Point of view: Santam's 2025 Insurance Barometer exposes rising risks across SA

IOL News

6 hours ago

Santam's 2025 Insurance Barometer reveals critical insights into the rising risks faced by South African households and businesses, highlighting economic pressures, infrastructure challenges, and the impact of climate change on the insurance landscape.
Image: Freepik
South Africa's short-term insurer, Santam, has released its 2025 Insurance Barometer, which paints a sobering picture of the risks confronting local households and businesses. Economic strain, infrastructure decay, crime, and increasingly erratic weather patterns tied to climate change have emerged as key concerns.
Now in its fourth edition, the biennial report offers a detailed pulse check on global and local risk trends. Drawing insights from nearly 900 consumers, businesses, and brokers across the country, the report captures shifts in public perception alongside expert industry analysis.
Atang Matebesi, CEO of Santam client solutions, said the short-term insurance sector must remain agile. 'Once again, weather volatility, infrastructure concerns, and socio-economic challenges have created a tough environment for local insurers. This has been exacerbated by ongoing geopolitical turmoil... threatening the affordability of the Motor and Heavy Haulage classes of insurance.'
Matebesi noted a concerning development: 'A trend is emerging where vehicles that normally wouldn't be written off are being declared total losses because repair costs have skyrocketed due to costly imported parts affected by the geopolitical environment.'
Balancing premiums while ensuring sustainable underwriting practices is an ongoing challenge. 'The industry has the unenviable task of balancing premium rates with sustainable underwriting practices and risk mitigation measures to ensure a sustainable insurance sector... thus also contributing to national economic growth,' Matebesi added. Claims trends and consumer pressures
The Barometer reveals that Santam's MTN portfolio saw a spike in claims for stolen mobile devices, tablets, and laptops, largely due to petty theft and muggings in shopping malls.
Motor insurance remains the main contributor to claims in both personal and commercial lines. While strategic underwriting has brought some relief, collision-related claims have surged as road traffic returns to pre-pandemic levels. 'This is largely due to road usage in South Africa returning to pre-COVID levels, driven by many companies reinstating five-day office attendance policies,' explained Matebesi.
Infrastructure degradation is also playing a role, particularly road conditions. 'Potholes causing loss or damage to vehicles' have hit all sectors, including agriculture and heavy haulage, particularly hard.
An emerging issue flagged in the report is the phasing out of 2G and 3G networks, which support many alarm systems and vehicle tracking devices. 'Close collaboration between insurers, insureds, and telecoms services providers is necessary... There is anecdotal evidence of the potential impact on property owners with those who have already had their alarms 'switched off' falling victim to crime,' Matebesi warned. The cost-of-living crunch
Rising living costs are reshaping consumer behaviour: 40% have cut back on non-essential spending
27% have reduced essential monthly expenses
21% have tapped into savings
Many South Africans are also changing their lifestyles: 38% now spend less on entertainment and eating out
23% have stopped going on holiday
19% drive less
14% opt for public transport or taxis more often
13% cancelled DSTV
Some households have turned to borrowing: 7% took personal loans
9% borrowed from friends or family
15% invested in alternative energy to reduce electricity costs Business realities and risk gaps
For corporate and commercial entities, theft remains the top worry, though concern has declined over five years. 'Persistent economic malaise remains a top concern for businesses at 19%. Interestingly, growing concerns over operational costs have emerged... likely related to economic pressures,' Matebesi said.
A surprising disconnect was noted regarding business interruption (BI) cover. Despite ranking high on global risk indices, only 7% of local commercial respondents prioritised BI. 'The lack of emphasis placed on loss of profits is concerning; we believe business interruption is a massively underestimated risk,' Matebesi warned.
Currency fluctuations made a noticeable jump, up 10%, amid global policy shifts and local political uncertainty, particularly around the Government of National Unity (GNU) budget delays.
One bright spot came from the power front: South Africa marked 300 days without loadshedding in 2024. This led to a significant drop in power surge claims, thanks to improved grid stability and underwriting action.
Climate risk remains entrenched, especially in agriculture. 'The agriculture sector is disproportionately concerned about climate risk,' Matebesi noted. Commercial claims linked to storms and flooding were up 5%, worsened by poor infrastructure and town planning. Top ten business risks in 2025: Theft (21%) Machinery/system breakdown (20%) Economic downturn (19%) Loadshedding/power surge (18%) Loss of profits (18%) Currency fluctuations (18%) Fires (16%) Climate change (16%) Staffing issues (14%) Crime (14%)
Brokers evolve their role
Brokers remain essential in risk mitigation. Most conduct home or site visits (72%) and communicate risk management tools via email or SMS (63%). Yet, one in three still finds coverage communication confusing.
More brokers now prioritise affordability, 34% cite price as the top factor in choosing an insurer, followed closely by service excellence and claims reliability.
Encouragingly, eight in ten intermediaries remain confident about business prospects in the year ahead, the data shows.
* Maleke is the editor of Personal Finance.
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