Clients want brokers to guide them through evolving risks
Cost of living, economic challenges and societal issues linked to crime and politics stand out as top risks in the personal lines insurance segment compared to challenging economy, poor infrastructure and political unrest in the corporate space. These are the top-level insights contained in the 2024-2025 Santam Insurance Barometer Report, launched at the insurer’s Johannesburg head office recently.
A whole-of-market view
The fourth edition of this report was based on 881 completed interviews conducted between January and April 2025. The sample included 402 consumers, 350 commercial and corporate entities and 129 insurance brokers who were further segmented as brokers servicing mainly personal lines clients (60) and business clients (69). Great care was taken to gain insights from stakeholders in priority sectors such as agriculture, aviation, construction, marine and transport.
In his introduction to the report, Santam Group CEO Tavaziva Madzinga reflected on the ever-changing risk environment that insurers, reinsurers and risk managers have had to navigate, spanning centuries. He also drew attention to the continued threat of systemic risks. “In recent years, we have observed a distinct shift wherein isolated, manageable losses are giving way to larger, more complex events that occur with greater frequency and are often systemic in nature,” he said. As a consequence, large insurers have had to double down on pricing and underwriting discipline to deliver profitable growth.
So, why undertake a survey of this magnitude? According to Madzinga, the survey highlights critical gaps and vulnerabilities that need to be addressed alongside opportunities for growth across South Africa’s evolving insurance landscape. He noted that the non-life insurance industry had proven its resilience through the triple disaster of COVID-19 (2020-2021), civil unrest (2021), and severe flooding (2022), only to face new threats due to deteriorating infrastructure, economic stagnation, increasing weather volatility and cyber exposures.
Adding climate and cyber to the mix
Respondents to the 2024-2025 Insurance Barometer identified crime, economic instability and failing infrastructure as their top concerns over two years. Climate change, often referred to as weather volatility, and cybercrime also featured strongly across all respondent groups. “South Africa’s domestic issues are marked by their intensity and persistence, exacerbated by limited state capacity and a widespread reliance on public services [which] hinder insurers’ efforts to make insurance more accessible and narrow the risk protection gap,” Madzinga said.
The previous Insurance Barometer identified industry-wide shortcomings in broker support and client education as well as a need for proactive risk advisory services that go beyond traditional models of risk transfer. Santam says it is making steady progress towards these goals while positioning for a new normal defined by more frequent and severe weather-related catastrophes. Need proof?
A decade ago, insured losses from global natural disasters rarely exceeded USD100 billion in a year; nowadays, that level of loss is expected. In January 2025, California wildfires had already caused around USD40 billion in insured losses, “highlighting the severe consequences when extreme weather risks are compounded by underinvestment in infrastructure and fire resilience.” The mega losses caused by the April 2022 KwaZulu-Natal (KZN) floods still resonate strongly at domestic insurers.
A comparison of the R54 billion in economic impact versus R15-17 billion in claims highlights the persistent gap between insurable losses and overall economic losses, a recurring theme throughout the 2024-2025 Insurance Barometer. Some key lessons from the work include that systemic concerns due to climate change are often compounded by fragile infrastructure; that infrastructure has become a core underwriting consideration; and that cyber risk continues to rise.
Could cyber usher in the next Black Swan event?
On cyber risk, Santam warned that “the rise in AI-backed scams and the interconnectedness of cloud infrastructure have amplified the risk of an unforeseen Black Swan event, with current levels of earned premium likely falling short of potential loss severity.” One of the biggest surprises from the research was that both commercial and personal lines insureds were very worried about cyber risks, but unlikely to have purchased cyber cover.
The latest Insurance Barometer is quite a heavy read. In this newsletter, we will drill into the systemic risk section before reflecting on the role of brokers, but there is plenty more for readers who to explore. We expect many of our readers to be interested in the report section covering the role of the broker, penned by the CEO of Santam Broker Solutions, Fanus Coetzee.
“As we entered 2025, 80% of broker respondents expressed confidence in the business outlook for the year ahead,” he wrote, before conceding that such confidence ebbs and flows in line with macroeconomic and political developments. By June, these same brokers were mulling over the impact on business of ructions in the Government of National Unity (GNU) and an IMF downgrade to the country’s 2025 GDP forecast.
