Fourth ASISA Insurance Gap Study (performed by True South Actuaries & Consultants)

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Transcription:

Fourth ASISA Insurance Gap Study (performed by True South Actuaries & Consultants) October 2016

Agenda (A trillion has 12 zeros)

Agenda (A trillion has 12 zeros)

within the SA population landscape 55 million people in South Africa 55 million people, but how many earners?

within the SA population landscape 55 million 32 million people in aged South 18 Africa to 65 <18 s: 36% >65 s: 5%

within the SA population landscape 14 million earners Earners represent around ¼ of SA population

within the SA population landscape Poorest Richest 2.6m 2.8m Next 2.6m 2.8m Next 2.8m Richest Poorest 2.8m 2.6m 14 million earners Next 2.8m 2.6m Diversity in SA: difficult to grasp Earner

Richest Poorest 2.8m 2.6m Consider 20% (R2.8m) richest SA earners

2016 (42) 2018 (44) 2020 (46) 2022 (48) 2024 (50) 2026 (52) 2028 (54) 2030 (56) 2032 (58) 2034 (60) 2036 (62) : Insurance Need How much insurance is needed? Richest Poorest 2.8m 2.6m 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 - expected earnings profile

2016 (42) 2018 (44) 2020 (46) 2022 (48) 2024 (50) 2026 (52) 2028 (54) 2030 (56) 2032 (58) 2034 (60) 2036 (62) : Insurance Need How much insurance is needed? Need for insurance Earnings R0.5m 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000-20% Richest SA earners earn R500K p.a.

2013 (42) 2015 (44) 2017 (46) 2019 (48) 2021 (50) 2023 (52) 2025 (54) 2027 (56) 2029 (58) 2031 (60) 2033 (62) : Insurance Need How much insurance is needed? Need for insurance Earnings R0.5m Replacement requirement 64% 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 - On average 64% of earnings at risk

2016 (42) 2018 (44) 2020 (46) 2022 (48) 2024 (50) 2026 (52) 2028 (54) 2030 (56) 2032 (58) 2034 (60) 2036 (62) : Insurance Need How much insurance is needed? Need for insurance Earnings R0.5m Replacement requirement 64% Capitalisation factor 14.1 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 - All future years need to be provided for

2016 (42) 2018 (44) 2020 (46) 2022 (48) 2024 (50) 2026 (52) 2028 (54) 2030 (56) 2032 (58) 2034 (60) 2036 (62) : Insurance Need How much insurance is needed? Need for insurance Earnings R0.5m Replacement requirement 64% Capitalisation factor 14.1 Insurance need R4.5m 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 - At the high end, ave need for insurance: R4.5m

: Actual Cover insurance cover Need for insurance Earnings R0.5m Replacement requirement 64% Capitalisation factor 14.1 Insurance need R4.5m Actual insurance Retail Group Life Government grants R1.3m R0.8m R0.0m R2.1m but average actual insurance over is only R2.1m

: Insurance Gap Insurance Gap = Insurance Need Actual Cover Need for insurance Earnings R0.5m Replacement requirement 64% Capitalisation factor 14.1 Insurance need R4.5m Actual insurance Retail Group Life Government grants R1.3m R0.8m R0.0m R2.1m but average actual insurance over is only R2.1m

: Insurance Gap Insurance Gap = Insurance Need Actual Cover Need for insurance Earnings R0.5m Replacement requirement 64% Capitalisation factor 14.1 Insurance need R4.5m Actual insurance Retail Group Life Government grants R4.5m R2.1m = R2.4m Death insurance gap for richest 20% of SA earning population R1.3m R0.8m R0.0m R2.1m gap: R2.4m per earner (Those earning > R500k)

(R12.9tn death gap) Poorest 20% Next 20% Next 20% Next 20% Need Actual Gap Richest 20% R4.5m R2.1m R2.4m Number people GAP gap: R2.4m per earner (Those earning > R500k)

