Cape Town - A comparison of the trading statements of the country's two biggest insurance groups, Old Mutual and Sanlam, shows a life insurance market where middle-income consumers appear to have lost appetite for traditional life products.
Individual recurring premium income is core to the life assurance operations of both groups, but their new business inflows were generally poor.
Old Mutual's individual recurring premium sales grew 7 percent in the first quarter.
While not directly comparable, Sanlam's new life business, including single and recurring premiums, was 4 percent lower in the first four months.
This compares with a 37 percent rise in new recurring retail premiums for Metropolitan Holdings in the quarter. It traditionally tackles the middle to lower life assurance retail market.
Both Sanlam and Old Mutual reported very low individual single premium growth, although neither gave figures.
Old Mutual said its individual single premium business had remained "at the same depressed levels as ... last year".
Sanlam said demand for single premium investment-linked life business "has remained low".
Paul Hanratty, the deputy managing director of Old Mutual South Africa, said part of the reason was that recent maturities were lower than illustrative values and the misconception had arisen that long-term life assurance returns were poor.
The changing tax environment had made unit trust and fixed interest returns more tax efficient than long-term insurance. Bonds and cash returns had been strong performers against equities in the past decade.
Wally Harris of Sanlam's corporate finance department said the widening of the gap between short- and long-term interest rate returns had made unit trust and money market returns more attractive than long-term life assurance product returns.
Volatile equity markets meant investors were keeping their investments in products that offered a higher degree of liquidity, he said.