The South African life-insurance industry grew by 14% in the first half of the year, the Life Offices’ Association (LOA) said on Thursday.
Total premium and investment income increased to more than R124-billion from R108,4-billion in the same period last year.
Compared with the second half of last year, total income increased by 1% from R122,2-billion.
The net inflow from the first half of the year increased by 95% to R17,1-billion, compared with last year’s R8,8-billion.
LOA chief executive Gerhard Joubert said the 2008 half-yearly statistics show that life insurers were continuing to attract new premiums during this period.
”New premiums grew by 5% 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% from R26,2-billion,” he said.
Consumers bought 13% more recurring premium policies during the first half of this year.
Joubert said there had been a slight decline in recurring premiums for individual business of 7% from R4,9-billion in the second half of last year to R4,6-billion in the first half of this year. This decline would likely increase the life and disability insurance shortfall in South Africa.
Joubert said an independent study by the LOA last year showed that South African families were grossly underinsured by an estimated R10-trillion.
When it came to retirement savings, the purchase of new recurring premium retirement annuity (RA) fund policies increased by 3% to R749-million in the first half of this year compared with the second half of last year.
Sales in new single premium RA fund policies increased by 11% to R3,9-billion from the second half of last year.
Joubert said the latest statistics showed that the shift from conventional annuity to investment-linked living annuity continued.
Living annuities grew by 51% to R8,4-billion in new single premiums compared with the second half of last year.
”Conventional annuities managed a growth of only 15% to R3-billion over the same period,” he said.
Joubert said the trend indicated that investors preferred the flexibility offered by living annuities.
”Not only do living annuities enable investors to change the rate of income withdrawal as needs change, but they also allow for active participation in the choice of the underlying market linked investments.
”With a conventional annuity, the annuity rate, or monthly pension, is determined by the life insurer and is dependent on the current interest rate.”
During the first half of this year, life companies paid out close to R90-billion to beneficiaries, policy holders and pension fund members.
These payouts, representing a 13% increase from the same time last year, were a result of death and disability claims, maturity pay-outs and pension and annuity payments.
Joubert said the value of surrendered individual policies — where a policy holder stops paying premiums and withdraws the reduced fund before maturity — had increased from the second half of last year by 8%, from R17,2-billion to R18,6-billion.
”This figure is not surprising given the fact that consumers have less disposable income and are therefore more likely to dip into their savings.”
Joubert said the value of lapsed policies — where the policyholder stops paying premiums before the fund value exceeds the unrecovered costs — had increased by 11%, from R1,8-billion to R2-billion.
Compared with the second half of last year, the value of lapsed policies had increased by 23% from R1,6-billion.
Joubert said the average monthly premium per policy lapsed in the first half of this year amounted to R81,84. — Sapa