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Marnus van Heerden The South African Insurance Industry Survey 2016 | 31
Accountant, Psychology and behavioural
Financial Services
Tel: +27 72 789 8599 economics of insurance
Email: marnus.vanheerden@kpmg.co.za
For many years, softer sciences such as The reality of human nature and behaviour, often thought to be fully
psychology and behavioural economics understood, keeps on surprising us as it is unravelled by the world’s
have been the ugly stepchildren of the brightest minds. Is the South African insurance industry taking full
factors taken into account in decision- advantage of the opportunities that these revelations present?
making. This has changed dramatically
in recent years with Daniel Kahneman Psychology - understanding the African market based on
(a Nobel Prize winner) and Dan Ariely Maslow’s hierarchy of needs
revolutionising the economics world South Africa accounted for US$49.16 billion of the US$68.97 billion
with their studies into human bias.1 of Africa’s gross written insurance premium (GWP) in 2014. This is
Notable Harvard law professors have 71.9 percent of the African insurance industry. South Africa’s gross
backed their studies, which has resulted domestic product (GDP) was US$352.8 billion in 2015. The GDP for
in the White House and the World Bank Africa was US$2 435 billion in 2015. SA's GDP represents 14 percent
employing behavioural economists of Africa’s GDP. Does it make sense that a country with 14 percent of
to help them make better decisions. Africa’s GDP attains 74 percent of GWP?
This has brought about policies such
as Obamacare, proving that ignoring GDP GWP
the irrationalities of the consumer
would be simply irrational. How could South Africa South Africa
an understanding of psychology and Rest of Africa Rest of Africa
behavioural economics help us to
comprehend the insurance industry?
1 Thinking Fast and slow- Daniel Kahneman
Predictably irrational – Dan Ariely
