South Africa:Insurance industry sees signs of adaptation, innovation, and resilience

The South African insurance market is showing encouraging signs of adaptation, innovation, and resilience across the insurance value chain, according to the 2024-2025 Insurance Barometer Report.

The report, published by Santam—South Africa's largest short-term insurer—adds that brokers are evolving their roles to remain relevant in a more challenging operating environment, while insurers are investing in smarter technologies, targeted risk mitigation, and more responsive claims handling. In the 2022–2023 Insurance Barometer, Santam emphasised the need for greater client education, stronger broker support, and more proactive risk advisory services to move beyond traditional models of risk transfer. It added that steady progress was being made toward these goals.

The report contains the findings of a survey that highlights critical gaps and vulnerabilities that need to be addressed, alongside opportunities for growth across South Africa’s evolving insurance landscape. Respondents’ perceptions have been shaped by a series of disruptive events that have tested the resilience of businesses, households, and the insurance sector alike.

Mounting risks

The insurance sector in South Africa now faces mounting deteriorating infrastructure, economic stagnation, increasing weather volatility, and the growing intangible threat of cyber exposures, having navigated the COVID-19 pandemic (2020-2021), civil unrest (2021), and severe flooding (2022).

The survey, conducted from January to April 2025, comprises 881 structured interviews with South African respondents, including 402 consumers, 350 corporate and commercial businesses, and 129 brokers. The sample remains consistent year-on-year across key demographics, industry sectors, and brokerages. This allows for meaningful comparisons over time and offers a clear view of shifts in perceived key risks, claim drivers, cover adequacy, and service performance.

In contrast to the 2023 Insurance Barometer, which highlighted a series of catastrophic events that prompted insurers and reinsurers to re-evaluate coverage, underwriting practices, and product development, the 2025 Insurance Barometer indicates that the past two years have been characterised by increased weather volatility, a cost-of-living crisis, and geopolitical tensions.

Overall, respondents identified crime, economic instability, and failing infrastructure as their top concerns over a two-year horizon. Climate change – also referred to as weather volatility – and cyber crime, with a notable increase in awareness across all respondent groups.

While these challenges are rooted in the local context, they reflect a broader global trend in the evolving risk landscape reshaping insurance markets worldwide. South Africa’s domestic issues are marked by their intensity and persistence, exacerbated by limited state capacity and a widespread reliance on public services, hindering insurers’ efforts to make insurance more accessible and narrow the ever-present risk protection gap.

Severe weather-related catastrophes

The report said, “The past year has reaffirmed what reinsurers and risk professionals have cautioned for some time: we are now operating in a new normal defined by frequent and severe weather-related catastrophes. A decade ago, insured losses from global natural disasters rarely exceeded $100bn in a year. Today, that level of loss is not only common – it’s expected. Events once considered 'one-in-a-100-years’ occurrences are now happening roughly every 20 years, with major catastrophes striking every three to five years.”

Global catastrophe patterns are mirrored locally. South Africa’s 2022 KZN floods remain the country’s costliest insured event, with claims totalling ZAR15bn ($839m) to ZAR1bn, and an estimated total economic impact of ZAR54bn. This highlights the persistent gap between insurable losses and overall economic losses.

In areas where risk is poorly understood or where failing infrastructure amplifies the impact of extreme weather, insurance coverage becomes increasingly difficult to price and provide. This is particularly concerning, as urban development continues in flood-prone or inadequately serviced areas. Santam has witnessed first-hand the ongoing expansion of building activity into high-risk areas, such as floodplains in Ladysmith and St Francis Bay, and dolomitic zones like Centurion.

Santam’s 2024 claims data reveals notable shifts in trends. The company’s commitment to sustainable underwriting – through higher excesses for selected risks, segmented premium increases, and enhanced risk selection and rating – helped limit the increase in average cost per claim (ACPC) in 2024.

Automation and artificial intelligence are streamlining a wide range of administrative functions, including digital claims processing and improving turnaround times. These, and other emerging technologies, are becoming essential as we strive to balance affordability with sustainable underwriting practices.

No line of insurance remains untouched

The 2025 findings reinforce that no line of insurance remains untouched by today’s evolving and interconnected risks, and no client is immune to the cascading effects of infrastructure decay, economic turmoil, and geopolitical fragmentation.

The overarching message is that the insurance industry will be shaped by stakeholders’ collective ability to anticipate and manage evolving risks, minimising their impact rather than simply reacting to them.