×

We've got news for you.

Register on SowetanLIVE at no cost to receive newsletters, read exclusive articles & more.
Register now

Cost of living burden shows in surrendered insurance policies

8.4-million recurring premium policies lapsed last year – a million more than in 2021.
8.4-million recurring premium policies lapsed last year – a million more than in 2021.
Image: 123RF/ALLAN SWART

The financial squeeze on South Africans has shown increasing numbers of consumers stopping their risk insurance premiums and cashing investment policies.

This is according to Hennie de Villiers, deputy chair of the Association for Savings and Investment SA life and risk board committee.

Asisa statistics show 689,888 recurring and single premium savings policies were surrendered in 2022. A surrender involves a policyholder withdrawing the fund value before a savings policy matures. While this is lower than in 2021, when 938,148 savings policies were surrendered, this is still too high and of concern, De Villiers said.

Data also showed 8.4-million recurring premium policies lapsed last year — a million more than in 2021. A lapse occurs when the policyholder stops paying premiums for a risk policy with no fund value.

“On the other hand, almost 1.2-million fewer recurring premium policies were sold in 2022 than in 2021, further demonstrating the financial pressure experienced by consumers,” said De Villiers.

The association, while citing volatile investment markets and a tough operating environment in 2022, said it was nevertheless well-capitalised and in a strong position to continue honouring contractual promises to policyholders and their beneficiaries.

Claims still higher than pre-Covid period

Long-term insurance statistics released on Wednesday show that life insurers held assets of R3.7-trillion at the end of 2022 while liabilities amounted to R3.4-trillion, both the same as at the end of 2021. This left the industry with free assets of R347bn at the end of December 2022, almost double the capital required by the Solvency Capital Requirements.

Policyholders and beneficiaries received claims and benefits payments worth R578bn from South African life insurers in 2022. These included claims against life, disability, critical illness and income protection policies, and retirement annuity and endowment policy benefits.

Last year, life insurers paid 501,785 death claims, 26% lower than in 2021 when death claims as a result of the Covid-19 pandemic were at their highest, but still 24% higher than in 2019, De Villiers said.

TimesLIVE

 


Would you like to comment on this article?
Register (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.