The South African general insurance industry is set to grow at a compound annual growth rate (CAGR) of 5.8% from ZAR181.5 billion ($9.8 billion) in 2024 to ZAR227.6 billion ($11.2 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the South African general insurance industry is expected to grow by 7.7% in 2024, supported by rising vehicle sales, increasing demand for policies covering natural catastrophic (nat-cat) events, and growing incidents of cybercrimes.

Sutirtha Dutta, Insurance Analyst at GlobalData, comments: “The South African general insurance industry grew by 14.7% in 2023, recording the highest growth in the last five years. The growth was supported by strong performance of the key economic sectors such as automobiles, construction, and financial services. However, the growth of general insurance industry is expected to remain subdued in 2024 and 2025 due to slower economic growth.”

Motor insurance is the leading line of business in the South African general insurance industry, which is expected to account for 42.5% share of the general insurance GWP in 2024. It is expected to grow by 5.6% in 2024, supported by growing vehicle sales. According to the Automotive Business Council (NAAMSA), total vehicle sales increased by 6.8% in July 2024 as compared to July 2023.

The growing popularity of electric vehicles (EVs) and new energy vehicles (NEVs) will also support the growth of motor insurance. Sales of New Energy Vehicles (NEV) increased by 82.7% during the first quarter of 2024 as compared to the same period of the previous year.

Dutta adds: “Rising premium rates will also support motor insurance growth. The increasing prices for automobiles, frequent nat-cat events, as well as rising cases of vehicle theft and road accidents, have led to an increase in the overall cost of claims for insurers. As a result, insurers are expected to reassess their risk exposure and increase the premium rates for motor insurance. Motor insurance is expected to grow at a CAGR of 6.5% during 2024-28.”

Property insurance is the second-largest line and is expected to account for 40.9% share of general insurance GWP in 2024. It is expected to grow by 10.2% in 2024, supported by continued demand for nat-cat policies. The increased frequency of nat-cat events has led to a rise in losses, which is reflected in an increase of reinsurance costs. The combined ratio for primary insurers has increased from 87.7% in March 2023 to 92.5% in March 2024, as reported by the South African Reserve Bank,  resulting in a rise of property insurance premium rates.

Dutta continues: “Ongoing and upcoming infrastructure developments are also expected to support the demand for property insurance, which is projected to grow at a CAGR of 5.6% over the period 2024–28.”

Liability insurance is expected to account for 4.9% GWP share in 2024. The rising incidents of cyber risks and requirement for enhanced cyber security measures due to rapid digitization will support the growth of liability insurance.

South Africa experienced a 22% surge in cyberattacks in 2023 as compared to the previous year, with small businesses being the most exposed, according to the South African Banking Risk Information Centre (SABRIC). Liability insurance is expected to grow at a CAGR of 3.9% during 2024-28.

General Insurance Personal Accident and Health (PA&H), financial lines, Marine, Aviation and Transit (MAT), and miscellaneous insurance are expected to account for the remaining 11.7% share of the general insurance GWP in 2024.

Dutta concludes: “The general insurance industry in South Africa presents a positive growth outlook over the next five years, driven by infrastructure expansion, increased demand for parametric insurance in the agricultural sector, and growing demand for cyber insurance. However, economic volatility, and increasing losses from nat-cat events may create obstacles to the industry’s growth in the short term.”