Local Insurance Companies Pay Out Billions in Life Insurance Claims

By:Justicia Shipena
Between the first quarter of 2020 and the first quarter of 2022 local insurance companies have paid out over N$20 billion in claims from life insurance policies.
This is according to economists at Simonis Storms on vehicle sales for the month of October.
According to the report, the billions paid in life insurance policies could have caused the rise in cash sales of new vehicles purchased by individuals.
“Between 1Q2020 and 1Q2022 just over N$20 billion in claims have been paid out from life insurance policies from local insurance companies. This could explain the rise in cash sales which some local dealers have pointed out,” said the report.
This comes as new vehicles purchased by individuals are likely dominated by cash sales. The economists at Simonis Storms say that household instalment credit growth remains lackluster, growing by a meagre 0.9% on average year to date compared to an average 13.0% corporate instalment growth during the same period.
In addition, the report states that vehicle sales continued to slow in October 2022, contracting for a second consecutive month.
“On a monthly basis, vehicle sales declined by 2.2% month-on-month in October 2022, compared to -3.2% month-on-month in September 2022,” the report said.
However, the report points out that vehicle sales are still trending above sales levels of 2021.
According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), only 996 units were sold in October 2022, compared to 717 units in October 2021.
Meanwhile, the economists observed that metal prices have decreased by 23.0% since the peak in March 2022.
“They are expected to remain subdued due to decreasing demand evidenced by declining factory orders in various industrial nations,” the report stated.
Moreover, the economists forecast the South African Rand to average 16.53 against the US dollar for most of 2023, adding that it will be slightly stronger than levels seen in 2022.
“Together with lower base and precious metal prices, we believe that new vehicle prices could show signs of moderating in 2023, providing local consumers some relief in the automotive market.”