The third largest life insurer in South Africa has warned that this trend may be on the way.
MMI Holdings, South Africa’s third largest life insurer, has released an insurance news announcement to warn the sector about a potential increasing lapse rate trend as consumers begin to feel the strain of trying to keep up their premiums payments.
This trend refers to the cancellation of policies as the result of premiums nonpayment issues.
The CEO of MMI Holdings, Nicolaas Kruger, explained that consumers are feeling a significantly larger amount of financial pressure than they were at the same time last year. He also pointed out in his insurance news that the depressed sale of coverage may impact the growth of premiums in upcoming years.
This confirms other insurance news trends suggested by recently conducted surveys.
An Ernst & Young survey’s results were released in last week’s insurance news, which pointed out that the confidence in the life sector has dropped during this year’s third quarter. This brings it to the lowest point that it has seen in the last three years. It is notably different from the environment among asset managers as well as retail and investment bankers, where confidence levels are on the rise.
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These low confidence levels have been making life insurance news all year, and has increased the chances of a rising lapse rate trend that is similar to the one that was seen during the last recession. At that time, insurers in the sector experienced a great deal of pain in their bottom lines.
Economists have been stating that rising debts and increasing fuel and food costs have been taking their tolls on house hold budgets, and has been enough to drain consumer confidence. The result of this insurance news is that companies are fighting to try to build their customer bases at a time when discretionary income that would once have been used for purchasing policies is being sent toward the repayment of debts.
Krueger’s insurance news statements have explained that consumers are under a significant amount of financial pressure, much more than they were last year. He believes that this will result in potential lapse rate increases and a slowing in new business.