The fragmented South African insurance industry is in the middle of far-reaching change. The overall profitable results are hiding the stark differences between the largest market leaders, the direct insurers, which benefit from low expense ratios and the medium and small companies, which have little choice but to submit to the pricing pressure fuelled by the power of insurance brokers. It is becoming increasingly difficult for smaller companies, both insurers and brokers, to deal with the increasing complexity of regulation, both in terms of corporate governance and consumer protection requirements.

The record losses of 2017 were largely covered by the reinsurance market, but reinsurers are pushing back. With increasing retentions and higher rates, reinsurance costs have gone up and insurers are carrying more risk within their net retentions. It is expected that more mergers and acquisitions will take place over the next few years, and with the regulators' current focus on outsourced service providers, such as underwriting and claims managers, insurers may even be forced to bring all aspects of insurance administration and underwriting back under their direct control.

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