Recession forces insurance clients to stop payments

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Friday, 14 August 2009 07:53

Since South Africa has been hit by the global recession, more and more clients have not been paying their premiums, reported Old Mutual South Africa. The recession has resulted in a number of clients losing their jobs rendering them unable to pay their premiums.

Head of Old Mutuals new long-term saving’s unit, Paul Hanratty, says the pressure is mounting on the upper end of the market and expects to see this trend continue for the next 6 months. Even Liberty Life insurance projects six months of losses amounting to R1.3bn.

In tough times, insurance is usually the first thing consumers do away with. Poor market conditions and recession-related job losses has resulted in lower levels of premiums. That said, however, South Africa’s performance seems to be holding up considering the economic conditions.

According to chief executive of Old Mutual, Julian Roberts, sales were strong as a result of the brand and extensive life and unit trust offerings. Long-term business though, has adjusted its operating profit to a flat R1.8bn. According to Roberts, this is because the company did away with loss making operations.

Adapted from Business Report.

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