Landmark industry research takes a bold step towards industry transformation
When we look at the insurance industry, we tend to focus on the challenges that the industry is facing. If we cannot find a solution to resolve these challenges, there will be little chance that the industry can move forward and progress.
This may create a distorted view of the industry where all is doom and gloom. But there are companies out there trying their best to make a difference in the industry. There is a major educational drive by the Insurance Sector Education and Training Authority (Inseta) to resolve the growing skills crisis which is affecting the industry.
Is industry transformation a noble ambition or an ambitious ideal?
Coupled with this is the growing desire to transform the industry and to include more skills from previously disadvantaged groups in the industry. Black economic empowerment legislation and the Financial Sector Charter drive the transformation of the sector and increase the demand for skilled black employees in all occupational categories, especially the professional and managerial category.
While there is the perception that there is no progress in transforming the insurance industry, research by Inseta suggests otherwise. The latest SAIA Bulletin shows that transformation efforts in medium and large enterprises in the categories sales workers and admin workers are paying off. For sales workers, Africans constitute 65.3%, Coloureds 8.7%, Indians 5.8% and Whites 20.1%. For clerical and admin workers, Africans comprise 40.8%, Coloureds 23.7%, Indians 10.6% and Whites 24.8%.
It has always been the desire of government that all industries should accurately reflect the racial demographic that exists in the South African population. While this is the case within the insurance industry, there is a problem with improving this in larger businesses.
The report adds that the converse is true for small enterprises. In the sales worker category, Africans comprise 21%, Coloureds 8.4%, Indians 7.2% and Whites 63.2%. Blacks make up an even smaller percentage of total employment in small enterprises. This means that the industry has far too few black entrepreneurs in the industry. Whites constitute 63.8% compared with 36.2% for blacks.
Are we creating an environment for small business development?
This has been identified as a major challenge for South Africa which extends beyond the insurance sector. Barriers to entry for potential small business owners are significant and there is little support from government. There is even rumours of the establishment of a Ministry of Small Business Development after the elections.
The seemingly poor status of transformation in small enterprises means that significant work needs to be done by government to promote and support black small businesses, with a focus on both skills development and business support.
Some of the challenges contributing to the high barriers of entry include cost containment and regulation. However, Inseta CEO Sandra Dunn has announced that a task team, which is being head up by Len Deacon and Associates, are doing research into all the contributing factors to the barriers of entry that the industry presents.
Industry participation is key
In order to achieve this, there needs to be participation from all sectors of the industry. "We encourage all Inseta's stakeholders to give of their time by participating in the research, which shall prove significant to all in the sector. While we have achieved much in the twenty years of South Africa's democracy, the outcome of the research shall further enhance Inseta's strategic planning process and take our organisation and its stakeholders to new heights in terms of transformation and developing scarce and critical skills,” says Dunn.
The research is expected to provide information on the insurance industry to identify the state of transformation, available skills and skills shortages, areas that offer job creation opportunities across all levels. It will also asses gaps between qualifications and skills that may be addressed within the Inseta mandate, and interventions to address the identified gaps.
The aim of the research project is to also outline the exact nature of the available skills within the insurance sector and all of its sub sectors. The latter comprises of short-term insurance; life insurance; risk-management; unit trusts; funeral insurance; reinsurance; insurance and pension funding; health care benefits administration and activities auxiliary to financial intermediation.
Funding the industry towards transformation
One of the aspects of transformation which has never been too much of a challenge is that of financial backing. If funding from government is slow, there is always a private sector company which is interested in playing their role in transformation. Inseta has always funded transformation through a number of projects and programmes; a prime example is the association's support of the South African Actuaries Development Programme (SAADP).
And the results of this support are visible. Inseta's sponsorship helped to increase the number of black female actuaries from 2% in 2002 to 5.5% in 2013. Inseta has also supported learnership candidates for small, medium and micro enterprises, hosted training workshops for burial societies and supported First-year BComm students from previously disadvantaged backgrounds.
"At Inseta, we are constantly striving to find new ways to empower youth and transform the landscape of professionals in South Africa. We look forward to discovering new market pools which we can train innovative youth to work in,” says Dunn.
Editor's Thoughts
This is a significant step in the right direction towards achieving governments mandate towards BEE. But while there is a lot of debate as to the actual need for transformation in the industry, maybe we should look beyond this and see how the research being undertaken by Len Deacon and Associates can benefit the industry as a whole. Identifying barriers to entry is a significant step towards trying to decrease them. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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