Discovery Life’s business model of paying people for making healthy choices — getting adequate sleep, eating well and taking regular exercise — has helped it grow market share in the fiercely competitive life assurance segment, according to its CEO, Riaan van Reenen.
He said Discovery Life, established 25 years ago, had to date paid out R13.2bn in paybacks and another R3bn through cash conversions to members who choose healthier lifestyles. This had pushed competitors to develop similar plans.
“If you think about it, the R16bn that we’ve paid out to people for living healthier, not for becoming ill or for dying ... shows how powerful this model of incentivising wellness is,” he said.
The shared value benefit model rewards customers through paybacks, cash conversions and Discovery Vitality and Discovery Wellness benefits for making healthier lifestyle changes.
Van Reenen said that while many viewed life policies as a grudge purchase, the group had “flipped” life insurance purchases, as 60% of payouts were living benefits as opposed to payouts only at death.
“It has shifted away from ‘I’m buying something that I really don’t want to, but I need it and put it in a drawer,’ to something that’s a living policy where we encourage people and we pay people to help to live healthier so they can benefit from lower premiums, payback benefits and cash conversion benefits.”
The benefits have meant better sales and persistency, with people keeping their cover longer, and it also helps them with affordability through difficult times, he said.
“Part of our success through our core purpose is to turn it around from a grudge purchase to something that makes people healthier, and part of [their] everyday living.”
In its 2025 financial year, Discovery Life’s operating profit increased by 14% to R5.5bn, while it paid R9.6bn in claims.
South Africans are generally underinsured for the death of a loved one, according to the 2025 insurance gap study released by the Association for Savings and Investment South Africa in October
Keagan Higgins, an investment analyst at Anchor Capital, said Discovery Life had shaped the industry through the introduction of “dynamic” underwriting, in which clients prove their ongoing behaviour — how they sleep, exercise and diet — is just as critical to the insurer’s risk as their age or health status at inception.
Higgins said life insurance remained a high-quality business because, while the mass market was under strain with wide-ranging policy lapses, customers in the affluent segment mostly covered by Discovery Life and competitor Sanlam were more likely to reduce luxury spending before they cut their life cover, underscoring their resilience.
He said the sector holds high solvency capital ratios — almost double the regulatory requirements — and its strong capital positions protect dividends even if top-line sales remain sluggish.
“Discovery specifically is trading on a different multiple as investors price in the transition of its bank from a start-up cost to a profit generator. There is optionality in Discovery that some of its peers cannot match,” Higgins said.
With the disappearance of traditional walls between banking and insurance falling, convergence would be a major theme for life insurance in the year ahead, he added. “The winners in the near term will be the insurers who successfully lock clients into this entire ecosystem to reduce churn.”
He also views the long-term benefit of the “two-pot” retirement system as a positive for the insurance sector, as employees no longer need to resign from their jobs to access capital, which helps keep retirement savings invested.
“Combined with the interest rate cutting cycle easing pressure on consumer liquidity, we expect lapse rates to stabilise, setting the stage for an earnings recovery.”
However, South Africans are generally underinsured for the death of a loved one, according to the 2025 insurance gap study released by the Association for Savings and Investment South Africa in October. The study found that the life and disability cover shortfall widened by 12% to R54-trillion in 2025, meaning that dependents or their businesses would potentially be exposed.
Van Reenen said this was a huge worry but also a huge opportunity. “I think it’s up to us, the insurance industry, to find innovative ways to close that insurance gap to the benefit of our customers, to the benefit of the industry.”
Stiff competition in the life assurance sector was also good for customers, he said. “I think the market has never been healthier. Competition is good; it’s good for customers. It forces us to be at the top of our game from a service perspective, a product perspective, [and an] advice as well as a competitiveness perspective.”
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