the statistics clearly show that the Covid-19 pandemic has had a devastating impact on millions of South Africans.
“Our industry has never before recorded such high numbers of death claims, and while life companies remain in a strong position to continue paying claims to grieving families, the money paid cannot make up for the life that was lost. We therefore urge all South Africans to get vaccinated rather than risk death or the long-term debilitating side effects often caused by Covid-19. Evidence from other countries with higher vaccination rates shows clearly that while Covid cases might still be relatively high in some of these countries, deaths have reduced materially,” he said.
