The busi­ness of in­sur­ance

The an­nual In­sur­ance con­fer­ence at Sun City con­tin­ues to grow from strength to strength, with more del­e­gates, more speak­ers, and more in­ter­na­tional rep­re­sen­ta­tion than ever be­fore.

RISKSA Magazine - - CONTENTS - Christy van der Merwe

The an­nual In­sur­ance In­sti­tute of South Africa ( IISA) con­fer­ence at Sun City con­tin­ues to grow from strength to strength, with more del­e­gates, more speak­ers, and more in­ter­na­tional rep­re­sen­ta­ton than ever be­fore.

“Strip things down, clear away the dis­trac­tions and get back to ba­sics.”

Be­ing the pre­mier in­sur­ance in­dus­try event on the con­ti­nent, it is i a spring­board to ac­cess the in­dus­try in Africa, and gives a good i in­di­ca­tion of the growth of the in­dus­try in South Africa A and be­yond be­yond. This year’s theme, ‘ the busi­ness of in­sur­ance is in­sur­ance’ is a good re­minder to strip things down, clear away the dis­trac­tions and get back to ba­sics. While there has been much neg­a­tiv­ity con­cern­ing soft mar­kets, reg­u­la­tory pres­sures and skills short­ages, Peter Todd, out­go­ing IISA pres­i­dent re­minds us that there is much to be up­beat about. The con­tri­bu­tion of the in­sur­ance in­dus­try to the fi­nan­cial ser­vices sec­tor in South Africa, and in turn, the sec­tor’s con­tri­bu­tion to the over­all econ­omy, is worth cel­e­brat­ing. While there is no doubt that the South African econ­omy is un­der ex­treme pres­sure, and the neg­a­tive GDP growth fig­ures from the first quar­ter of 2014 (- 0.6 per cent) have caused se­ri­ous con­cern, it is worth not­ing that the big­gest pos­i­tive con­trib­u­tors to eco­nomic ac­tiv­ity in­cluded fi­nance, real es­tate and busi­ness ser­vices ( 0.4 of a per­cent­age point). Un­for­tu­nately, this was not enough to counter the neg­a­tive im­pact of the min­ing and man­u­fac­tur­ing in­dus­try, but pro­vides a glim­mer of hope nonethe­less. In fact, fi­nance, real es­tate and busi­ness ser­vices con­trib­uted 21.1 per cent to the coun­try’s GDP in 2013 – more than any other sin­gle sec­tor.

The econ­omy has, and will con­tinue to shift. The fo­cus for South Africa is to be­come a knowl­edge- based econ­omy, with a greater fo­cus on tech­nol­ogy, e- com­merce and fi­nan­cial and other ser­vices. Since the early 1990s, eco­nomic growth has been driven by the ter­tiary sec­tor - which in­cludes whole­sale and re­tail trade, tourism and com­mu­ni­ca­tions. The key sec­tors that con­trib­ute to the gross do­mes­tic prod­uct and keep South Africa’s eco­nomic en­gine run­ning are man­u­fac­tur­ing, re­tail, fi­nan­cial ser­vices, com­mu­ni­ca­tions, min­ing, agri­cul­ture and tourism. And in­sur­ance is re­quired to pro­tect all of these. While there were no great shakes ex­pected from Pres­i­dent Ja­cob Zuma’s State of the Na­tion speech on 17 June, he did place fo­cus on eco­nomic growth, how­ever, it was dis­ap­point­ing that there was not much em­pha­sis on fi­nan­cial ser­vices as part of this. “We will con­tinue to in­vest in ed­u­ca­tion and skills devel­op­ment as that is the key to eco­nomic growth and devel­op­ment. We need en­gi­neers, elec­tri­cians, plumbers, doc­tors, teach­ers and many other pro­fes­sion­als to build our coun­try’s econ­omy,” said Zuma in par­lia­ment. No men­tion of those who insure and cover the cit­i­zens of this coun­try, like the en­gi­neers and their projects, or the doc­tors and their pa­tients. Re­al­is­ing that in­sur­ance pro­fes­sion­als are not in this job for recog­ni­tion from the govern­ment ( that might be nice, but don’t count on it), they should at least know that they are valu­able con­trib­u­tors to the econ­omy, cre­at­ing em­ploy­ment and gen­er­at­ing in­vest­ment. And most im­por­tantly, giv­ing South African cit­i­zens peace of mind in a some­times very scary en­vi­ron­ment, and pro­tect­ing them from fi­nan­cial dis­as­ter.

