Santam 2025 insurance barometer highlights ongoing socioeconomic, infrastructure and climate change risks

Santam, South Africa’s largest short-term insurer, today unveiled the 2025 Santam Insurance Barometer Report, which highlighted that a persistently tough economic environment, crime, infrastructure risks and climate change-related weather volatility are the biggest challenges currently impacting South African households and businesses.

The biennial report tracks global and local emerging risk trends and is in its fourth iteration this year. Fieldwork for the local study was conducted within a landscape of unprecedented geopolitical uncertainty, heightened global climate risk, as well as local economic strain.   

Surveying almost 900 consumers, businesses and brokers from across South Africa, the report provides in-depth data and insight into the shifting risk trends impacting the nation. Research findings, which reflect the market perception of risks, are juxtaposed with Santam’s expert industry insights to create rich analysis that unpacks how the local industry should respond and/or adapt to evolving market realities and customer needs. 

According to Atang Matebesi, CEO of Santam Client Solutions, continuous shifts in the local and international risk landscape mean the local short-term insurance industry must continue to adapt and innovate at rapid pace.

“Once again, weather volatility, infrastructure concerns and socio-economic challenges have created a tough environment for local insurers. This has been exacerbated by ongoing geopolitical turmoil that is currently fundamentally shifting traditional trade routes and heavily impacting the cost of repair parts, threatening the affordability of the Motor and Heavy Haulage classes of insurance. A trend is emerging where vehicles that normally wouldn’t be written off are being declared total losses because repair costs have skyrocketed due to costly imported parts affected by the geopolitical environment.

“The industry has the unenviable task of balancing premium rates with sustainable underwriting practices and risk mitigation measures to ensure a sustainable insurance sector that can continue to provide quality cover and pay claims over the long term, thus also contributing to national economic growth,” he says.  

The impact of societal stressors was evident in Santam’s claims statistics. Additionally, there was a notable escalation of claim volumes in Santam’s MTN portfolio, where Matebesi says that South Africans claimed for theft of laptops, smartphones, and tablets due to muggings and petty theft taking place mainly in South African shopping malls.

The Motor category remains the key driver of Personal and Commercial lines claims, however, Matebesi says that after responsible underwriting actions, Santam was able to gain control of unsustainable claim trends, strengthening the insurance pool. “The outlier in the Personal Lines Motor book was collision claims (involving two or more vehicles), where claim volumes spiked substantially. This is largely due to road usage in South Africa returning to pre-COVID levels, driven by many companies reinstating five-day office attendance policies.”

Still on the motor class, Matebesi highlighted that infrastructure degradation manifested in the deterioration of road surfaces with potholes causing loss or damage to vehicles, with the impact felt across the personal lines, commercial lines, specialist heavy haulage, and agriculture business lines.

An emerging risk to watch relates to the decommissioning of 2G and 3G networks that power radio-linked alarm systems and vehicle tracking devices. According to Matebesi, this could introduce an unforeseen risk in the personal and commercial lines motor and property books. “Close collaboration between insurers, insureds, and telecoms services providers is necessary to ensure the phased ‘switch-off’ of these networks, scheduled for the end of 2027 (with towers already being disabled in some areas), does not cause widespread disruption. There is anecdotal evidence of the potential impact on property owners with those who have already had their alarms ‘switched off’ falling victim to crime.”

The 2025 survey specifically measured the risk trends and market perceptions of South Africans, the key findings of the study are:

How insurance consumers experience the risk landscape in south africa

South African households are feeling the impact of persistently high inflation and interest rates, with 84% of consumer survey respondents saying they have had to make adjustments to cope with the increased cost of living. Forty per cent (40%) of these say that they have had to cut back on non-essential items to relieve financial pressure. Positively, short-term insurance remains very low on consumers’ radars when it comes to reducing expenditure, with only 1% stating they have cut short-term insurance policies.

Crime is increasingly a concern, with 16% more consumer respondents citing it as a top 3 risk for their households now, compared with 2023. According to Matebesi. Santam’s crime-related claims experience has levelled out due to a combination of stricter underwriting measures and enhanced risk management measures implemented.

Climate change remains heightened this year, with 78% of consumers citing they are in some way concerned about the threat of extreme weather events. “Interestingly, while 24% of respondents said they are taking risk mitigation steps by improving maintenance (e.g. clearing gutters) to reduce the impact of adverse weather events. Santam’s claims experience tells a different story.