“Whatever the economic backdrop, brokers remain the powerhouse of traditional insurance, with our Broker Solutions business reporting R34.3 billion (R31 billion in 2023) in premium, placed by more than 3 000 brokers, in 2024,” Coetzee said.
He emphasised disciplined underwriting as the gatekeeper of profitable, sustainable insurance and hinted that the insurer had to do some ‘heavy lifting’ to restore insurer-broker relations after recent pricing and underwriting actions taken to ensure the business’ long-term sustainability. He contended that brokers should focus on value and risk mitigation, not price.
Santam a top choice for brokers
The 2024-2025 Insurance Barometer affirmed Santam as one of the top brand choices among brokers. And in a somewhat unexpected finding, more than half (56%) of personal lines consumers in the survey said they bought their insurance via a broker.
“This is in contrast to the rising trend of direct to consumer insurance observed in the industry for a number of years, but it may be reflective of the population sampled,” Coetzee said. “It makes sense that many personal lines customers buy direct insurance; entry-level personal lines clients are often more efficiently served by direct insurers, as the cost-to-serve can make them less viable for traditional broker channels.”
Broker identity continues to evolve, with a compelling 90% of broker participants now viewing themselves as risk advisers rather than mere policy sellers. This shift aligns with client expectations: personal lines consumers place high value on expertise (62%) and hassle-free claims (50%), while commercial clients prioritise efficient claims handling (49%), technical knowledge (45%) and good service (45%).
Coetzee noted that brokers are well positioned to deliver against these expectations, especially as Santam ramps up investments in broker training, quoting efficiency and risk assessment support. “Brokers are well placed to meet clients’ expectations,” he said. Around 60% of brokers also believe that improved clarity in policy wording, including on exclusions and extensions, would further enhance client trust and enable more meaningful advice.
Complex and interconnected risk landscape
The report noted that systemic risks were becoming more complex and interconnected, with global events exposing insurers to correlated losses across multiple lines. Santam Group Chief Underwriting Officer, Michael Cheng, contrasted global risk concerns over cyber, natural catastrophes and macroeconomic shocks with unique domestic vulnerabilities such as infrastructure failure, political unrest and extreme weather.
Santam’s own ranking places weather volatility first, followed by natural catastrophes and economic disruption. The underwriting expert noted that infrastructure failure can amplify systemic exposures in areas like energy, transport and urban planning. A staggering 83% of surveyed commercial clients identified poor infrastructure as their biggest emerging risk with loadshedding, port inefficiencies and road-to-rail shifts all raising underwriting concerns.
Insurers are doing their part to address these and other systemic concerns. Santam’s geocoding initiative got special mention in the report, and the insurer says it now has geocoded data on over 80% of its property book, which information helped it to reduce its exposure to flood-related losses by about R300 million in 2024. Another initiative, called the Partnership for Risk and Resilience (P4RR), sees the insurer supporting 102 municipalities with flood mitigation and firefighting capabilities.
Exploring geopolitical risks
Macroeconomic and geopolitical risks are rising fast on the systemic radar. South Africa remains exposed to global shifts, including US trade tariffs proposed by President Trump in 2025 and the possible expiry of AGOA.
The insurance industry’s profitability is tightly linked to GDP growth and inflation, meaning that systemic volatility abroad can quickly filter down into local premium volumes and claims outcomes. Overall, Cheng cautioned that affordability is the greatest obstacle to broader pooled risk solutions, saying that SASRIA remains the country’s only state-backed risk pool; and that for a defined set of political risks.
An overarching message from the latest report is that the industry’s future hinges on how effectively stakeholders anticipate and manage evolving risks. “We cannot afford to simply react, our collective focus must shift toward proactive risk mitigation and resilience-building,” concluded Madzinga. The 2024-2025 Insurance Barometer offers tangible examples of steps that can be taken to create a more sustainable, resilient and inclusive insurance value chain for all participants.
Writer’s thoughts:
The 2024-2025 Santam Insurance Barometer showed that nine in 10 brokers now identify as risk advisers, a non-negotiable trait in today’s complex and evolving risk landscape. How are your client conversations changing as you take on this advisory role? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