The sad truth is that with the un­em­ploy­ment

lev­els where they are in South Africa A ( about 36 per cent of f un­der 35s are said s to be un­em­ployed, while the he of­fi­cial of­fi­cia un­em­ploy­ment rate was at 25.2 per cent in 2013), there are more peo­ple turn­ing to crime. While Crime Stats SA re­ported a drop in over­all crime in 2011 and 2012, the num­bers were up again in 2013. This, in turn, has an in­flu­ence on claims stats in the in­sur­ance in­dus­try. And, tough as things may get, in­sur­ers con­tinue to pay claims, they re­it­er­ate to RISKSA. Come hail or high wa­ter. The ones who don’t, will fall by the way­side, and the ones that do will con­tinue to gain the trust of un­der­writ­ers, in­ter­me­di­aries and con­sumers, and will con­tinue to pros­per, and in turn cre­ate jobs and stim­u­late the econ­omy.

Reg­u­lat­ing growth

Be­cause the fi­nan­cial ser­vices sec­tor has be­come a cor­ner­stone of the econ­omy in South Africa, reg­u­lat­ing it has be­come ever more im­por­tant. Reg­u­la­tions gov­ern­ing the fi­nan­cial sec­tor, and par­tic­u­larly risk man­age­ment, have un­der­gone con­sid­er­able re­fine­ment to align them to in­ter­na­tion­ally recog­nised stan­dards and best prac­tice. Reg­u­la­tion is un­doubt­edly the most of­ten be­moaned topic of con­ver­sa­tion at any an in­sur­ance in­dus­try event. The creep­ing costs of com­pli­ance weigh heavy on com­pa­nies large and small, and reg­u­la­tory ex­ams have even been said to have forced some peo­ple out of the in­dus­try al­to­gether. How­ever, as many CEO’s of com­pa­nies have told RISKSA, these reg­u­la­tory chal­lenges will be over­come, and the op­por­tu­ni­ties that they bring about will be taken ad­van­tage of. The re­silience of the in­dus­try will be tested, but the strong and the in­no­va­tive will sur­vive. The 2014 IISA In­sur­ance Con­fer­ence presents the per­fect plat­form for in­dus­try stake­hold­ers to dis­cuss these chal­lenges and brainstorm the so­lu­tions that will carry the in­dus­try for­ward. The one topic that is sure to come up is that of Re­tail Dis­tri­bu­tion Re­view ( RDR), as it elic­its se­ri­ous con­cern, par­tic­u­larly from in­de­pen­dent fi­nan­cial ad­vi­sors ( IFAs). Al­trisk MD Michael Blain reit­er­ates that the key point in the fee de­bate, is that the RDR has come about as a di­rect re­sult of the ag­gres­sive pur­suit of growth and fi­nan­cial gain at all costs, which goes di­rectly against the prin­ci­ples of sus­tain­abil­ity and con­sumer pro­tec­tion em­bod­ied in in­sur­ance and FAIS leg­is­la­tion. “Which­ever way RDR may go, we must en­sure that in­de­pen­dent bro­ker­ages are able to ap­pro­pri­ately pre­pare for such reg­u­la­tory changes while en­sur­ing that their busi­nesses re­main sol­vent and prof­itable. If we truly value in­de­pen­dent ad­vice, we need to lobby and en­gage with the rep­re­sen­ta­tive bod­ies to en­sure that IFAs don’t get lum­bered with dra­co­nian laws that hold the threat of many un­in­tended con­se­quences. IFAs can­not be left alone to fight for their right to sur­vive. As prod­uct providers, we need to stand up and make right by the in­dus­try, the ad­vi­sor and the con­sumer. It’s time to fo­cus our en­ergy on build­ing a sus­tain­able, pro­fes­sional and re­spected fi­nan­cial ser­vices in­dus­try that val­ues in­de­pen­dent ad­vice and to stamp out self- in­ter­est and greed,” em­pha­sises Blain. Again, the In­sur­ance Con­fer­ence presents the per­fect op­por­tu­nity for pre­cisely this type of en­gage­ment with reg­u­la­tors, as­so­ci­a­tions and rep­re­sen­ta­tive bod­ies. Todd high­lights that the con­fer­ence al­lows the chance for great de­bate and ques­tion and an­swer ses­sions, be­cause speak­ers are will­ing to in­ter­act openly with del­e­gates. Take ad­van­tage of these op­por­tu­ni­ties. If there is one over­whelm­ing re­sponse that RISKSA re­ceived while com­pil­ing this In­sur­ance Con­fer­ence spe­cial is­sue, it is for del­e­gates at­tend­ing the con­fer­ence to learn as much as they can, net­work as much as they can and build up the re­la­tion­ships that will boost their busi­nesses. In­sur­ance is at the heart of the South African econ­omy, and the an­nual con­fer­ence is truly at the heart of the in­sur­ance in­dus­try – make the most of it.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.