South African Insurance Outlook

Insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company The company pools clients’ risks to make payments more affordable for the insured. Most people have some insurance: for their car, their house, their healthcare, or their life.

Despite Blacks being the largest population group in South Africa, there are the least to be covered with White being the top population group that is covered. This can not only be attributed to misconception of understanding insurance, income categories also plays a role. Indians are the seconds largest population to be covered. Only 16% of South African population is covered with medical aid.

With widened Insurance Gap in the country, income active earners are under insured since their insurance need is more the actual cover. This is the underlying reason why most South Africans are not insured; income predetermines the cover. If income is stretched, then it speaks of competition between essentials and insurance covers. Basically there will be a trade-off between the two. Low Income countries have the lowest insurance penetration for obvious reasons of survival, this does not down play the aspect of misconception of insurance at large i.e insurance being for the rich etc. Often times people do understand the risk of not being insured but still choose take that risk due to affordability.

Mainly South African’s priority on insurance is on Funeral cover (both individualized and through group society) and only a fraction of the population is insured with other products. Demographics reveals that black South Africans are the least to be insured despite being the largest population group. This population can be reached and insured more effectively through penetration of the group societies, tailoring products for families, early pay-out and less paper-work can assist penetrate this market.

Most private companies do not take pension funds for their employees, only public service shows a high percentage of its employees with a secured pension. Companies needs tailored made products that will encourage them to cover their employees, products should be affordable.

Research shows that many South Africans also have misconceptions about life cover, examples being that “It’s just for the rich” or “It’s just for those who have families”. People also think that a life insurance policy is only designed to cover death whereas disability and so-called “critical illnesses” are covered too. (Barriers limiting life insurance uptake in South Africa, 2023)

Perspective in Numbers



Asisa explain that “The study shows that South Africa’s 14.3 million income earners had only enough life and disability insurance to cover 45% of the total insurance needs of their households. The average South African household supported by at least one income earner would, therefore, be forced to cut living expenses should the earner die or become disabled, and no other source of income can be found”.



Forty-two percent of adult South Africans reported having funeral cover in 2021, down from 53% in 2019. On the other hand, 10% (2019: 12%) have life insurance, 11% (unchanged) have physical asset insurance, and 8% have health insurance (9%). An individual may have more than one type of each policy, so his or her aggregate coverage is only 19%, not 29%. (Moonstone, 2022)


Low incomes and the precarious nature of work often prevent many people from affording private medical insurance. In South Africa, over half the population earns less than R3 500 per month (US$ 191) and 50 per cent of the poorest South Africans have a negative net wealth estimated at R16 000 (US$ 873). This group of individuals is also heavily indebted as their debts outweigh their assets. Labour market research also indicates that many individuals survive by working in the informal sector. By its nature, such employment involves a lack of access to basic worker protection and benefits such as medical insurance.


On average over ZAR12,3 billion is spent on insurance premium payments monthly in South Africa. Insurance penetration, measured using premiums as a percentage of GDP, was 13.7% in 2020 – one of the highest penetrations in the world; ranking higher than the USA and the UK markets. However, as further detailed below, most of this insurance comprises funeral insurance products. South Africa holds 70% of the African insurance industry’s market premiums (FSCA,2020).


Almost three in five South Africans report having some type of insurance. According to the 2021 Fin Scope survey, 17% of South African adults report having insurance through their bank, 38% from a regulated insurance company (non-bank affiliated), and 29% report having insurance (typically some form of funeral cover) through informal channels such as a funeral parlour or burial society. (FSCA,2020).


In conclusion, insurance should be tailored to suit the specific demographics because clearly blanked approach does not work. Society insurance should be made popular in black communities and the payout should be fast with less documentation requirement because a large portion of blacks who use Society system does not like paper work hence they still remain with their system because it pays out early and has less documentation.