Insurance in South Africa: Market and IT Overview

December 29, 2005

Abstract

London, United Kingdom December 29, 2005

The South African Insurance market reported $27 billion in net written premium in 2004 and is set to grow about 5% in the next five years. Celent estimates that IT spending will reach $1.78 billion by 2008.

In a new report, Insurance in South Africa: Market and Overview, Celent highlights the unique social and political challenges facing South Africa and outlines the related IT opportunities.

Since the introduction of democracy in 1994, South Africa has undergone massive political, social and economic change. South Africa痴 economy is growing and is attracting more foreign investment. A beacon of this growing interest came in May 2005, when UK-based Barclays Bank agreed to buy a majority stake in Absa, South Africa痴 largest retail bank.

The changes underway in South Africa are impacting the insurance market as well. "Local developments such as the Financial Services Charter, increased regulation, black economic empowerment, and changing distribution channels will influence and help create the next generation of insurer," says Catherine Schmitt, senior analyst at Celent and author of the report.

Celent outlines the challenges facing insurers and their impact on IT strategy arising from the new economic and political environment in South Africa. In the past, low levels of investment in IT were linked to poor company performance, but this is about to change. Insurers are gearing up to increase IT spending over the next three years. Celent estimates that US$1.5 billion will be spent on IT in 2006. Insurers will invest in integration and core system replacement and are increasingly moving away from bespoke development to buying off-the-shelf applications.

The 29-page report contains 6 figures and 10 tables.

of Celent's Life/Health Insurance and Property/Casualty Insurance research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

London, United Kingdon December 29,  2005

Insurance in South Africa: Market  and IT Overview

Return to report Abstract

Executive Summary 3
Introduction 4
  Terminology 4
About South Africa 5
  So What's Changed Since 1994? 5
  Reality Check 6
The South African Insurance Market 7
  Size 7
  The Competitive Environment for Insurers 9
Market Growth and Drivers 10
  Black Economic Empowerment 10
  The Financial Services Charter 11
  Changing Demographics 11
  Health Care Crisis 12
  The Economy 12
  Distribution Models 12
  Regulation 13
Insurance & Technology 15
  Total IT Spending in Insurance 15
  Budget Allocations 16
  IT Infrastructure and Technology 17
  Role of Outsourcing 17
  Role of the Vendor 18
Technology Trends 20
  Drivers for Change 20
  The Internal IT Challenge 21
  IT Initiatives 21
Conclusion 23
  For Insurers 23
  For IT Solution Providers 23
Objectivity and Methodology 25

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