(R12.9tn death gap) Poorest 20% Next 20% Next 20% Next 20% Need Actual Gap Number people GAP Richest 20% R4.5m R2.1m R2.4m 2.8m R6.7tn R1 trillion: Stack of R100 notes from Cape Town to Bloemfontein

(R12.9tn death gap) Need Actual Gap Number people GAP Poorest 20% R0.1m R0.0m R0.1m 2.8m R0.2tn Next 20% R0.3m R0.0m R0.3m 2.8m R0.9tn Next 20% R0.8m R0.1m R0.7m 2.8m R1.8tn Next 20% R1.6m R0.4m R1.2m 2.8m R3.3tn Richest 20% R4.5m R2.1m R2.4m 2.8m R6.7tn R12.9tn Adequacy of cover 4% 7% 16% 25% 47% 37% R1 trillion: Stack of R100 notes from Cape Town to Bloemfontein

(R16.0tn disability gap) Need Actual Gap Number people GAP Poorest 20% R0.2m R0.4m -R0.2m 2.8m -R0.5tn Next 20% R0.6m R0.4m R0.2m 2.8m R0.6tn Next 20% R1.2m R0.5m R0.8m 2.8m R2.1tn Next 20% R2.3m R0.7m R1.6m 2.8m R4.5tn Richest 20% R6.0m R2.7m R3.3m 2.8m R9.2tn R16.0tn Adequacy of cover - 64% 37% 30% 45% 45% R1 trillion: Stack of R100 notes from Cape Town to Bloemfontein

(R12.9tn death gap + R16.0tn disability gap) Richest 0.2tn 2.6m 6.7tn Next 2.6m 0.9tn Death 1.8tn Next 2.6m 3.3tn 12.9tn Disability Richest -0.5tn 2.6m 9.2tn Next 2.6m 0.6tn 2.1tn Next 2.6m 4.5tn 16.0tn Death Gap: R12.9tn Disability : R16.0tn : R28.8tn

Buy insurance Cut expenses Seek Employment (% earnings) (% reduction) (extra income) Death 4.2% 34% R4 970 Disability 2.4% 30% R5 977 There are worse things in life than death. Have you ever spent an evening with an insurance salesman?" (Woody Allen)

Richest 0.2tn 2.6m 6.7tn Next 2.6m 0.9tn Death 1.8tn Next 2.6m 3.3tn 12.9tn Disability Richest -0.5tn 2.6m 9.2tn Next 2.6m 0.6tn 2.1tn Next 2.6m 4.5tn 16.0tn Death Gap: R12.9tn Disability : R16.0tn : R28.8tn

(Middle group only) Richest 0.2tn 2.6m 6.7tn Next 2.6m 0.9tn Death 1.8tn Next 2.6m 3.3tn 12.9tn Disability Richest -0.5tn 2.6m 9.2tn Next 2.6m 0.6tn 4.5tn 2.1tn 16.0tn Death Gap: R1.8tn Disability : R2.1tn : R3.9tn

Death Gap: Effect of Age Middle income group alone Need Actual Gap Number people GAP 18-29 R1.0m R0.1m R0.9m R0.8m R0.8tn 30-34 R0.9m R0.1m R0.8m R0.5m R0.4tn 35-39 R0.8m R0.1m R0.7m R0.5m R0.3tn 40-44 R0.7m R0.2m R0.6m R0.3m R0.2tn 45-50 R0.5m R0.1m R0.4m R0.2m R0.1tn 50-54 R0.3m R0.1m R0.2m R0.2m R0.0tn 55+ R0.1m R0.1m R0.0m R0.2m R0.0tn R0.8m R0.1m R0.7m R2.8m R1.8tn Adequacy of cover 8% 12% 18% 22% 28% 39% 102% 16% Adequacy of life cover increases in line with age (possibly due to lump sum nature of group risk cover)

