The South African motor insurance market shows great potential. But sustained growth in this highly competitive sector requires a focus on excellent customer service and customer retention. Here’s a look at what the future holds for the South African motor insurance industry.
The South African motor insurance industry is facing economic challenges and high risks, such as theft and hijacking, but it is also an industry with strong potential. In the face of a tough economic environment, marked by high crime and unemployment rates, and financial constraints, the non-life insurance sector continues to see unprecedented growth.
Room to grow
If we continue embracing change and adapting to the new market environment, the industry can grow and continue to play a vital role in the lives of motorists. In 2022, the industry reported gross written premiums of R140.1 billion. This amounts to an increase of 9.6% when compared to the R127.8 billion recorded in 2021, according to accounting firm KPMG’s The South African Insurance Industry Survey 2023.
In the non-life insurance market, motor insurance continues to command the largest class of business, making up approximately 45% of the non-life insurance business, according to the South African Insurance Association Annual Review 2023.
This is a high achievement considering the overarching inflationary and economic growth environments and market competition. Motorists still grapple with the excessive price of fuel, and the Reserve Bank – in its statement of the Monetary Policy Committee in May – said it expects fuel price inflation to increase in the near future.
South Africa has experienced an increase of 6.5% in the number of car thefts and hijackings in the third quarter of 2023/2024, according to the latest crime statistics from the South African Police Service. The Stats SA February Consumer Price Index indicated that premiums for all types of insurance have increased by 9.5% over the past year. It is predicted that the cost of motor insurance is likely to continue increasing due to the high risks faced by motorists on the roads, putting more financial pressure on consumers.
It is not surprising that a number of insurers reported that motor vehicle accident claims are back to pre-pandemic levels, while repair costs have increased due to global supply chain challenges and the high inflationary environment. As the cost of claims for insurers increases, premium rates will inevitably increase, and policyholders might have already seen sharp increases in their premiums.
Using digital tech to customise products and retain customers
In the highly competitive South African motor insurance market, providing excellent customer service and retaining customers is essential for sustained growth. The availability of accessible data empowers original equipment manufacturers (OEMs) to swiftly augment their product design and development, thereby enhancing safety features for motorists.
Insurers must embrace technologically advanced frameworks to efficiently navigate this paradigm shift. As consumer preferences evolve and the market changes, insurers need to adapt product offerings to provide more customised products and services and harness digital technology to upsell and improve customer experience. Case in point: For those clients who wish to control their own policies, we offer an easy-to-use online facility called, Infiniti Online.
Digital channels enable insurers to reach a broader audience, enhance operational efficiency, and reduce costs. By leveraging data and analytics, insurers can gain insights into customer behaviour and preferences, allowing us to tailor our offerings and provide relevant product offerings. Advanced technology capabilities can help improve operational efficiency by streamlining processes such as claims management and underwriting to create more accurate pricing and risk selection.
At Infiniti Insurance, we believe that interpersonal relationships between brokers and clients remain the backbone of our business. However, investing in digital technology will enhance these relationships rather than replace them. This will help us deliver a superior customer experience that fosters loyalty and drives up-selling opportunities. It will equally assist us to stay competitive in the rapidly evolving digital landscape while preserving the human touch that is crucial in building long-lasting customer relationships.
