The South African Insurance Industry needs imaginative answers to balance the negative effect of the sensational deterioration in the estimation of the rand since December 2015. This is as indicated by Anees Vazeer, CFO, Lion of Africa Insurance, a financial service firm. Heres how the weak rand will hurt your insurance premiums.
With no foreign equity holders, low capacity for reinsurance and unaffordable premiums for consumers a sustained weak currency poses the real threat to catapult the well established successful South African insurance industry. One of the biggest concerns is foreign owned insurance and reinsurance companies disinvesting from South Africa due to the continued weakening and volatile Rand.
Lion of Africa Insurance said that the poor results declared by foreign owned insurance companies as of now mirror the effect of the weak Rand and more are hoping to offer their South African organizations, with the resultant inconvenient effect on the industry in general.
A big concern for the South African industry is the disinvestment by reinsurance companies, many of whom are operating in South Africa through fully capitalised subsidiary companies with international companies as equity holders. The locally capitalised subsidiary companies offer local insurance companies high credit rated reinsurance balance sheets, a critical requirement in protecting the local insurance company balance sheets and reducing their capital requirements. If these companies were to close their South African businesses the quality of reinsurance and the capacity for reinsurance will decrease.Lion of Africa warned that another threat for the industry posed by the weakening Rand is consumer resistance to the inescapable increases in insurance premiums.
Insurance companies are already experiencing an increase in the value of claims due to the higher cost of imported goods and will have no other option than to increase premiums.
Looking for the best insurance deals on South African insurance products?
