South African insurance sector shows resilience amid economic headwins, report says

The South African insurance sector has not only sustained its performance but has built upon the robust outcomes recorded in 2023, demonstrating a remarkable degree of resilience amid persistent economic headwinds.

This is the central finding of the 2025 KPMG Insurance Industry Survey, a publication that has served as a benchmark for over 25 years.

The latest edition analyses the financial results of 28 non-life insurers, sixteen life insurers, and four reinsurers, offering a comprehensive view of the sector’s operational and strategic evolution.

The theme of this year’s survey, “Up in the air”, aptly reflects the multifaceted challenges insurers are navigating, balancing internal priorities with external pressures, all while managing profitability in a climate of uncertainty.

Despite these complexities, the industry has continued to build momentum, leveraging strategic interventions such as rate adjustments, cost containment, process optimisation, and stricter underwriting protocols, the report found.

“The industry continues to benefit from the strategic measures implemented in recent years, such as rate increases, cost containment measures, process efficiencies, and the application of stricter underwriting principles, to name a few. The approach taken by the industry to achieve these results underscores their commitment to long-term resilience and strategic foresight, ensuring that long-term stability is not compromised in the interest of short-term gains,” says Mark Danckwerts, partner: Africa Insurance Lead at KPMG South Africa.

The report reveals that Life insurers reported a solid performance for 2024, with growth supported by resilient premium flows, normalised claims ratios, strong investment returns, and accelerated digital transformation. Premium growth was moderate, largely driven by inflation-linked indexation of existing policies. However, elevated interest rates and inflationary pressures did affect policy lapse rates and consumer affordability. Claims ratios, which had stabilised in 2023, continued to reflect improved underwriting margins into 2024, supported by steady reinsurance costs.

According to the data, equity markets delivered strong returns, particularly in the latter half of the year, resulting in positive fair value gains across investment portfolios and enhanced embedded value growth for most life insurers.

The sector also intensified its focus on digital transformation, with notable investments in AI-driven underwriting, automated claims processing, and digital sales platforms. These innovations were complemented by the expansion of bancassurance and partnership models, especially in underserved rural and township markets, it says.

The report says the top five life insurers posted solid results, buoyed by strategic expansion, investment performance, and operational efficiencies. Their balance sheets remain robust, underpinned by innovation, cost discipline, and market diversification.

“Life insurers have risen to the occasion and showcased the stability of their business model over the last few years. The results that they have reported have underlined the strong foundations on which they are operating,” says Danckwerts.

The report reveals that in the non-life segment, 90% of insurers reported improved results for 2024, a testament to the sector’s resilience amid economic turbulence. Insurance revenue rose by 9.8%, from R140.4 billion in 2023 to R154.2 billion in 2024, outpacing the average inflation rate of 4.40%. This growth is particularly notable given the pressure on consumer disposable income and heightened market competition. Profit after tax also saw a significant increase, rising from R14.2 billion to R17.7 billion, a 24.6% uplift. “Ninety percent of the non-life insurance industry reported improved results for 2024, demonstrating the resilience of this market over the year, despite challenges experienced from economic headwinds,” notes Danckwerts.

Investment performance was bolstered by favourable market conditions, including improved investor sentiment following the establishment of the Government of National Unity (GNU), its positive impact on equity markets, and a persistently high interest rate environment, the report finds.

Underwriting results were driven by a favourable claims experience and strong revenue growth, despite intense competition. Insurers made strategic advances in portfolio management and risk selection, with the timing of these initiatives proving fortuitous given the broader industry upswing.

The reinsurance market also reflected a positive shift, with improved performance indicators across the board. Strategic efforts to moderate risk exposure, such as premium rate adjustments and underwriting limitations, combined with a benign catastrophe claims environment, contributed significantly to profitability. Insurance revenue among reinsurers increased by an average of 7%, with individual growth rates ranging from 3% to 12%, marking a sharp reversal from the 2% decline recorded in 2023. The insurance service result surged by 89% year-on-year.

Reinsurers are now entering a phase of softening rates, with pricing power gradually shifting towards primary insurers. This follows a prolonged period of hardened rates and conservative underwriting practices. The capital buffers built during this time are expected to cushion the impact of rising claims costs driven by catastrophe events, inflationary pressures, geopolitical instability, and competitive strain on underwriting margins.

“While the past year has been marked by benign catastrophe claims events, lower levels of electricity supply disruptions, and robust returns on investment, behind the scenes, several strategic initiatives are underway. From climate, third-party and cyber risk management, ESG reporting, climate risk modelling, M&A and partnership activity, and implementation of AI initiatives, to name a few. 

“What is clear is that operating in today’s business environment is no easy task and it is not only about balancing profits. For the insurance industry, the key to success lies in embracing the opportunity and capitalising on change. If there is one thing we know, it is that the insurance industry is a savant in responding to change and remarkably resilient. We have seen time and again that insurers have risen to the challenge, adapting to internal and external pressures while staying true to their purpose and continuing to provide unwavering support to society," says Danckwerts.

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