|
Reinsurance basically refers to the insurance bought by an insurance company from either one or more insurance companies either directly or through a broker as a means of risk management. Both, the ceding company and the reinsurer enter into a reinsurance agreement which contains the conditions, on the basis of which, the reinsurer has to pay a certain share of the claims that are incurred by the ceding company. According to the report, “Reinsurance in South Africa, Key Trends and Opportunities to 2020”, a comprehensive analysis of the market trends is undertaken wherein drivers and challenges in the South African reinsurance segment are studied well. The South African reinsurance segment has registered a compounded annual growth rate of about 8.9% when observed starting from 2011 and ending at 2015. This report offers the values for significant market performance indicators that include- written premium, reinsurance ceded and reinsurance accepted. A proper overview of the South African economy and its demographics, along with detailed investigation of natural hazards and their impact on the South African insurance industry is provided by the report. The South African reinsurance industry is greatly concentrated, with the leading companies reckoning for a majority share of 85.6% in the industry’s total gross written premium in 2015. Herein, non-life segment yielded a premium that accounted for about 29.3% in the reinsurance market in 2015, followed by personal accident and health segment with around 8% and the life segment registering around 4.5%. Reinsurance market has prolonged to account for an indispensable component of the country’s risk management plans because of the frequent happenings of natural disasters. However, a decline in the severity of the natural disasters that took place in the country during the review period has further led to an excess in the available reinsurance capacity. Therefore, the reinsurers along with the government will have to adapt to several effective pricing and policies and efficient steps pertaining to various risk mitigation efforts that would ameliorate the market conditions on a whole and attract more customers to opt for reinsurance. Also, in order to remain competitive and profitable, the reinsurers have to be extremely careful while stepping up both adaptations of underwriting as well as optimal efforts to mitigate risk – through proper examination of the current practices of local authorities. If technology that prevails in South Africa is taken in consideration, it is found that it has been robustly securing itself to be a major factor responsible for accessing new customers in new markets thereby looking up for all the possibilities of growth. In the Middle East, like many other markets, the insurers are searching for alternative distribution routes available. With the advent of latest technology, even the aggregator websites are turning into big businesses and the market for mobile apps to sell products is also developing. Compared to other African countries, South African insurance companies have been initially steady to make a move into the mobile apps space. However, it is noticed that the number of insurers moving into this area has substantially augmented and in the coming years, a positive rapid growth is anticipated. As a result, insurers are getting more involved into looking up for innovative ideas as to how they can well deploy the new technologies like artificial intelligence and machine learning in order to enjoy savings by lessening back-end overheads, tackling fraudulent claims and bringing down the headcount. Micro-insurance is another important product that offers a significant growth potential in South Africa and a new framework for the same is anticipated to be established under the upcoming Insurance Bill, which is framed to assist the growth of this market, and highlights the groundwork for specific standards to be adequately followed. The Bill is foreseen to reduce the amount of capital required to be generally held by micro-insurance businesses and will thus, lower the regulatory norms that are required for selling such products. Favored mainly by strong cultural factors, the funeral insurance has been the most prevalent type of micro-insurance products that is currently available in South Africa. Indeed, this has accounted to be one of the country's biggest-selling policies and possesses an enormous market perforation rate due to the fear of risk of lives to almost majority of the population. Accordingly, the global micro insurance market is all set to prosper at increasing growth rates year after year. The population of this country, as depicted in the graph below, is persistently going to increase in the coming years as well since an increasing trend in the same can be witnessed from year 2012 to 2016 which will undoubtedly continue without any fail. With increasing levels of population, the South African reinsurance market on a whole has already proliferated really well if recent performances are compared with past performances and in the years to proceed as well, the reinsurance industry is all set to just get better with more and more people joining the customer base of this industry, thereby multiplying it every year and opening up great opportunities for growth and development of this sector. Several reinsurance programs have been of great importance to well cover up the losses suffered by insurers, however, shrinkage in the profit margins could make them highly vulnerable and lead to marginal reinsurance purchases for protection of carriers since they adapt to the upcoming risks. Thereby, South African reinsurers, who have adapted themselves to the augmenting scales of risk with more sophisticated risk management functions, are highly likely to come out as one of the strongest competitors of the reinsurance market in the coming years. To know more about the research report: https://www.kenresearch.com/banking-financial-services-and-insurance/insurance/reinsurance-south-africa-key-trends/111702-93.html Related reports: Governance, Risk and Compliance-The Burundian Insurance Industry Governance, Risk and Compliance-The Qatari Insurance Industry Contact Us: Ken Research Ankur Gupta, Head Marketing & Communications ankur [@] kenresearch.com +91-9015378249 www.kenresearch.com
Related Articles -
South Africa Reinsurance Market Research Report, South Africa Reinsurance Market Size,
| 
