Johannesburg - Life companies remain well positioned to honour benefit payments
due to clients, the Association for Savings and Investment SA
(Asisa) said on Thursday.
In a statement it said that South Africans bought life insurance
products worth R62bn in new premiums last year, only five
percent less than was spent on new recurring and single premiums in
2008 when R65.5bn was received.
Reporting back on the 2009 sales statistics for the SA long-term
insurance industry, Peter Dempsey, deputy CEO of Asisa, said the
uncertainty caused by the global financial crisis and the resulting
economic woes had slowed consumer uptake of life products,
particular in the single premium space, in the second half of 2008
and during the first half of 2009.
"However, life insurers experienced a sudden surge of 18 percent
in new recurring and single premium business during the second half
of last year resulting in the collection of R33.6bn in new
premiums for the six month period."
This meant more than half of last year's new life insurance
premiums were collected in the latter six months of 2009 as
consumer confidence gradually started improving, he added.
Dempsey said that given the economic hardships experienced by
the majority of South Africans last year, the initial slowing in
single premium business did not come as a surprise.
"We believe that many South Africans probably chose to defer
their retirement and therefore did not have lump sum retirement
savings to invest in living annuities and compulsory annuities.
"In addition a lower number of consumers would have been
inclined to commit spare cash to their retirement annuities and
other life linked investments."
Dempsey added, however, that the reluctance to commit single
premiums started changing in the second half of last year when
demand in new individual single premium business increased by 20%.
He said new recurring premiums also showed an 11%
increase in the second half of last year from R6.1bn to R6.7bn, bringing the total half yearly increase for new recurring
and single premium business to 18%.
"In addition to purchasing new life and disability insurance and
savings policies last year, policyholders also maintained and
increased their recurring premiums for existing business."
Total recurring premiums increased by nine percent last year
from R61.3bn in 2008 to R66.8bn in 2009.
Dempsey said that while the life insurance industry had assumed
the brace position given the economic hardships experienced by
South Africa last year, the impact had not been as severe as had
initially been expected.
"Total income for the industry from existing individual
premiums, group insurance premiums, investment income and fees
dropped by only one percent in 2009 compared to 2008, from R251.9bn to R248.8bn."
He added that the industry's total assets increased by four to
R1.13 trillion at the end of December last year from R1.08 trillion
at the end of December 2008.
This brought the industry close to the pre-crisis asset levels
of R1.15 trillion held at the end of 2007.
"Long-term insurance industry assets continue to strongly exceed
liabilities by more than three times the legal reserve buffer
required.
"This is good news for policyholders as it means that life
companies remain well positioned to honour benefit payments due to
clients," he said.
- Sapa