The South African insurance industry has demonstrated remarkable resilience over the past few years, despite a challenging economy and a changing risk landscape. The frequency and severity of climate- and weather-related events place increasing pressure on underwriting, claims and reinsurance costs. At the same time, technological advancement and digitalisation have introduced heightened exposure to cyberattacks, fraud and data breaches, requiring insurers to reassess products, pricing and risk models. Economic uncertainty may also necessitate premium increases to reflect higher costs and risk, raising affordability concerns for consumers.

Coupled with a visible enforcement focus from regulators, these developments mean that insurers must do more than promise protection to consumers; they must demonstrate it quickly, consistently and fairly. Insurers that build consumer confidence through faster claims processing, fair and understandable products, simplified policy wording, investment in risk prevention and management, and visible alignment with regulatory and social expectations will not only earn trust but also contribute to a more resilient consumer market.

According to a 2024 Munich Re report, global overall losses in Africa from natural catastrophes in the first half of 2024 were estimated at USD120-billion, of which the insured portion was USD 62-billion. In June 2025, South Africa declared a national state of disaster following catastrophic flooding in the Eastern Cape Province. This followed the 2022 Durban floods and, before that, the Cape Town fires. These extreme weather events are occurring with increasing frequency, increasing claims volumes and severity and raising questions around affordability and premium development.

Insurers are also facing growing exposure to fraud. The Association for Savings and Investments South Africa reported a 46% increase in the number of fraud and dishonesty cases reported by South African insurers and investment companies in 2024, with industry losses of at least ZAR 175.9-million in 2023. These losses drive up costs and delay legitimate claims. From a regulatory perspective, the Financial Sector Conduct Authority (FSCA) has placed renewed emphasis on consumer outcomes and enforcement to uphold consumer confidence in the financial system. Insurers must therefore embed Treating Customers (TCF) principles throughout product development, communication and claims practices.

Practical priorities for building and sustaining consumer trust

Deliver claims certainty: speed, clarity and empathy 

Customers value predictability as much as the payout itself. Transparent and timely claims outcomes provide visible proof of value and build trust in insurers. One of the most effective measures insurers can take is to simplify policy wording and claims processes.  Policy wordings should be drafted in clear, plain and understandable language setting out cover and exclusions in simple terms to minimise disputes and interpretation issues.

Websites and digital platforms should serve as educational tools, enabling both potential and current customers to access relevant information easily. This may include glossaries of insurance terminology, user-friendly interfaces and simplified visual summaries of claims processes.

Insurers should also consider fast-tracking common claims through triage rules and automation to streamline claims processing and ensure timeous payments. A healthy balance must be maintained between the use of artificial intelligence and empathic human engagement, particularly where customers are distressed.

Transparency: turning complexity into clarity

Insurance is often perceived as complex and opaque, and this perception is as. not unfounded as some insurance concepts can be difficult to simplify for the lay person. Even with intermediary assistance, customers may struggle to understand policy terms, exclusions and pricing structures, eroding confidence and creating friction during claims. Documentation should therefore be simplified and made accessible to the intended audience, complex jargon and legalistic language. Clear and plain language drafting is not only best practice but also aligned with TCF principles.

Transparency must also extend to the claims process. Providing customers with real-time updates on the progress of claims and decisions helps reassure them during what is often a stressful period. Digital platforms and mobile applications can facilitate this through status tracking, instant notifications and direct communication channels with claims handlers.

Ultimately, transparency is about empowering customers with clarity. When customers are informed and able to engage meaningfully with their insurer, trust is strengthened, supporting long-term sustainability and reputation.

Design customer-centric and affordable products

If there is any positive to be taken from the COVID-19 pandemic, it is the opportunity it created to do things differently and to adapt to change. There is scope for insurers to develop non-standard insurance products and to offer clearly priced core benefits with optional add-ons, rather than complex bundled policies that confuse customers.