Disability Gap: Effect of Age Middle income group alone Need Actual Gap Number people GAP 18-29 R1.7m R0.6m R1.1m R0.8m R0.9tn 30-34 R1.4m R0.6m R0.9m R0.5m R0.5tn 35-39 R1.3m R0.5m R0.8m R0.5m R0.4tn 40-44 R1.1m R0.4m R0.6m R0.3m R0.2tn 45-50 R0.8m R0.4m R0.4m R0.2m R0.1tn 50-54 R0.5m R0.3m R0.2m R0.2m R0.0tn 55+ R0.2m R0.2m R0.0m R0.2m R0.0tn R1.2m R0.5m R0.7m R2.8m R2.1tn Adequacy of cover 35% 38% 39% 41% 48% 57% 96% 37% Adequacy of disability cover increases in line with age (possibly due to lump sum nature of group risk cover)

Death Gap: Effect of Education Middle income group alone Need Actual Gap Number people GAP PS or lower R0.5m R0.1m R0.4m R0.4m R0.2tn Some HS R0.8m R0.1m R0.7m R1.2m R0.8tn Matric R0.9m R0.1m R0.7m R1.0m R0.8tn Diploma R0.8m R0.1m R0.6m R0.1m R0.1tn Degree R0.5m R0.2m R0.3m R0.0m R0.0tn R0.8m R0.1m R0.7m R2.8m R1.8tn Adequacy of cover 14% 15% 15% 18% 36% 16% Cover adequacy is much higher for the group with a degree as the highest education level

Disability Gap: Effect of Education Middle income group alone Need Actual Gap Number people GAP PS or lower R0.8m R0.3m R0.5m R0.4m R0.2tn Some HS R1.2m R0.5m R0.7m R1.2m R0.9tn Matric R1.4m R0.5m R0.9m R1.0m R0.9tn Diploma R1.3m R0.5m R0.8m R0.1m R0.1tn Degree R1.3m R0.6m R0.7m R0.0m R0.0tn R1.2m R0.5m R0.7m R2.8m R2.1tn Adequacy of cover 36% 37% 38% 39% 48% 37% Cover adequacy is much higher for the group with a degree as the highest education level

Death Gap: Effect of Geography Middle income group alone Need Actual Gap Number people GAP Gauteng R0.8m R0.1m R0.6m R1.0m R0.6tn Western Cape R1.0m R0.2m R0.8m R0.5m R0.4tn KwaZulu-Natal R0.8m R0.1m R0.7m R0.5m R0.3tn Eastern Cape R0.8m R0.1m R0.6m R0.2m R0.1tn North West R0.5m R0.1m R0.4m R0.2m R0.1tn Free State R0.7m R0.1m R0.6m R0.1m R0.1tn Mpumalanga R0.6m R0.1m R0.6m R0.2m R0.1tn Limpopo R0.7m R0.1m R0.6m R0.1m R0.1tn Northern Cape R0.8m R0.1m R0.7m R0.0m R0.0tn R0.8m R0.1m R0.7m R2.8m R1.8tn Adequacy of cover 19% 18% 12% 15% 13% 11% 10% 8% 13% 16% Death cover adequacy for the middle income group is highest in Gauteng and Western Cape

Death Gap: Effect of Gender Middle income group alone Need Actual Gap Number people GAP Male R0.8m R0.1m R0.6m R1.7m R1.1tn Female R0.8m R0.1m R0.7m R1.1m R0.7tn R0.8m R0.1m R0.7m R2.8m R1.8tn Adequacy of cover 15% 16% 16% Cover adequacy is fairly similar for male and female earners

Disability Gap: Effect of Gender Middle income group alone Need Actual Gap Number people GAP Male R1.2m R0.5m R0.7m R1.7m R1.2tn Female R1.2m R0.5m R0.7m R1.1m R0.8tn R1.2m R0.5m R0.7m R2.8m R2.1tn Adequacy of cover 38% 36% 37% Cover adequacy is fairly similar for male and female earners

Questions Provision for others is a fundamental responsibility of human life. (Woodrow T. Wilson 28 th American President)

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