In today’s tightening insurance landscape, more policyholders are facing unexpected cancellations — often due to high loss ratios that exceed 100%. Whether it’s the result of a major claim or multiple smaller claims filed within a short time frame, insurers and their reinsurers are becoming far more risk-averse.
If you’ve recently received a 30-day policy cancellation notice, you’re not alone. The growing number of cancellations is a direct response to both global and local pressures: economic uncertainty, increased fraudulent activity, and the rising cost of claims — particularly those related to extreme weather events.
Why Insurers Are Cancelling Policies
Increased claims activity has left insurers with limited options. Climate-related disasters — like the devastating Knysna fires of 2017, which resulted in over R2 billion in claims — have placed enormous strain on reinsurers. As a result, reinsurers are clamping down on what risks insurers can carry, forcing insurers to offload high-risk clients to maintain financial sustainability.
Unfortunately, once a policy is cancelled, finding an alternative insurer willing to take on a high-risk client becomes extremely difficult. Many insurers now share data and claims histories, making it hard for a previously cancelled client to find cover elsewhere — especially during turbulent economic times.
The Alternative: Self-Insurance
If traditional insurance options are no longer available to you, it may be time to consider self-insuring. This approach involves setting aside funds that you would have paid as premiums into an investment vehicle that is:
- Flexible
- Liquid
- Capable of generating returns
Some examples include:
- Tax-Free Savings Accounts (limited to R36,000 per year)
- Unit Trusts
- Money Market Accounts
So how does it work?
Instead of paying premiums to an insurer, you commit to saving and investing that same amount regularly. Over time, your fund will grow — and in the absence of claims, it becomes your personal safety net.
Need to repair a minor water leak or replace a broken window? You can access your funds.
Don’t experience any losses for a few years? You’ve accumulated a significant sum — a self-funded “no-claims bonus” that could go toward a dream holiday, home renovation, or retirement fund.
The Pros and Cons of Self-Insurance
Pros:
Full control over your money
Flexibility to choose when and how to use the funds
Potential to earn interest or investment returns
Money saved remains yours if you don’t claim
Cons:
Large claims (especially early on) can deplete the fund quickly
No access to emergency services or support from insurers
Requires discipline and consistent contributions
Not suitable for every type of risk (e.g., total loss of a home or expensive vehicle accidents)
Final Thoughts
Self-insuring is not a perfect substitute for traditional insurance — especially for high-value assets or catastrophic risks. However, in situations where insurers are no longer willing to provide cover, it is a smart, proactive way to protect yourself financially. Over time, it could become one of the most empowering financial decisions you make.
If your policy has been cancelled and you’re unsure of your next steps, consider consulting a financial adviser or investment professional to tailor a self-insurance strategy that suits your needs.
Need help navigating your next steps?
If your policy has been cancelled or you’re exploring self-insurance options, we’re here to help. Get in touch with us for personalised advice and assistance with setting up an investment strategy that works for you.
Contact us today to start planning with confidence.
