Isaac Moledi

Isaac Moledi

The South African insurance industry grew by 14 percent during the first half of this year compared to the same period last year, with total premium and investment income increased to more than R124 billion from R108,4 billion.

Compared to the second half of last year, total income increased by one percent from R122,2 billion, according to the 2008 half-yearly statistics for the long-term insurance industry released by the Life Officers Association (LOA) last week.

A healthy net inflow of R17,1 billion was recorded, an increase of 95 percent from the first half of last year when the net inflow stood at a modest R8,8 billion.

The LOA 2008 statistics also show that life insurers also continued to attract new premiums during the first half of this year, despite consumers grappling with interest rates and the high cost of living.

Gerhard Joubert, chief executive of the LOA, says new premiums grew by 5 percent to R31,9 billion in the period from January 1 to June 30 this year, compared to R30,2 billion in the second half of last year.

Compared to the first half of last year, new premiums were up by 22 percent from R26,2 billion.

But Joubert says the statistics confirm that South Africans are feeling the pinch.

While consumers bought 13 percent more recurring premium policies in the first half of 2008, compared to the same period in 2007, there was a slight decline in recurring premiums for individual business of 7 percent from R4,9 billion in the second half of 2007 to R4,6 billion in the first half of 2008.

The statistics measure life, disability and endowment policies. They exclude retirement annuity and credit life policies.

Joubert says this decline is likely to increase further.

An independent study commissioned by the LOA last year into the life and disability insurance shortfall for South African households showed South Africans are underinsured by an estimated R10 trillion.