South African insurers are increasingly embracing innovative approaches to business generation, says S&P Global Ratings (S&P).
In a report titled “Credit FAQ: Key Trends In The South African Insurance Industry", published yesterday, S&P Global Ratings credit analyst Sylvia Mhlanga said, "We expect widespread digitalisation and the adoption of AI will improve operational efficiencies and reduce costs for insurers over the long term."
This also means, however, that insurers could become more vulnerable to cyber attacks. A significant cyber attack could cost reinsurers and insurers a considerable portion of their average annual earnings.
Insurers and banks are moving toward integrating financial services under one umbrella, which is reshaping the financial landscape in South Africa. By diversifying their product offerings, banks and insurers will likely mitigate the risks associated with economic fluctuations and thereby stabilise their financial results.
S&P expects the South African insurance industry's solvency will remain stable if insurers continue to adopt sound risk management practices and maintain adequate capital reserves.