Insurance premiums in South Africa are rising, placing increased financial pressure on individuals and businesses. From climate-driven risks to economic volatility, this article unpacks the factors behind premium hikes and offers practical strategies for managing insurance spending effectively.
Why Are Insurance Premiums Increasing in South Africa?
Several compounding factors are driving up insurance costs:
1. Climate-Related Disasters
Extreme weather events have become more frequent and destructive:
- The 2023 Western Cape floods triggered R403 million in insurance claims.
- Gauteng hailstorms added R180 million.
- In 2024, Santam paid out R607 million in weather-related claims—four times the previous year.
This surge in claims leads to higher reinsurance costs—up to 30%– then passed on to clients through premium increases.
2. Load Shedding and Infrastructure Risk
South Africa’s ageing infrastructure and persistent load shedding increase the likelihood of property and equipment damage. This results in more claims, adding further pressure on premiums.
3. Economic Pressure
With inflation, unemployment, and rising interest rates, affordability remains a significant issue. Many households and businesses are forced to downgrade cover or reduce their risk appetite, which can lead to increased long-term vulnerability.
How Rising Premiums Affect Businesses
Businesses in particular, face tough choices when it comes to managing rising insurance costs:
- Cash Flow Strain: Increased premiums can reduce profitability, particularly for SMEs.
- Justifying the Cost: Stakeholders may question the value of high premiums, especially if claims have been infrequent or minimal.
- Operational Risk: Reducing cover to save costs may leave businesses exposed to significant loss events.
5 Smart Ways to Manage High Insurance Premiums
Here’s how you can take control of your insurance spending:
1. Invest in Risk Management
Implement proactive measures such as:
- Upgrading security systems
- Installing fire or flood protection
- Conducting regular safety audits
Lowering your risk exposure often leads to premium discounts.
2. Tailor Your Policy
Avoid generic, off-the-shelf insurance. Work with a broker like RBS Insurance Brokers to design a policy that:
- Eliminates unnecessary cover
- Focuses on critical risks
- Aligns with your budget
3. Use Tech to Your Advantage
IoT sensors, AI monitoring, and intelligent alerts can help you detect risks early. Some insurers reward this with lower premiums or customised pricing.
4. Partner with a Broker
A broker helps you:
- Negotiate competitive terms
- Identify overlapping or redundant cover
- Benchmark your premium against industry standards
RBS also offers access to embedded or bundled insurance solutions for cost efficiency.
5. Explore Embedded Insurance
Coverage offered through banking platforms or service providers (e.g., vehicle finance or property rental) may provide cost-effective protection for specific assets or risks.
Looking Ahead: Be Informed, Stay Protected
South Africa’s risk landscape is shifting quickly, driven by climate trends, infrastructure vulnerabilities, and economic headwinds. Navigating this environment requires informed decision-making and expert support.
About RBS
Risk Benefit Solutions, better known as RBS, originated as an entrepreneurial-focused services business in 1998 and today is one of the largest fully-fledged black-owned insurance brokers in South Africa and a Level One B-BBEE contributor. Celebrating 25 years in business this year, our growth has contributed to offering clients a unique approach to risk management by positioning our skilled resources as an extension of our client’s risk management team. Our company covers various services, including Insurance Broking, Risk Management, Commercial and Corporate Risk Advisors, and Corporate Vehicle Hire Services. With its head office in Cape Town, RBS has offices in Gauteng, the Eastern Cape, and globally, as represented by its board membership with WING (Worldwide Insurance Network Group).