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Weakening Rand Pushes Up Insurance Premiums' Prices

Thursday, 19 January 2012 10:05

The rand has weakened about 16 percent against the dollar since August 2011, which will push up the price of insurance premiums this year, or so analysts say. As most of our vehicle parts are imported, the weak rand makes these parts more expensive. As the cost to repair vehicles is one of the largest contributing factors to insurance premiums, this could see insurance companies push up prices as well.

This increase in cost of parts and other imported products is coupled with the increasing competition in the industry. Companies like Clicks, Woolworths and Vodacom are entering the short-term insurance market, which further puts pressure on insurance company profit margins.

The new entrants in the market, though, must compete by offering cheaper premiums and paying claims. In order to do this they will need to underwritten by larger insurers, who will use the opportunity to expand their channels of distribution.

For more information on this report, visit IOL.

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Weakening Rand Pushes Up Insurance Premiums' Prices

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