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98 | The South African Insurance Industry Survey 2016
1 July 2014, the start of the crop season. The book was sold to Landbank’s –– Increased service delivery protests have increased the Sasria loss ratio by
insurance subsidiary and for the 2015 financial year effected through a 100% 6,8%. Approximately 81,0% of these claims emanate from strike and labour
quota share arrangement with Landbank Insurance. disturbances and 19,0% from non-political riots, which include service delivery
protests, xenophobia and taxi violence. We don’t expect an improvement in
Although crop GWP approximated R450 million, the margins were low and the Sasria’s underwriting performance for 2016 due to the Pickitup strikes and
overall impact on the net underwriting margin in 2015 was positive. #feesmustfall.
The commercial books performed well for Standard Insurance and Nedgroup –– The bancassurers, Nedgroup Insurance and Standard Bank Insurance again
Insurance. This was not the case for Absa Insurance. Commercial business is managed to limit their claims ratio to below 50% at 46,3% and 41,1%
sold through a network of independent brokers. As a result of a restructuring respectively. Absa with a slightly more diversified portfolio recorded a 66,0%
in the bank’s commission arrangements due to the impending RDR legislation, loss ratio and 75,1% for Absa idirect.
Absa lost some of their commercial brokers and the portfolios they administered
– mainly to Santam –– Previously we reported that Zurich embarked on an exercise to offload non-
profitable business. This year they have reaped the benefits from this and
Profitability improved their loss ratio by 9,0%.
Improved claims ratios have resulted in the combined ratio improving from As expected motor business was the class of business with the worst claims
98,0% recorded in 2014 to 94,4% in 2015. This combined ratio differs from the ratio at 64%, only 1% lower than 2014.
results announced by the Financial Services Board (reported a combined ratio
of 87%) in their quarterly report for 2015 due to the following factors: The expense ratio for the industry increased by 1,2%. Intermediary supported
–– The report published by the FSB is for the calendar year ended insurers continue to struggle to avoid duplication of their administration activities
and those performed at the intermediary. The implementation of SAM is adding
31 December 2015 whereas the KPMG survey focusses on the published 0.7% on average to the cost ratio (0.5% of GWP).
results for the companies based on the their specific financial year-end date
during the 2015 calendar year. The JSE All Share Index closed the year only 2% higher than in 2014. 25% of
the short-term insurance industry’s investments are invested in shares and as
–– The KPMG survey does not include the results of some of the niche insurers. a result there is an expectation that the investment performance would be flat
It is predominantly these insurers that improve the claims results due to their and that upside would really be generated from the increase in the interest rates
speciality lines of business. that were effected during the year. The investment return increased by only 1%
during the year for the industry.
–– Different treatment of the results posted by the cell-captives.
. . . and in other news
Natural disasters such as significant hail events or flooding were benign in 2015.
It is also expected that the full impact of the drought will only become apparent We are reminded of recent headlines that have made the last 12 months
in the 2016 claims statistics. exciting and unique in the industry:
–– Chubb launches multinational political violence & terrorism cover in South
Despite the improved claims statistics for the industry as a whole, there are
some outliers that must be considered. Africa.
–– A significant improvement in the Escap claims ratio (improved from 222,0% to
–– King Price Insurance extends its product offering to include business
80,3% or R1,4 billion). The 2014 claims were blemished by the loss incurred at insurance.
the Duvha power station.
