Insurers, reinsurers and other stakeholders in the risk management value chain must move beyond responding to loss events to building resilience through sustainable underwriting, innovative partnerships and new approaches to emerging risks that can narrow Africa’s ever-present protection gap.
The 2025 Standard Bank Insurance Claim Insights Report begins with a somewhat rhetorical reflection on the role of insurance amid evolving risks, based on a deep dive into the South African insurer’s five-year claims experience.
The non-life insurer, which is the 10th largest in the country measured on gross written premium (GWP) in 2024, reported it had paid out an average ZAR1.8 billion (US$103.5 million) per year over the period 2019 to 2024, processing over 100,000 claims annually across all of its product lines. The average household property damage or loss claim tipped the scales at R12,700 ($728), and for private motor vehicles, R35,000 ($2,005).
Complex environment
Thabani Ndwandwe, chief risk officer at Standard Bank South Africa, said that domestic insurers were writing business in a complex, fast-moving and interconnected risk environment.
“Infrastructure breakdowns, severe weather events, supply chain shocks and rapid market shifts now occur with greater frequency, often overlapping to create systemic challenges that test the resilience of economies and institutions alike,” he wrote.
Johan van Greuning, chief executive at Standard Bank Insurance, commented on the widening protection gap that threatens to derail progress in Africa. Citing a Swiss Re ‘Natural Catastrophes and Inflation in 2022’ report, he commented on a staggering 80% protection gap – in that year, Africa suffered around US$1.3 billion in economic losses from natural catastrophes, with only $200 million covered by insurance.
South Africa fared slightly better in response to its recent mega-flood event in the KwaZulu-Natal (KZN) province in April 2022. That event caused an estimated R62.3 billion ($4.15 billion at the time) in economic losses, of which R32 billion ($2.13 billion) was insured. In this case, the protection gap was nearer 50%.
“These gaps underscore the urgency of rethinking how short-term insurance is delivered, who it serves and how it integrates into the broader resilience ecosystem,” Van Greuning said.
Evolving role
Van Greuning opined that the role of short-term insurance was evolving from one of stepping in after loss to repair, replace or compensate a business or household into a proactive enabler of resilience. And to deliver on this resilience promise, insurers have to play at both sides of the risk frontier – mitigating risk in anticipation of a loss event – and accelerating recovery beyond paying claims.
While these big-picture insights provide the context for the insurer’s latest data release, the real story lies in how risks are manifesting in actual claims.
Your writer interviewed Hardy Ncube, head of personal products at Standard Bank Insurance, to consider some of the report findings in greater detail. He turned out to be the right person for the job, sitting, as it were, in the hot seat of an insurer writing 94% of its annual premium in the personal lines sub-class, and just 6% among commercial insureds.
Ncube noted that the bulk of the insurer’s premium was placed through brokers, with the caveat that the group’s bancassurance business is channelled through its wholly owned internal brokerage, Standard Bank Insurance Brokers (SBIB).
The first theme-related question put to the expert probed the impact of the rising frequency and severity of extreme weather events on the insurer’s underwriting performance.
“We have had our moments where we were down in terms of performance … but we have focused on remediating our underwriting to address this,” Ncube said. He refused to take the bait on the ‘global warming causes extreme weather’ line, choosing instead to emphasise that all insurers are aware of, and positioning for, higher-frequency, higher-severity events.
Growing place of data
Data and technology emerged as major foils in balancing insurers’ on-the-ground risk exposures, with local insurers favouring geo-tagging to gather insights on their flood and wildfire exposures, among others. Additional information about an asset’s risks makes it easier for brokers and insurers to interact with clients at renewal or when onboarding new business.
In his introductory remarks, Van Greuning had bemoaned the absence of a national catastrophe risk pool in SA. So, Africa Ahead asked him for his thoughts on the matter. For instance, could the country consider expanding the mandate of its special risks insurer, Sasria SOC Limited, beyond offering asset and business interruption protection against civil commotion, riot and strike?
“An expanded arrangement with Sasria could have an impact provided it is structured innovatively,” Ncube said.
He suggested the industry could take a certain amount of risk, and beyond a deductible of, say, R100 million ($5.75 million), the catastrophe pool could kick in. This structure could shield insurers from escalating reinsurance costs. Another area where the insurance sector could assist government is in post-event response, because insurers have perfected the art of supply chain management in terms of reinstating policyholders after a loss.
Parametric insurance stands out as another oft-mentioned solution for Africa’s protection gap. “Models like the African Risk Capacity (ARC) offer a blueprint,” Van Greuning said. “ARC provide sovereign parametric insurance for climate disasters, enabling rapid payouts based on satellite data.” This type of solution allows governments to partner up with the private sector and NGOs to pre-arrange financing for disaster response – with early successes in Madagascar, Senegal, Zambia and elsewhere on the continent.
Your writer could not resist asking Ncube about one of the eye-watering claims statistics featured in the report, namely a R183 million (about $9.9 million) commercial fire loss. Did this force immediate changes in how this peril was underwritten?
“It triggered a pivot in terms of our commercial strategy around risk acceptance criteria; it also spoke to exposure management in terms of how far we can write specific risks,” he said. Aside from on-site risk mitigation, insurers have to consider co-insurance and reinsurance to spread exposure.
There was plenty of touchy-feely background in this report including how women are taking the lead in seeking asset protection; how seniors tend to claim more while younger policyholders carry the cost; how middle-aged drivers are leading in the road incident claims stakes; and how claims volumes spike in years four to 10 of a policy.
Technology at the centre
But Africa Ahead readers will be more interested to learn that catastrophic weather events are now the leading threat to homes and vehicles, with fire the silent risk ‘heavyweight’ in short-term portfolios.
To close, we consider the biggest insurance shifts revealed in the report. According to Ncube, digitisation is coming to the fore, especially in the commoditised personal lines segment. He pointed out that artificial intelligence (AI) and digital technology were being leveraged to make things easier across functions like advice, claims, distribution, pricing and policy administration. Technology also enables data integration between insurers, brokers and various third-party suppliers.
“Climate change remains a significant challenge going into the future. It calls for a more innovative way of underwriting, and a more innovative way of structuring solutions for different lines,” Ncube concluded.
His sentiment overlaps nicely with that of Ndwandwe, who argues that foresight is key in risk management.
“We apply scenario analysis, stress testing and predictive modelling to anticipate how emerging risks from economic volatility to environmental pressures might interact and evolve,” he wrote. “This enables proactive rather than reactive responses.”
It seems only fair to allow the chief executive the parting shot. He maintained that sustainable insurance cannot exist in a vacuum, saying that successful insurers will have to embed resilience, use technology to reduce loss, and build trust by partnering with clients.
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