The personal lines property class was dominated by geyser claims. “In the two years since the last Insurance Barometer, Santam has worked on risk management interventions to help mitigate losses. Specific interventions include early detection devices and installing overflow trays to minimise damage. Despite these interventions, there was an increase in loss or damage to geysers, water containers, tanks, or pipes in 2024 – Santam believes this is due to the cyclical nature of geyser claims as wear and tear sets in,” says Matebesi.

The top 10 risks identified by consumers

1. Increasing cost of living (food, electricity, transport): 66%
2. Societal issues (crime): 50% (2023: 34%)
3. Economic challenges (rising interest rates, inflation): 47% (2023: 58%)
4. Unemployment: 35% (2023: 29%)
5. Accidental loss/damage to home, vehicle, property: 26% (2023: 39%)
6. Loadshedding: 23% (2023: 57%)
7. Political risk, e.g. Degradation of infrastructure (potholes, etc.): 16% (2023: 19%)
8. Climate change: 14% (2023: 14%)
9. Fire: 12% (2023: 13%)
10. Cybercrime: 7% (2023: 12%)

The impact of the increased cost of living on consumers

• 40% have had to cut back on non-essential expenses
• 27% have had to reduce their expenditure on essential monthly expenses
• 21% have had to dig into their savings

Some have had to make lifestyle adjustments:

• 38% spend less on entertainment and eating out
• 23% stopped taking holidays
• 19% drive less
• 14% use public transport/taxis whenever they can
• 13% cancelled their DSTV subscription

Others have had to take on additional debt:

• 7% took out a personal loan (mainly from a bank)
• 9% borrowed money from friends and relatives
• 15% use alternative energy sources to save on electricity

Responses from corporate and commercial entities

Socioeconomic challenges remain top of mind for corporate and commercial entities, with theft emerging as the primary concern for commercial respondents. According to Matebesi, concerns of theft have, however steadily declined over the past five years (from 34% in 2020/21 to 21% in 2025). “Persistent economic malaise remains a top concern for businesses at 19%. Interestingly, growing concerns over operational costs have emerged with machinery/systems breakdowns having increased by 6% over the last 5 years.  This is likely related to economic pressures on the increased costs of doing business,” he says.  

Matebesi points out that an interesting disconnect revealed in this year’s Insurance Barometer survey is the lack of perceived business interruption (BI) risk. “The 2024 Allianz Risk Barometer ranks BI second on its top 10 global risks. Meanwhile, only 7% of commercial respondents mentioned it in their top three. The biggest threat to the economic viability of a business is a disruption that causes it to halt operations, resulting in a loss of profits. BI cover ensures business continuity, whether the interruption is caused by machinery breakdown, fire, or a cyber-attack.

“The lack of emphasis placed on loss of profits is concerning; we believe business interruption is a massively underestimated risk,” warns Matebesi

Concerns around currency fluctuation emerged strongly this year, with an increase of 10%, likely due to US policy uncertainty as well as the indecision between South Africa’s GNU around the tabling of the National Budget. 

Loadshedding, while still within the top 10 risks identified by businesses, saw a significant decrease in terms of the severity of the concern. Government and private sector initiatives to stabilise the grid saw South Africa experience a consecutive 300 days without loadshedding in 2024. “Together with underwriting actions, this resulted in a favourable claims experience – Santam’s Commercial Lines power surge claims showed a considerable decrease compared to 2023,” says Matebesi.

Climate change also continues to weigh on the minds of businesses, remaining in the top ten commercial concerns at 16%. “The agriculture sector is disproportionately concerned about climate risk due to its inherent exposure to the impacts of inclement weather,” he says.

From Santam’s perspective, Matebesi says that commercial lines weather and water claims saw a 5% increase in claims volume. Storm and flood damage is often exacerbated by inadequate infrastructure maintenance or poor town planning, resulting in higher value claims regardless of no major catastrophe events occurred over the past year.

Top 10 traditional risks identified by corporate and commercial businesses

1. Theft: 21% (2023: 27%)
2. Machinery/systems breakdown: 20% (2023: 16%)
3. Economic downturn: 19% (2023: 19%)
4. Loadshedding/ power surge: 18% (2023: 41%)
5. Loss of profits: 18% (2023: 20%)
6. Currency fluctuations: 18% (2023: 8%)
7. Fire (electrical/ accidental/ wildfires): 16% (2023: 19%)
8. Climate Change: 16% (2023: 16%) – Agriculture sector: 64%
9. Staffing issues: 14% (2023: 10%)
10. Crime: 14%

Challenging economic conditions continue to weigh on corporate and commercial entities

The economy has been challenging over the past two years, with interest rates and inflation increasing significantly.  All businesses have been impacted by this tough environment with higher operating costs (54%), low profits (51%) and increased prices to the customer (46%) having emerged as the key impacts.

