Perfect storm brewing for personal lines
The South African Insurance Association (SAIA) announced its new board of directors at their Annual Cocktail Function in Johannesburg last week Thursday. The function provides an opportunity for various stakeholders in the short-term industry to get together and informally discuss challenges in the industry.
During his address to introduce the new SAIA Board, outgoing Chairman, Adam Samie said “Our operating environment as short-term insurers has become increasingly complex and challenging, and SAIA’s role in facilitating dialogue and joint decision making between all role players is now more crucial than ever before.” The new board would have plenty of work to do in the coming year as regulatory and operational challenges in the short-term industry increase in intensity. This changing industry necessitated a dynamic SAIA board to bring together SAIA’s member companies.
New SAIA board elected
The new SAIA Board of Directors includes:
Nick Beyers: Zurich Insurance Company Ltd
Keith Kennedy, Mutual & Federal Insurance Company Ltd
Amit Khilosia, Lloyd’s
Ian Kirk, Santam Ltd
Nic Kohler, Hollard Insurance Company Ltd
Willem Roos, OUTsurance Insurance Company Ltd
Herman Schoeman, Guardrisk Insurance Company Ltd
Angela Mhlanga, Compass Insurance Company Ltd
Adam Samie, Lion of Africa Insurance Company Ltd
Mike Truter, Credit Guarantee Insurance Corporation of Africa
Joost Vink, AIG South Africa
Mike Durek, ACE Insurance Ltd
Adriaan Louw, MUA Insurance Company Ltd
Achim Klennert, Hannover Reinsurance Africa Ltd
Junior Ngulube, Munich Reinsurance Company of Africa
Samie announced that he would not be available for another term as chairman of the SAIA board and that a new chairman would be elected at the first board meeting.
Mr Samie said that he believed that the current immediate outlook did not look as positive as previous years for short-term insurers and that it seemed as if some concern existed about the current trading environment and the underwriting result going forward. He added that he believed the personal lines market was showing signs of severe strain, and that there were several factors driving towards a ‘perfect storm’ for personal lines insurers including the depreciation of the rand, ever increasing inflation rates, and motor vehicle accident rates.
Challenges facing the short-term insurance industry
There are a number of challenges facing the short-term industry, not least of which is the impact of inflation on meeting claims in the personal lines business. There was a “perfect storm” brewing in the personal lines business with a depreciating rand, inflation and vehicle accident rates putting pressure on underwriting results. As an example, Samie noted that: “Ten years ago the cost of accidents amounted to less than 50% of the cost of vehicle claims, with crime being the more significant factor. Now, the cost of crashes exceeds 75% of the cost of claims, and this has become a far bigger focus for insurers.” This swing to motor accidents as the most significant portion of the claims bill will continue as the country’s road infrastructure comes under continued pressure in the next few years and the number of cars on the roads increase.
“I think that we have a lot more work to do in educating our consumers” said Samie, noting that consumer education was a massive challenge across all areas of the financial services industry. Samie reminded the audience that SAIA had committed more than R27m to consumer education in the previous five years – and that such initiatives would carry on at pace in the current and future periods.
He also appealed to the short-term industry to throw its weight behind the Finance Sector Charter to ensure speedier transformation in the sector.
Editor’s thoughts: Whenever the short-term insurance industry meets the issue of vehicle accidents is raised as a major cost drive in the personal lines business. What would you recommend the short-term insurance industry does to address this problem? Add your comments below, or send them to [email protected]
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