South Africans could soon be paying as much as 5% more on their premiums as insurers face growing risks both globally and locally.<\/p>\n
The country is now considered \u201cvery risky\u201d due to mounting flood and fire dangers, as well as risks to people and infrastructure following last year\u2019s deadly riots, according to Paul Hanratty, chief executive officer at Sanlam.<\/p>\n
Africa\u2019s biggest insurance group has seen rising claims stemming from rolling blackouts as well as growing costs relating to crime. Half-year results on Thursday showed a 7% fall in net operational earnings, dragged lower by a 57% slump in general insurance net earnings.<\/p>\n
\u201cI think it could push premiums anything up to 5% depending on the type of cover that you have, and doesn\u2019t sound like a lot but remember when you\u2019re already facing big inflationary increases and you have to add that on top, it can be quite debilitating for consumers,\u201d Hanratty said in an interview with Bloomberg.<\/p>\n
The situation is made worse by reinsurers raising the price of coverage, particularly in South Africa where they have lost money since the start of Covid-19, Hanratty said.<\/p>\n
\u201cNone of 30 reinsurers that Sanlam works with have pulled out, but the biggest and most important ones have indicated that they are not going to provide as much cover to us and some have indicated as much as a 50% reduction in the cover that they will provide to South Africa,\u201d he said.<\/p>\n
For the rest of the year, Sanlam expects the difficult operating environment to persist, while customers will feel the full impact of repricing in 2023.<\/p>\n
\u201cI think the economy will recover slowly, and I do expect to see some growth coming back, but the problem is the surge in inflation, energy prices and so on is putting consumer incomes under pressure,\u201d Hanratty said. \u201cConsumption, but also the savings rate, is going to come under enormous pressure.\u201d<\/p>\n