Nadine van Niekerk, Head Client Markets Sub-Saharan Africa L&H Re, Swiss Re

The South African Insurance industry has a long history of providing advice and ensuring that adequate life cover is allocated to high-net-worth lives in the market. We’ve seen the demand for covers above R10m, sold through the retail market, decline along with a tightening of capacity allocated by the market. The growth in the group employee benefit market continues to thrive.
We’ll look at the results of the Swiss Re Individual Life New Business survey 2023 to shed light on how this market has changed and unpack how the market is responding to continue to service the needs of this group.
Is the market growing as expected?
The South African market for high-net-worth individuals has been facing significant pressures in recent years. Economic challenges, combined with factors such as emigration, have exerted strain on the insurance sector, particularly impacting policies issued to affluent clients. We can see evidence of this in the Swiss Re survey.
More about the Swiss Re Individual New Business Volumes Survey
* The annual Swiss Re Individual New Business Volumes Survey 2023 includes data from 24 participants, encompassing all major insurers in South Africa. It explores new business sales across all life products and distribution channels.
The annual survey highlights that the tied agent and independent advisor market remains under pressure, exhibiting low growth compared to products sold without advice through alternative distribution channels. These advice channels typically service the affluent market, whereas alternative distribution channels, such as call centres and products sold via retailers, cater to the medium and mass market. On the other hand, alternative distribution channels – which focus on the mass market – have experienced comparatively better growth while leveraging their reach and convenience.
Mega Policies sold in the market
One of the critical findings from the Swiss Re survey is the lag in the number of individual mortality policies sold above R10 million sum assured, known as mega policies. Despite inflation, the number of new mega policies sold each year has remained stagnant at around 6,000 over the last decade. The average mega policy remaining around R16 million sum assured since 2017.
Reduced appetite
But is this due to demand pressure or is there another force at play? This stagnation is attributable to both economic pressures and a reduced risk appetite for mega covers.
Given the challenges associated with underwriting high-net-worth lives and losses faced in recent years we’ve observed reduced facultative support by reinsurers. Some reinsurers opt to exit the South African market entirely or reduce facultative resources to some insurers in the market. At the same time, the market is facing increased pressure to reduce underwriting requirements.
With fewer reinsurers to share the risks it’s more common now that instead of a single insurer taking on the entire risk, the coverage is distributed among multiple insurers according to the capacity allocated by their reinsurers. This strategy mitigates the risk for any one single insurer and ensures that high net worth lives are still covered locally. Only a few high-net-worth individuals have had to seek capacity in the global market for residual covers.
In conclusion, the South African market for high net worth lives is navigating a complex landscape shaped by economic pressures, emigration, changes in underwriting and evolving risk appetites. While the market faces significant hurdles, the insurance sector continues to adapt, employing innovative strategies to ensure coverage for affluent individuals. As the industry evolves, it remains crucial to monitor these dynamics and respond proactively to maintain stability and growth in the high-net-worth insurance segment.
Editor’s Thought
As South Africa’s high-net-worth insurance landscape undergoes rapid transformation, Nadine van Niekerk from Swiss Re provides a timely and insightful overview of the pressures reshaping this critical segment. From economic strain and emigration to reduced reinsurance appetite and shifting distribution models, the market is clearly at a crossroads. Yet amid the challenges, innovation and adaptation continue to pave the way for sustainable coverage of affluent lives. Nadine’s analysis highlights the importance of understanding these forces — not just to survive the shift, but to lead through it.