ARTICLE
18 December 2017

South African Re/Insurers Will Seek Creative Solutions To Counter Low Economic Growth

CC
Clyde & Co

Contributor

Clyde & Co is a leading, sector-focused global law firm with 415 partners, 2200 legal professionals and 3800 staff in over 50 offices and associated offices on six continents. The firm specialises in the sectors that move, build and power our connected world and the insurance that underpins it, namely: transport, infrastructure, energy, trade & commodities and insurance. With a strong focus on developed and emerging markets, the firm is one of the fastest growing law firms in the world with ambitious plans for further growth.
During the recent mid-term budget policy statement, Minister of Finance Malusi Gigaba confirmed the view of the majority of economists that growth in South African ...
South Africa Insurance

Industry will be forced to innovate as GDP forecasts revised downwards

During the recent mid-term budget policy statement, Minister of Finance Malusi Gigaba confirmed the view of the majority of economists that growth in South African will likely fall to 0.7%. The outlook is set for a slight pick up to 1.1% in 2018, and 1.5% in 2019.

While this foreshadows a difficult economic environment for insurers and reinsurers, we foresee that this will spur a creative period for product development and cost containment. We have already seen the adoption of blockchain technology, PPK products, and combined service offerings in the motor vehicle insurance market.

Increased pressure on the market will likely see a race between re/insurers to capture the lower LSM market (largely non-participants in the non-life insurance market) firstly by cutting costs on traditional products, and secondly by rapid implementation of micro-insurance products after the promulgation of the Insurance Bill, 2016.

While tough macro-economic factors will keep the pressure on growth for insurers, this period will also be one of opportunity for those who embrace the challenge to adopt new solutions for the market.

You can read the rest of our insurance predictions here.

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