In any business it is critical to understand the key drivers of sales, costs and sustainability. This study
aimed to understand whether macroeconomic indicators could be used to explain and predict
insurance sales, cancellations and overall underwriting profitability in South Africa, and whether the
drivers for insurance demand and profitability differed based on individual wealth. The significance
of answering these questions is directly related to managing and running an insurance business in
terms of which products to sell, and which consumer segments to target based on prevailing
macroeconomic conditions. Regression analyses using Ordinary Least Squares were completed on
both low income and high income consumer groups. Predictive models for sales (low income and
high income groups) and profitability (low income group) were derived; however no model
sufficiently explained cancellations in either income group. The explanatory variables for sales in the
low and high income groups differed, suggesting that macroeconomic factors differentially influence
buying behaviours in these groups. Sales and profitability in the low income group were explained by
the same macroeconomic factors.