SA insurance premiums reach R110 billion

South Africa’s property and casualty (P&C) insurance industry is turning a tidy profit, with R110 billion in premiums collected in 2013, and a payout ratio of 87.6%.

The annual Insurance Risk Study by Aon Benfield, the global reinsurance intermediary, revealed that the P&C industry, namely insurance on homes, cars, and businesses, achieved a global underwriting profit last year.

The global insurance and reinsurance premium reached a record $4.9 trillion (R54 trillion) in 2013 – a 0.9% increase over 2012, the group said – driven primarily by growth in the P&C and health insurance segments.

The top 50 countries across the globe accounted for $1.32 trillion of the total, led by the US which pocketed $531.8 billion in 2013.

The P&C business across the top 50 markets had a combined ratio of 99.1% in 2013, according to Aon Benfield.

The combined ratio is an indicator used by insurers to measure how well they are performing. A ratio under 100% means that insurers are underwriting a profit – a ratio over 100% indicates a company is paying out more than it is receiving in premiums.

South Africa’s insurance industry (excluding health insurance) raked in just under $10 billion in the year (R110 billion) – the highest ranking African country, ahead of Morocco ($1.6 billion) and Nigeria ($1.1 billion) – with a 5 year cumulative combined ratio of 87.6%.

Top 10 P&C markets in the world

Country Premiums (US$m)
5-year combined ratio
U.S. 531,838 101.9%
Japan 94,825 103.5%
China 84,431 98.7%
Germany 71,432 99.0%
France 66,918 98.9%
U.K. 65,538 101.2%
Canada 42,179 99.0%
Italy 37,397 98.8%
Australia 34,097 99.7%
Spain 28,826 92.5%

The 2014 Insurance Risk Study includes a “country opportunity index” which ranks the desirability of the top 50 markets based on a mix of profitability, growth potential, and political environment.

The index identifies countries with a desirable mix of profitability, growth potential and a relatively stable political environment.

Saudi Arabia tops the group’s list with a 5 year cumulative ratio of 91.5% and a 5 year annualised growth projection of 8.1%.

South Africa ranks 10th overall on the opportunity index with a ratio of 87.6%, and a growth projection of 4.4%. South Africa is the second-highest ranked African country on the index behind Nigeria, ranked 7th.

Top 10 growth countries

Country Combined ratio
Growth Political risk
Saudi Arabia 91.5% 8.1% Medium-Low
Ecuador 86.9% 7.8% High
Singapore 88.9% 4.6% Low
Hong Kong 98.6% 7.0% Low
Malaysia 90.7% 6.8% Medium
Indonesia 88.2% 5.7% Medium
Nigeria 80.2% 4.4% Medium-High
China 98.7% 11.2% Medium
Chile 95.6% 5.5% Medium-Low
South Africa 87.6% 4.4% Medium

South Africa is considered a high-growth, out performer across all sectors – motor insurance, property insurance, liability insurance and overall.

Compared to last year’s report, both South Africa and China are newcomers to the high-growth out performer status.

Growth is determined based on five year annualized premium growth. While countries with five year loss ratios lower than the average of their income peers, or combined ratios below the global combined ratio, are classified as out performers.

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SA insurance premiums reach R110 billion