Property insurance, the largest category in the South African non-life insurance industry, is expected to grow at a Compounded Annual Growth Rate (CAGR) of 6.6% up till 2017 according to Timetric.
The written premium of the category is forecasted at US$6.41 billion, accounting for 46.3% of the overall non-life insurance written premium. Property insurance will benefit from an increase in the volume of natural disasters affecting the country and a greater availability of credit by banks.
Insurance companies prepare to pay large claims
Insurance companies are expected to pay large claims as the severity of natural disasters increases up till 2017. The government is attempting to improve its relief measures to rely less on international aid. However, floods and hailstorms such as those in Gauteng in 2012, and fires such as those in St Francis Bay, caused losses of US$73.4 million to South African insurers. Santam paid more than three times its average annual catastrophe claims over the past 12 years. Heidi Dias, the Head of Claims at Mutual & Federal predicts an increase in the number of claims “We are likely to see an increase in the number of claims due to the severity of floods.”
Banks will offer more credit as the economy improves
Despite a decline during the economic downturn, property insurance claims are expected to gain sales volume up till 2017. Individuals that purchase property by taking out a bank loan are required by the lenders to purchase property insurance. With the market recovering gradually and the availability of credit improving, the property insurance category is expected to pick up momentum.
