The current of optimism can become a wave
January, and the beginning of February, is generally a time for reflection in the financial services industry as insurers look back at the year that was, as well as the year that lies ahead.
The general sentiment in the industry is that 2017 was a year that challenged insurers in terms of risk management, claims handling and solvency as severe weather events resulted in a flood of claims.
FAnews spoke to Nicholas Francis, Chief Marketing Officer at Bryte Insurance, to find out the company’s views on the year that was and their outlook for the year ahead.
Challenged to the core
Like most insurers, Bryte experienced challenging times in 2017.
“The extreme weather events in 2017 (particularly the Southern Cape fires and floods in Durban and Gauteng) left an indelible mark on the short term insurance industry. While the billions of Rands in losses severely impacted industry profitability, the overwhelming support from insurers, their employees and intermediary partners who rallied together to assist the victims on their road to recovery was a very proud moment for every member of the industry,” says Francis.
He adds that for those without cover – and those who were inadequately covered – the losses were compounded. Some lost their homes, businesses and the only source of income they possessed.
“That being said, these events served as a clear reminder of the importance of robust risk management solutions that comprehensively addresses exposures. This is a vital consideration to ensure longer term sustainability,” says Francis.
A year of change
Francis adds that while there is a lot of optimism regarding the year ahead, it will also present its own set of challenges to the industry.
“Increasing economic pressures, coupled with the ongoing water crisis in the Western Cape and predictions of more severe weather events in 2018, means a creative approach to risk management is necessary. While having the appropriate level of cover is critical, so too is proactive risk management to lower risk profiles and the cost of cover for individuals and businesses,” says Francis.
While the economic and weather threat is looming. The majority of the industry’s focus this year will be directed towards regulatory reform. Existing and impending regulations are transforming how the short term insurance industry operates.
“Insurers must move away from being sales driven to being service driven thereby adopting a truly customer-centric approach. A one size fits all approach is a recipe for failure and those that neglect to transform could see their business severely threatened,” says Francis.
He adds that adopting best practices and ensuring full compliance must be an ongoing focus. Added to this is a focus on ensuring agility, adaptability, authentic communication and solutions that are tailored to address actual customer needs and evolving exposures.
“Yes, the business of today has to be dynamic and respond efficiently and timeously to change. Just as we are consistently reviewing customer risk – which is constantly evolving – so too is it important to ensure our business models are evolving and effectively responding to changing customer needs,” says Francis.
Current thoughts
The only way that the insurance industry will be able to fully embrace the optimism that 2018 promises is to be cognisant of the challenges that the industry currently faces, and to make demonstrable efforts to address and overcome them.
“Comprehensively understanding customer exposures, the local and global risk landscape and being able to effectively anticipate risks will remain a foundational focal point in delivering mutual value. As climate conditions, technology, and regulation continues to evolve, the short term insurance industry must ensure it stays abreast of change and is adapting for sustainable outcomes through relevant product and process innovation,” says Francis.
He adds that tailored solutions, seamless engagement with customers and partners, efficient claims processing and effective supplier management systems are just some of the other aspects that will require ongoing attention. Collaborations that extend the capabilities of the insurer, support in effectively managing customer risks, and increased business profitability, will continue to be sought.
Attention seekers
There are also other challenges that need to have a greater focus during the year.
“Similar to other industries, the short term insurance industry is also impacted by low economic growth, political uncertainty, unemployment, currency volatility, and extreme weather patterns. In these challenging circumstances, the ability to quickly recover from significant losses becomes even more limited. Therefore, proactively and effectively protecting the customer’s assets (their business) must remain the central focus,” says Francis.
He adds that attention to detail, engaging in relevant innovation, driving efficiencies, collaborating with partners who are able to extend access and the insurer’s overall value proposition will be vital.
Editor’s Thoughts:
While challenges exist, these challenges bring opportunities which, if leveraged appropriately, can drive sustainability and success. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
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