The protection gap is growing, and better advice is the solution
Personal Life insurance claims tell animportant story.
Beyond the numbers and statistics, they provide a real-world viewof the challenges customers face, the risks they encounter, and the financialimpact those risks have on families. They also highlight an uncomfortablereality that the South African financial advice industry cannot afford toignore: the protection gap remains significant, and in many cases, it isgetting wider.
At Old Mutual, we have paid nearly R100 billion in claims since2002. While that figure demonstrates our long-standing commitment to honouringour promises to customers, the more important statistic is our consistentlyhigh claims pay out ratio. Historically, more than 94% of claims have beenpaid, while some product categories have achieved pay out rates exceeding 97%,with certain years approaching 100%.
Insurance works - These numbers reinforce animportant message: insurance works. Yet despite this, many South Africansremain substantially underinsured. Recent claims data, viewed alongside thefindings of the 2025 ASISA Gap Study, provides valuable insight into where theindustry should focus its efforts. One of the most notable trends emerging fromboth sources is the growing importance of living benefits.
While the traditional “big four” severe illness claims, cancer,heart attack, stroke, and coronary artery bypass surgery, continue to dominateclaims experience, cancer remains the single most significant driver acrossmultiple product categories. Every year, a larger proportion of claims relateto cancer diagnoses, making it one of the most important risks customers needto prepare for financially.
Beyond severe illness, disability claims continue to be driven byconditions such as musculoskeletal disorders, nervous system illnesses, andcancer-related complications. Importantly, these risks affect customers acrossall age groups.
Claims are age blind - The perception that severeillness or disability is primarily a risk for older individuals is increasinglyinaccurate. We continue to see claims from customers in their eighties andbeyond, with the oldest claimant being 82, while also seeing severe illnessclaims from individuals in their twenties. Illness does not discriminate basedon age, income, or life stage.
What has become particularly evident is that people are livinglonger and recovering from conditions that would previously have been fatal.This is positive news from a medical perspective, but it introduces a newfinancial challenge. Surviving a severe illness often means managing long-termrecovery costs, lifestyle adjustments, and income disruption for many yearsafter treatment has ended.
This is where the protection gap becomes most visible. The ASISAGap Study reveals that underinsurance is not limited to lower-incomehouseholds. In fact, when we isolated higher-income earners, individualsearning more than R30 000 per month, the findings were equally concerning.
Among this group, life cover adequacy sits at approximately 49%,while disability cover adequacy falls into the high thirties. In practicalterms, this means that many higher-income South Africans are underinsured bymillions of rand. On average, the shortfall exceeds R3 million for life coverand more than R5 million for disability cover.
“The true value of advice is not demonstrated when a claim is paid. It is demonstrated long before that claim occurs.”
