A widening catastrophe protection gap, geopolitical instability and mounting pressure on profitability are forcing South African insurers to rethink how they price risk, deploy capital and extend cover to underserved markets.
After strong financial results in 2025, the industry is navigating a more uncertain 2026, with rising claims costs and weaker investment markets threatening to erode recent gains.
These competing pressures emerged at the recent launch of KPMG’s South African Insurance Industry Survey 2026, which analyses the financial results of 15 life insurers, 29 non-life insurers and four reinsurers, alongside thought leadership on the forces reshaping the industry.
The event was emceed by Kashmira Naran, an audit partner in KPMG’s insurance practice, who engaged with a panel of experts to tease out the latest financial results and remind the audience of the industry’s noble purpose. She promised to explore how emerging trends in artificial intelligence (AI), geopolitics, resilience and reporting were filtering through to insurance stakeholders.
Derek Vice, partner and head of insurance at KPMG Southern Africa, provided the macroeconomic backdrop. He said that South Africa had enjoyed a reasonably good year in 2025 despite GDP growth of 1.1% lagging that of many of its emerging-market peers.
Vice also briefly commented on tensions across a dual economy that boasts an advanced, developed insurance market offering innovative products and services to businesses and households on one hand, and a broader, unserved market battling unemployment and poverty on the other.
Fading tailwinds in 2026
Throughout 2025, business and household consumers were benefiting from a strong currency against the dollar and pound, low inflation and interest rates, and staggering equity market returns. And there was no shortage of tailwinds for insurers servicing the developed insurance market either. Non-life insurers thrived thanks to a combination of benign natural catastrophe claims and a softer reinsurance market cycle.
Hanyani Mabaso, a partner in the firm’s insurance practice, said that the 29 non-life insurers had delivered impressive investment returns, premium growth and underwriting results.
Insurance revenue grew by 8.5% from R160.3 billion (US$9.66 billion) in 2024 to R173.9 billion (US$10.48 billion) in 2025 and profit after tax grew by 33% to R23.7 billion (US$1.43 billion). The KPMG survey covers approximately 89% of South Africa’s total non-life insurance revenue.
Mabaso warned that the outlook for 2026 results was less clear. The inflation and interest rate tailwinds disappeared as higher fuel prices filtered into headline CPI in the first half of the year, causing the South African Reserve Bank to hike interest rates by 25 basis points in May, and another 25 points in September. Financial markets were in the doldrums too. In 2025, bonds and equities returned 24.2% and 42.6% respectively; year-to-date to 30 September 2026, the JSE All Bond Index had returned just 3.54% while the JSE All Share Index was down 6.3%.
Finally, the favourable weather-related claims experience that supported insurers’ 2025 results was already showing signs of reversing over the first half of 2026.
Santam Limited reported R1.5 billion (US$90.9 million) in natural catastrophe and other large losses, net of reinsurance, for the first half of 2026, compared with just R144 million (US$8.7 million) over the same period in 2025. Large losses occurred following floods in Limpopo and Mpumalanga in January; wildfires in parts of the Western Cape in February; and severe storms and flooding in the Western Cape in May.
Climate-related catastrophes
The report warned that Africa’s exposure to climate-related catastrophes was compounded by economic vulnerability and low insurance penetration, citing Swiss Re’s latest estimate of South Africa’s natural catastrophe protection gap at 82%. Businesses, governments and households across Africa are left to absorb much of the financial damage caused by uninsured loss events.
“The life insurers included in the survey had R5 trillion (US$302.1 billion) in assets under management [representing significant] capability to invest in and direct the development of our economy,” Vice said.
Statistics from the Association for Savings and Investment South Africa (ASISA) show approximately 46.2 million in-force risk and savings policies at the end of 2025, with life insurers paying R44.2 billion (US$2.68 billion) in individual death, credit life and funeral claims during the year.
Vice said that most of the country’s large life insurers were showing positive growth in embedded value, revenue and value of new business (VNB). But in many instances, VNB margins had fallen from 2024 to 2025 and were showing further weakness in the first half of 2026.
“What that means is that whilst there is growth, it is not necessarily profitable growth,” he said. Life insurers are hard at work to reverse the experience.
Favoured approaches to improve profitability
According to the survey, the three favoured approaches to improve profitability include expense management; international expansion in pursuit of growth and diversification opportunities in Africa, Asia and the United States; and creating cross-selling opportunities by building integrated financial services capabilities across banking, investments, asset management, healthcare and insurance.
There were some conflicting messages around prospects in Africa. On one hand, Sanlam completed the regulatory integrations of SanlamAllianz across 11 jurisdictions, generating an inaugural dividend of R500 million (US$30.2 million). On the other hand, Momentum disposed of its Ghana operations and classified its Mozambique operations as ‘held for sale’ despite its broader Africa operations contributing positively to FY2025 results.
Geopolitical risks
The survey report noted that “geopolitical risk had become a significant and growing threat to the non-life insurance industry,” with global conflicts affecting exchange rates, causing supply chain disruptions and driving energy prices higher, to name a few.
KPMG actuarial partner Jan van der Merwe said that the prevailing geopolitical conditions raised awareness around non-life insurance’s role as a key enabler in the global economy.
“If there is no insurance cover or if pricing is too expensive, then ships cannot sail, planes cannot fly and trade cannot operate,” he said.
Commenting on the impact of global conflicts on domestic insurers, Van der Merwe noted claims cost inflation and household affordability challenges. Finally, he warned of growing cyberattack risks during periods of geopolitical tension.
Insurers were challenged to look beyond premium collections and claims payments to find their purpose. KPMG sustainability assurance specialist Poogendri Reddy said the industry had to consider its wider contribution to society. It needs to chip away at risk protection gaps by “increasing financial resilience to underserved populations and increasing affordability for populations that have never been covered before.”
She also questioned whether insurers’ annual reports adequately demonstrated the impact of their sustainability initiatives, arguing that reporting should extend beyond customer numbers and initiatives undertaken to include measurable improvements in financial protection and affordability.
The challenge is to find a better way than “just adding more pages to a glossy annual report” to demonstrate meaningful environmental and social impact to small businesses and informal sector households.
Growing use of AI
Panellists also offered some fresh views on insurers’ approaches to AI and its impact. “At a baseline level, we are seeing AI being used for efficiencies across all industries in writing documents, emails and creating presentations,” Van der Merwe said. “But what we are also seeing [is] some insurers applying it in some of their core functions.”
He added that AI was finding application in claims settlement, client engagement, fraud detection and underwriting, though implementation remains complex and expensive.
Firms were cautioned against allowing AI technology to operate without adequate human oversight. They will have to “adopt AI responsibly” and balance implementation costs against their needs and the value derived. On a related matter, Van der Merwe encouraged firms to see data as a strategic business asset and to implement strict data governance and security protocols.
Embracing partnerships as risks increase
The growing frequency and severity of natural catastrophes raised questions about the ability of private insurers and reinsurers to continue carrying systemic risks. Turning to the resilience theme, Vice suggested that South Africa could learn from countries where government-backed insurance structures absorbed some of the catastrophe exposure.
“The government should be getting involved [with some of these systemic risks] to allow a formalised way of handling them,” he said.
Developed markets such as the United States have used government-backed insurance and reinsurance mechanisms to absorb some of the catastrophe exposure that private markets struggle to carry. Reddy suggested that domestic stakeholders consider similar structures to share exposures between policyholders, insurers and affected communities.
“As long as we have an open-mindedness in this industry about our shared responsibility, you realise that the insurance industry actually has an incredible amount of influence and an ability to drive positive change in South Africa,” she said.
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