It used to be argued that life assurers were geared to the equity market because shares made up such a high proportion of their net worth per share.

But even though they have bounced off their recent lows, the life insurers have woefully under-performed their peers on the JSE. Since the beginning of 2007 the life assurers have fallen by 15%, while the Alsi has risen more than 25%.

Sanlam, the strong performer at the beginning of last year, is down 18% to about R20, though it has still outperformed the 20% fall at Liberty, 22% at Metropolitan and Old Mutual's 26% decline to R17. Sanlam has proved to be a much better investment since demutualisation. Sanlam listed at R6 and Old Mutual at R11,50.

One of the reasons that life assurers have been poor performers on the JSE is that they are seen as a mature industry. This is not entirely fair, as gross flows, at least, continue to grow. Last year there was a 13% increase in individual premium income to R103bn - in terms of new premiums alone, the growth has been 14% to R57bn.

But life companies can still barely keep up with what goes out through the back door. There were withdrawals of R90bn - harsher economic times are reflected in a 31% increase in lapses (policies cancelled before they acquire any surrender value) and a 10% increase in surrender values in the second half of 2007.

Historically, the main reason for growth in life-based contractual savings has been the lack of a national pension scheme: there must be risk that discretionary cash flows will be diverted away from life policies towards the national scheme.

Originally this was going to be implemented as soon as 2010. But now even the executive officer of the Financial Services Board (FSB), Dube Tshidi, is predicting that the serious work will only start once the new president, cabinet and directors-general are installed in 2009.

The prime mover of the reform initiative at treasury, Jonathan Dixon, has moved to the FSB as the new deputy executive officer in charge of insurance, and his successor will need time to learn the ropes.

Liberty CEO Bruce Hemphill says that it is hard to see government removing the role of the private sector. "It recognises the importance of private financial institutions in deepening the capital markets."

New Metropolitan group CEO Wilhelm van Zyl says that the reform philosophy - to give people a decent pension, make sure the pensions are preserved until retirement and to safeguard the pension against all corporate governance abuses - is well aligned with its own.

The national scheme might even present a number of opportunities to the private sector. An obvious one is administration - Metropolitan already runs the huge Transnet funds, while Old Mutual's SA Retirement Annuity Fund is the largest private-sector fund.

Some of the "new generation" RAs such as Liberty Excelsior and Old Mutual Max already pay commission on the new scale - in which half, rather than two-thirds, of commission is paid upfront and the remainder is paid over the life of the policy.

The surrender penalties will also be reduced significantly. They were set at a maximum of 30% as part of the industry's statement of intent - this will be reduced to a maximum of 15% and after five years there will be no surrender penalties.

Sanlam Life's head of client solutions Anton Gildenhuys says that not everyone will benefit from the new system - because more will be given to investors who leave before the end of their term, at the expense of those who stay.

Metropolitan's Van Zyl says he is concerned that it might be difficult to promote life insurance sales as a career, especially at the lower end - though a minimum upfront fee of R400 will be allowed.

Like its peers, Metropolitan has diversified away from the retail life business, though Van Zyl says: "We are still happy to call ourselves an insurance company."

This is certainly in contrast to Liberty, which under Hemphill has increased its interest in Stanlib from 37% to 100%, bought a health business and begun to diversify into Africa. It refers to itself internally as "LibWealth" and to its core business as wealth management. It has re-entered health-care administration and aims to push pension administration into a higher gear after appointing Investment Solutions CEO Steven Braudo as head of Liberty Corporate Benefits.

Hemphill says Liberty needs to show that it has the intellectual capital to make a contribution to the Standard Bank group, "because once our bancassurance agreement ends in 2010, there is nothing to stop them setting up their own greenfields life insurance business. We now have the skills to take over pensions, asset management and payroll administration businesses in Africa when Standard Bank buys them".

Old Mutual CEO Jim Sutcliffe talks about asset management and asset gathering. True, it did buy a life assurer, Skandia, two years ago but this is predominantly a fund supermarket and packager of investment products.

Sanlam calls itself a financial services group but Gildenhuys points out that the nonlife business would not have been successful if they had not been able to leverage the existing life book.

Life insurers are certainly becoming much more creative about their distribution strategies.

Life products are losing market share in investment products every year. But there is still undoubtedly a significant opportunity to sell life and disability products. In February, the Life Offices Association released the Insurance Gap Study, in which research was carried out by True South Actuaries & Consultants.

It found that for families to maintain their standard of living after the death of a breadwinner, total life cover must be at least doubled to R7,9 trillion. There is also only about half as much disability cover as needed.

This is one of the prime considerations behind a comprehensive social security scheme as part of the national pension fund.

The products set to be sold into the lower income groups, in which risk cover is most important, now usually carry the Zimele brand.

Zimele (Zulu for stand on your own feet) uses Cat standards, meaning fair charges, easy access and reasonable terms. The range was recently extended from funeral policies into credit life, conventional life insurance and disability cover. LOA CE Gerhard Joubert says that Zimele is an important part of the initiative to improve consumer confidence.