SA’s insurance industry to hit R200 billion by 2028 as disasters, cyber crimes take their toll
South Africa’s general insurance industry is set to grow at a compound annual growth rate of 5.8% in the next four years, according to a forecast by GlobalData.
The global analytics and data company predicted that the value of gross written premiums in the country would grow from R181.5 billion in 2024 to R227.6 billion in 2028.
The company’s insurance database also reveals that SA’s general insurance industry will grow by 7.7% in 2024 alone.
GlobalData said this growth would be driven by an expected rise in vehicle sales as well as increasing demand for policies that cover natural catastrophe (nat-cat) events. The growing scourge of cyber crime is also expected to fuel growth in the insurance industry.
Motor vehicle insurance is currently the largest segment of the general insurance industry, at 42.5%, and with growth of 5.6% expected for 2024.
However, increased risk factors are set to result in higher insurance premiums.
“Rising premium rates will also support motor insurance growth,” said Sutirtha Dutta, insurance analyst at GlobalData.
Rising vehicle prices as well as an increase in vehicle thefts and road accidents mean insurers are now paying more for claims.
“As a result, insurers are expected to reassess their risk exposure and increase the premium rates for motor insurance. Motor insurance is expected to grow at a CAGR (compound annual growth rate) of 6.5% during 2024-28,” Dutta said.
Property insurance accounts for the second largest share of the insurance industry, at 40.9%, but this segment is expected to show revenue growth of 10.2% this year, primarily from continued demand for policies that cover natural disasters.
Liability insurance, with a 4.9% share of general written premiums, is expected to see further growth on the back of rapid digitalisation and the associated rise in the incidence of cyber crime.
The rate of cyber attacks increased by 22% in South Africa in 2023, according to the SA Banking Risk Information Centre, with small businesses being most at risk.
“The general insurance industry in South Africa presents a positive growth outlook over the next five years, driven by infrastructure expansion, increased demand for parametric insurance in the agricultural sector, and growing demand for cyber insurance.
“However, economic volatility, and increasing losses from nat-cat events may create obstacles to the industry’s growth in the short term,” Dutta added.
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