• Almost all businesses have been impacted by the increased price of fuel. 61% said that operating costs had increased as a result, while 51% have had to raise customer prices to remain profitable. Interestingly, 25% said that they had seen less business coming in as a result of fuel price increases.
• Corporate and commercial entities reduced their expenditure on these business costs over the past 12 months:
• 43% reduced transport/fuel costs (2023: 21%)
• 26% cut salaries/wages (fewer staff or salary freeze) (2023: 25%)
• 21% reduced domestic travel (2023: 13%)
• 17% reduced debt repayments/restructuring (2023: 13%)
• 14% reduced expenditure on commercial property/rent payments (2023: 6%)
• 12% reduced expenditure on vehicles (sold/gave up lease) (2023: 11%)
• 12% reduced international travel (2023: 10%)
• 11% reduced expenditure on warehousing (2023: 4%)
• 6% reduced expenditure on employee benefits (pension, life, disability, medical aid) (2023: 7%)
• 3% reduced expenditure on short term insurance policies (2023: 2%)

Broker role increasingly advisory as risk landscape complexity rises

Intermediaries remain an important sales channel for short term insurance, used by 78% of businesses and 56% of consumers surveyed. The 2025 Insurance Barometer highlights the shifting nature of the broker from intermediary to risk management partner, as premiums rise to accommodate an increasingly complex risk environment. “Brokers are spending more time counselling and guiding clients and businesses on effective risk mitigation strategies, despite onerous administration requirements still taking up a large portion of their capacity. The study revealed that almost nine in ten brokers see themselves as risk advisers, saying that this is very important to their clients, says Matebesi.   

Top trends in the changing role of the modern insurance broker

• 72% of brokers confirmed that they conduct a home/site visit to assess risk management
• 63% of brokers send clients email/SMS updates on new risk management tools
• 48% go through a risk management checklist on the phone
• 1 in 3 intermediaries (33%) still say that communication on policy coverage is confusing
• 6 in 10 intermediaries believe the best way for the insurance industry to support government in addressing risk from failing infrastructure is to fix the potholes and support the REIPPP.
• Intermediaries are upbeat about business in the year ahead, with 8 in 10 saying they are “very/somewhat confident”.
• Price has increasingly become a factor, with 34% of brokers saying affordable rates for clients was the most important reason for selecting an insurer, excellent service (33%), and good track record for claims settlement (31%) followed.

Impact of the increased cost of living on brokers

• Increased premiums continue to impact the insurers that intermediaries recommend, with 43% saying they’ve changed insurers as a result.
• 43% of intermediaries report an increase in volume of claims in the past year and 51% say the value has increased
• Brokers noted a change in client behaviour due to the increased cost of living:
• 24% of commercial lines and 21% of personal lines brokers’ clients put additional risk management measures in place
• 17% of commercial lines and 20% of personal lines brokers’ clients switched to a different insurer
• 13% of commercial lines and 18% of personal lines brokers’ clients reduced their insurance cover
• 9% of commercial lines and 10% of personal lines brokers’ clients cancelled a short-term insurance policy
• 8% of commercial lines and 5% of personal lines brokers’ clients opted for self-insurance

The future of the industry

Brokers currently spend around half of their time engaging with existing and potential clients and 37% on admin and compliance.  But encouragingly, 50% believe that industry growth will come from streamlining these activities via greater use of digital channels to allow deeper engagement with the customer.

Matebesi emphasised how important this is given the rising complexity of the risk landscape. “To be an effective risk management partner, the bulk of brokers’ time needs to be spent on client interaction. Digital adoption in practices to minimise admin time is critical to unlock the space for intermediaries to provide this,” he says.

Brokers echo this sentiment with 7 in 10 respondents saying the best way for insurers to remain relevant in future is by providing meaningful risk management solutions and tools.    

Conclusion

According to Matebesi, insurance makes individuals, businesses, and populations more resilient. “In this complex, continually evolving risk landscape, insurers must shift their focus to delivering unexpected value, beyond traditional insurance offerings, and enhancing the client experience through operational excellence and risk management support is vital,” he concludes.