The introduction of the Insurance Act, no. 18 of 2017 (the Act) sees the final step in the long journey towards a risk-based prudential regime.
Consider the following. For the year ended March 2011, the MSC IWorld (global stock funds) Index dropped by 52%. The worst ever performance of the Johannesburg Stock Exchange (JSE) was for the twelve months ended 31 May 1970. Over this period, the JSE ndex dropped by 49.5%. Over the twelve months to February 2009, the JSE dropped by 39.8% and for the period to 31 August 1980 it dropped by 36.2%.
Shall we talk natural catastrophes? The damage from the Gauteng hail storms in 2012 amounted to more than R1 billion. It is estimated that over the following four years, weather-related insured losses amounted to R2.5 billion. Add to this the Knysna fires (total property damage of around R44 billion with insured losses close to R3 billion ) and the St Francis fires (with property damage estimated at R300 million ).
Or how about pandemics? By June 2018, there were 1,053 reported cases of listeriosis in South Africa, with 212 deaths in West Africa in March 2016, Ebola infected 28,616 people resulting in 11,310 deaths. Unlike property damage, many of these pandemics affect the poorer and uninsured portions of the market. Although this is usually the case, it is not always so. The Spanish flu of 1918-1920 killed approximately 75 million people. Many of the people killed by this pandemic were previously healthy adults”. During the first year of this pandemic, life expectancy in the United States dropped by about 10 years. Quantifying the impact of these and the impact directly on mortality claims against life insurers is diffcult. In 2010, 66% of all worldwide HIV/ AIDS related deaths occurred in sub-Saharan Africa (approximately 1.2 million deaths per annum). Which of the million individuals had life insurance is hard to tell. Either way, HIV/AIDS had a signifcant impact on the mortality rates of life insurers.
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