In the United Kingdom, for example, flexi-motor insurance is offered on a usage-based basis (pay-per-mile), allowing customers to pay premiums only for the kilometers actually driven. Temporary insurance products are also available, providing cover for limited periods during which a vehicle is used. Products can similarly be developed to offer cover for freelancers and seasonal workers who require insurance on a part-time basis. In Japan, for instance, short-term cover is offered on a 24-hour basis for injury when attending events, playing sports or travelling on business.

For perishable and climate-related risks, parametric products, where payouts are triggered by objective criteria such as rainfall or wind speed, can provide rapid relief to affected communities and reduce claims friction. Micro-insurance and indexed products can also extend over to lower-income households at sustainable premiums levels.

Closely related to product design is assisting customers to take advantage of available benefits. Insurers should do more to help customers understand the benefits offered and how to maximise them, including by recommending ways in which consumers can reduce their premiums. Examples include referring clients to low-cost home security providers; advising whether completion of a defensive driving course may reduce motor insurance premiums; or indicating whether lifestyle changes, such as quitting smoking or reducing alcohol consumption, could lower life insurance costs. Providing these resources demonstrates a genuine commitment to helping customers save money.

Embed treating customers fairly (TCF) and proactive governance

Insurers should test for fair outcomes across the product lifecycle – including marketing, underwriting, servicing claims, and publish summary outcome metrics to demonstrate accountability. They should anticipate the Financial Sector Conduct Authority’s (FSCA's) conduct priorities and proactively disclose how TCF outcomes are met. This approach reduces enforcement risk and bolsters public confidence. Insurers should also collaborate with government, reinsurers and industry bodies to expand disaster financing, subsidised cover for vulnerable communities and parametric solutions for agriculture and informal settlements. Collective solutions improve insurance penetration and enable more effective risk-spreading.

Proactive risk education and prevention

Insurers hold significant volumes of historic and current data on peril statistics, which can be used constructively to assist consumers as part of the risk management process. Proactive risk education involves providing tools and resources that help consumers understand emerging threats and take preventive action.

This approach is already evident in the motor insurance sector, where insurers share information on hijacking hotspots or warn customers of impending storms or hail, encouraging them to take protective measures. There is no reason similar initiatives cannot be applied to other perils. For example, insurers can advise consumers on avoiding cyber risks by sharing tips on cyber hygiene, or use data analytics to warn consumers about flood-line locations.

Care must be taken to ensure that proprietary information is protected and that personal data is not disclosed without appropriate consent. However, positioning insurers as trusted advisers and partners in risk management requires regular engagement with customers, not only at renewal or claims stage.

Incentivise resilience and risk reduction

Insurers should reward customers who take verifiable steps to reduce risk, such as home flood-proofing or installing early-warning systems, through premium discounts or other incentives. This reduces systematic losses and reinforces a partnership-based relationship with customers.

By investing in local disaster preparedness and public awareness campaigns, insurers that actively help to reduce loss exposure will increasingly be viewed as partners rather than merely premium collectors. This approach contributes to building confidence in insurance as a critical component of economic resilience.

Jump on the Insurtech band wagon

Finally, insurers that have not yet done so, need to jump on the insurtech band wagon. Artificial Intelligence and related technologies are reshaping every aspect of the insurance value chain, from distribution and underwriting to pricing and claims management. Rapid technological advances over the coming decade are expected to lead to disruptive changes.

The insurers most likely to succeed in an AI-enabled environment will be those that leverage new technologies to develop innovative products. Improve operational efficiency and enhance the overall customer experience.

Insurers, whether acting individually or collectively as an industry, have a significant role to play in embedding customer-centric policies and strategies at the core of their businesses. This is not only the right thing to do from a conduct and governance perspective, but it is also essential to building strong and long-lasting customer relationships and a resilient insurance market.

Written by Sandra Sithole, Partner & Rethabile Shabalala, Senior Associate at Webber Wentzel