MICROCAPITAL BRIEF: Survey: Two Thirds of Poor Insured South Africans Choose Funeral Microinsurance

A study by Ikapadata, a South Africa-based data collection company, indicates that 20 percent of South Africans with low incomes have formal health insurance while 66 percent have no formal insurance at all, excluding those who receive coverage from their employers. 

In a statement attributed to Mr. Jaba Malele of KPMG Insurance, the insurance branch of Netherlands-based professional services company KPMG, lack of trust between low-income consumers and insurers is the reason for the microinsurance sector’s low penetration rate in the country. According to Mr. Malele, ineffective regulation and low demand for formal health insurance has enabled informal savings schemes and funeral insurance to become more popular amongst South Africa’s poor. Funeral insurance, which covers two thirds of the survey’s insured respondents, remains the most popular form of insurance in the country.

The South African Parliament is reportedly reviewing a comprehensive national microinsurance policy framework, entitled the South African Microinsurance Regulatory Framework, to be implemented in 2014. This framework is reportedly aimed at increasing the access of low-income households to microinsurance as well as boosting consumer protection within the country. The microinsurance framework is an outgrowth of the document described by MicroCapital in 2011.

By Brian LeBlanc, Research Associate

About KPMG

Founded in 1987, KPMG is a professional services company based in the Netherlands. KPMG provides assurance, tax advisory, consulting, financial advisory, actuarial and legal services. As of December 2012, KPMG reported USD 156 million in total assets and USD 23 billion in total revenue.

About ikapadata

Ikapadata is a market research company based in Cape Town, South Africa. Focusing on South Africa’s semi-urban areas, ikapadata provides both survey and consultancy services.

Sources and Additional Information

Business Day article, “Cost, distrust discourage consumers from obtaining insurance,” http://www.bdlive.co.za/business/financial/2013/03/05/cost-distrust-discourage-consumers-from-obtaining-insurance

MicroCapital story, December 25, 2012, “MICROCAPITAL BRIEF: FirstRand Bank of South Africa Recieves $300m Line of Credit from African Development Bank (AFDB),” https://www.microcapital.org/microcapital-brief-firstrand-bank-of-south-africa-receives-300m-line-of-credit-from-african-development-bank-afdb/

MicroCapital story, November 7, 2011, “MICROCAPITAL BRIEF: FinMark Trust 2012 FinScope South Africa Survey: Banking Population Increased from 63% to 67% in Past Year,” https://www.microcapital.org/microcapital-brief-finmark-trust-2012-finscope-south-africa-survey-banking-population-increased-from-63-to-67-in-past-year/

MicroCapital story, August 9, 2011, “MICROCAPITAL BRIEF: South Africa’s National Treasury Releases Policy Document, “The South African Microinsurance Regulatory Framework,” to Address Access to Insurance, Consumer Protection for Low-Income Households,” https://www.microcapital.org/microcapital-brief-south-africa%E2%80%99s-national-treasury-releases-policy-document-%E2%80%9Cthe-south-african-microinsurance-regulatory-framework%E2%80%9D-to-address-access-to-insurance-consumer/

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