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Speaker 1: News this week that really I think for the first time,

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Speaker 1: the amount of money managed by our longer term insurance industry,

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Speaker 1: including life insurers obviously has gone past five trillion rand.

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Speaker 1: I mean, obviously stock market's really rocketing last year having

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Speaker 1: a big impact on that now at five point two

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Speaker 1: trillion rand. Gareth Friedlander is a member of the SEESET

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Speaker 1: Life and Risk Board Committee, the insurance body that looks

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Speaker 1: at this, Gareth good Evening, I mean, so obviously this

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Speaker 1: number you would expect would edge up year after year.

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Speaker 1: Markets moved quite significantly last year. Did that start to

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Speaker 1: help to move the amounts of money under management a

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Speaker 1: lot over the last few months.

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Speaker 2: Yes, Stephen good Evening. It certainly was market driven. Obviously

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Speaker 2: you would expect these numbers, as you've seen the trend

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Speaker 2: over the years, to increase over time, but buy it

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Speaker 2: by a very strong bull market. Last year we did

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Speaker 2: see the number of assets management long term insurance in

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Speaker 2: South Africa really go up quite significantly to over as

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Speaker 2: you mentioned, five trillion for the first time, half point

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Speaker 2: two trillion to be exact.

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Speaker 1: At the moment your managers manage I think it's forty

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Speaker 1: six point two million policies that involve sort of risks

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Speaker 1: and savings. They are obviously different, different kinds of products.

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Speaker 1: There are only sixty two million people in South Africa,

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Speaker 1: and for a moment I got quite excited. I thought,

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Speaker 1: oh wait, quite a lot of our people do have policies.

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Speaker 1: But then I realized this is probably the same people,

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Speaker 1: the same group of people with lots of different policies.

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Speaker 2: Yeah, that's right. We don't have the exact stats at

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Speaker 2: a kind of entity level, but we do know that

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Speaker 2: that forty six point two million is made up of

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Speaker 2: a wide range of policies, including long term risk insurance,

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Speaker 2: savings policies, a host of funeral policies, and we know

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Speaker 2: many clients tend to have multiple funeral policies. So it

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Speaker 2: is a big number. But obviously, you know, to go

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Speaker 2: with that is a big insurance gap that we have

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Speaker 2: reported on in the last few weeks as well. So

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Speaker 2: people do remain significantly underinsured from a South African population perspective,

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Speaker 2: at a sixty one percent insurance gap in the country.

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Speaker 1: It's a huge gap, and it's sort of out inequality

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Speaker 1: gap in a way. Have you seen that number change

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Speaker 1: at all? Is there any sort of sign for us

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Speaker 1: to be optimistic. I mean, is that gap being closed

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Speaker 1: or is it being quite stubborn.

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Speaker 2: It's it is being stubborn, to be honest. We've seen

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Speaker 2: some pockets of optimism. The actual numbers go up each year,

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Speaker 2: but that's just because you know, you would expect the

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Speaker 2: gross numbers to increase as the population increases and as

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Speaker 2: people's earnings increase. But from a gap perspective, it remains

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Speaker 2: incredibly stubborn. And it is just so important that consumers

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Speaker 2: try and reduce that gap given, you know, to give

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Speaker 2: them some resilience against these life changing events, because it

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Speaker 2: is just so much more difficult once you've had a

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Speaker 2: death or an illness or a disability in the family

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Speaker 2: to then try and you know, kind of adapt to

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Speaker 2: the new life changing circumstances that that family finds itself in.

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Speaker 2: So insurance is the best way to do that, and

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Speaker 2: we need to try and keep closing that gap.

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Speaker 1: Eleven million policies bought last year. Funeral policy is probably

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Speaker 1: the bulk of that. I mean, they're the biggest seller.

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Speaker 2: Absolutely, So the vast majority of policies that we saw,

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Speaker 2: you know, that we saw bought under the risk insurance

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Speaker 2: space last year was with funeral policies, which are typically

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Speaker 2: much smaller policies, and then there were also one point

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Speaker 2: nine million credit life type policy and the remainder about

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Speaker 2: two point seven million being the longer term risk policies.

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Speaker 1: I mean, funeral policies are so interesting. There's such an

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Speaker 1: enduring kind of feature of South African life. And you

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Speaker 1: made the point that quite many people have more than one,

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Speaker 1: and I sometimes wonder if at some point that might

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Speaker 1: lead to some kind of action or even pushback or something,

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Speaker 1: because I mean, you should really only need one.

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Speaker 2: Yeah, it's a very interesting point, Stephen, and obviously something

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Speaker 2: that the industry grapples with those policies. You know, it's

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Speaker 2: such a cultural, you know, almost peculiarity of South Africa

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Speaker 2: where that funeral is so broad and people tend to

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Speaker 2: take out multiple funeral policies. And look, we will definitely

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Speaker 2: encourage more insurance rather than less, but certainly it is

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Speaker 2: important to seek advice because it might well be possible

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Speaker 2: to consolidate if you've got a number of different policies

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Speaker 2: consolidated in one bigger policy, one more kind of comprehensive

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Speaker 2: risk insurance policy get underwritten potentially and you know, the

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Speaker 2: client could pay lower premium, So it is important to

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Speaker 2: really look at that, you know, in conjunction with a

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Speaker 2: financial advisor.

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Speaker 1: We all know how difficult it is for people in

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Speaker 1: South Africa to save I mean, we know how many

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Speaker 1: people take money out of their pension the moment they can.

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Speaker 1: In the two part system, for example, there's sort of

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Speaker 1: more expensive policies that you buy to protect yourself from

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Speaker 1: something like dread, disease or death. How are those policies

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Speaker 1: doing in this current economy? Are people still putting money

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Speaker 1: into those? I mean, those are still I think some

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Speaker 1: of the issues that keep people awake at night, what

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Speaker 1: if this happens to me, what if I lose my

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Speaker 1: income for example?

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Speaker 2: Yeah, absolutely, Stephen, that is just so important. We definitely

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Speaker 2: are seeing take up that, but at the same time,

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Speaker 2: we're seeing lapses increase of those types of policies. For

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Speaker 2: the first time in three or four years, we actually

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Speaker 2: saw lapses coming down over the previous three years and

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Speaker 2: last year sadly, the lapses of you know, longer term

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Speaker 2: recurring premium insurance policies did increase across the industry. So,

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Speaker 2: you know, in conjunction with the previous measures around the

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Speaker 2: insurance gap. It is just so important to think about

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Speaker 2: this in the context of financial advice and for clients

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Speaker 2: to hold on to cover And I know it's easier

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Speaker 2: said than done. I know we're on the looming petrol

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Speaker 2: price hike, the likes of which you haven't seen in

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Speaker 2: a while, and consumers will be squeezed. It just makes

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Speaker 2: it so important to, you know, really consider your options

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Speaker 2: in conjunction with proper advice and make sure that you're

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Speaker 2: not letting go of the wrong you know, pieces of

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Speaker 2: your financial planning puzzle.

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Speaker 1: Thanks so much. Gareth Friedlander is a member of the

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Speaker 1: Association for Savings and Investments South Africa Life and Risk

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Speaker 1: Board Committee