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Finaccord’s report titled Bancassurance in South Africa: Current State and Future Perspectives to 2020, plus the PartnerBASE™ and market data file that accompany it, provides comprehensive and detailed insights into the prospects for bancassurance in South Africa.

In addition to offering a review of key macro-economic metrics in South Africa, th e research also provides a background to the banking sector through the following information: identification of the ten largest banks by number of retail banking customers; data to illustrate the development of the banking market including number of fully-licensed banks, deposit accounts, branches and ATMs and how each of these have developed since 2005; and review of the value and growth of the consumer mortgage and non-mortgage lending market.

The research then focuses specifically on bancassurance with commentary in several areas: the regulatory environment and general importance of banks as an insurance distribution channel; the insurance product range, operating models and bancassurance partnerships of the ten leading banks; and future outlook for the value of the life and non-life insurance market of South Africa through to 2020.

Table Of Contents

Bancassurance in South Africa: Current State and Future Perspectives to 2020
TABLE OF CONTENTS
0.0 EXECUTIVE SUMMARY ... 1
1.0 INTRODUCTION 3
What is this report about? .. 3
The development of the bancassurance channel in South Africa is the focus of this report .. 3
Rationale . 3
Sub-Saharan Africa hosts a number of fast-growing financial services markets… 3
… with bancassurance poised to grow in several of these .. 4
Methodology ... 4
Macro-economics, banking and insurance sectors .. 4
Survey of banks .. 4
Market data . 5
Definitions ... 5
Investment-related life insurance ... 5
Retirement savings . 6
Risk life insurance ... 6
Accident insurance . 6
Health / hospital cash plans ... 6
Medical expenses insurance .. 7
Personal motor insurance .. 7
Household insurance .. 7
Creditor insurance ... 7
Travel insurance . 7
Agricultural insurance . 8
Commercial insurance 8
Mortgages and consumer finance . 8
Weighted provider share of partnerships .. 8
Operating models ... 9
Abbreviations and exchange rates 9
PartnerBASE .. 9
Finaccord .. 10
2.0 MARKET ANALYSIS ... 11
Macro-economic background .. 11
Gross domestic product and purchasing power parity (PPP) 11
Various factors have caused a slowdown in the South African economy in recent months 11
Total population, age structure and level of urbanisation ... 12
South Africa's population is less skewed to younger age groups than others in sub-Saharan Africa .. 12
Political risk 14
Readings for political stability, regulatory quality and rule of law are comparatively stable .. 14
Other key indicators .. 15
Rates of life expectancy are lower than might be expected given the country's relative affluence .. 15
Mobile subscriptions in South Africa more than doubled between 2005 and 2013 .. 16
Introduction to the banking sector ... 18
Structure of the banking sector 18
Absa, FNB, Nedbank and Standard Bank make up the country's 'big four' banks ... 18
… in a country with relatively few banks given its overall population and wealth .. 18
Development of the banking sector . 20
Most measures are indicative of a fast-growing banking sector in recent years ... 20
Consumer lending . 22
South Africa has the only genuinely developed mortgage market in sub-Saharan Africa 22
In real terms, non-mortgage lending balances have been growing at a compound annual rate of 7.9% 22
Introduction to the insurance sector 24
Life insurance accounts for over 80% of South Africa's total insurance market… 24
… meaning that premiums per capita are among the highest in the world ... 24
The bancassurance market . 27
Regulatory environment ... 27
There are no particular restrictions to stop banking organisations from selling insurance products 27
Importance of bancassurance as a distribution channel 27
The distribution share of banks in South Africa is higher than in any other country in sub-Saharan Africa… . 27
Product range, operating models and partnerships of the ten leading banks ... 27
… with a wide range of policy types on offer from most leading banks… . 27
… including commercial insurance products as well as consumer-oriented policies ... 28
The majority of bancassurance products are underwritten by captive insurers… 29
… such as those belonging to Absa, Nedbank and Standard Bank . 29
AIG and FNB Life are the most prominent external underwriters in the market ... 30
Future outlook ... 33
It is anticipated that premiums for non-life insurance will outgrow those for life insurance up to 2020 33

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY ... 1
Bancassurance in South Africa: key data points .. 2
1.0 INTRODUCTION 3
2.0 MARKET ANALYSIS ... 11
GDP in current prices and PPP (purchasing power parity) per capita in South Africa, 2008 to 2020 (forecast) ... 12
Total population and level of urbanisation in South Africa, 2008 to 2020 (forecast) 13
Population age structure in South Africa, 2014 .. 13
Key economic indicators for South Africa, 2008, 2014 and 2020 (forecast) (table) . 14
Index of political stability, regulatory quality and rule of law in South Africa, 1996 to 2012 . 15
Life expectancy at birth in South Africa, 2005 to 2013 ... 16
Mobile phone subscriptions, fixed broadband subscriptions and fixed phone lines per 100 people in South Africa, 2005 to 2013 . 17
Other key indicators for South Africa, 2005 to 2013 (table) ... 17
Ultimate holding companies and credit ratings of the ten largest retail banking organisations in South Africa, 2014 ... 19
Total assets, number of customers and number of branches of the ten largest retail banking organisations in South Africa, 2014 19
Number of fully-licensed banks and deposit accounts in South Africa, 2005 to 2013 . 20
Number of branches and ATMs per 100,000 adults in South Africa, 2005 to 2013 . 21
Key banking sector indicators for South Africa, 2005 to 2013 (table) ... 21
Residential mortgage lending balances outstanding in South Africa (absolute and per capita), 2009 to 2013 .. 22
Consumer non-mortgage lending balances outstanding in South Africa (absolute and per capita), 2009 to 2013 .. 23
Key data points for the consumer lending market in South Africa, 2009 to 2013 (table) . 23
Gross written premiums for life and non-life insurance in South Africa, 2009 to 2013 . 24
Gross written premiums per capita and as percentage of GDP in South Africa, 2009 to 2013... 25
Gross written premiums for life and non-life insurance in South Africa, 2009 to 2013 (table) . 25
(table) 25
Segmentation of non-life insurance gross written premiums in South Africa, 2013 . 26
Involvement in bancassurance of the ten largest retail banking organisations in South Africa: provision of bundled and stand-alone products, 2014 ... 28
Overview of provision rates for different types of insurance offered by the ten largest retail banking organisations in South Africa, 2014 29
Bancassurance in South Africa: provision rates, weighted operating models and weighted provider share of partnerships, 2014 ... 31
Summary of use of captive and joint venture bancassurance partners by the ten largest retail banking organisations in South Africa, 2014 32
Summary of use of external bancassurance partners by the ten largest retail banking organisations in South Africa, 2014 33
Forecast for gross written premiums for life and non-life insurance in South Africa to 2020 ... 34

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