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04 October 2004 Angelo Coppola

The long-term insurance industry results for the six months to 30 June 2004 strengthened when compared to the same period in 2003 as well as the six months to 31 December 2003.

According to Gerhard Joubert, executive director of the Life Offices' Association (LOA), the total individual premium income increased by 11% to R35bn compared to R31,7bn for the period in 2003, says Joubert.

"Single premium income increased by 12% to R15bn compared to R13,5bn and total recurring premium income also increased from R18,2bn to R20bn, an increase of 10%.

There was a distinct switch from fixed interest compulsory annuities to investment linked life annuities (ILLA's) over the six months to 31 December 2003 as many purchasers were reluctant to enter into long-term annuity contracts based on relatively low levels of interest rates."

"Although premiums lost as a result of lapses increased by three percent when compared to the same period last year, a decrease of two percent was recorded when compared to the six months to 31 December 2003.

The same pattern can be found in the number of polices lapsed. When compared to the same period last year, the number of policies lapsed increased by 12%.

However, when compared to the six months to 31 December 2003, the number of policies lapsed decreased by three percent."

"It seems as if the lapse rate might be steadily declining. This might be partly as a result of industry intervention. It was felt that one of the main reasons for the increase in the lapse and surrender rate of policies was increased churning activities.

The number of policies involved:
From 609 142 for six months to 31 December 2003 to 593 278 for six months to 30 June 2004.

Premiums lost as a result of lapses:
From R1,013,484 for six months to 31 December 2003 to R 995,102 for six months to 30 June 2004.

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