Skills development issues and challenges for SA’s short term insurance industry

06 November 2014 Sandra Dunn, INSETA
INSETA's CEO, Sandra Dunn says research shows the short term insurance industry is making steady progress in addressing the skills shortage.

INSETA's CEO, Sandra Dunn says research shows the short term insurance industry is making steady progress in addressing the skills shortage.

INSETA recently released its second report arising from a comprehensive study of skills development in the insurance industry.

While the first report defined the context for skills development of the South African insurance industry as a whole, the second report focuses on the South African short-term insurance sector.

The report covers the following areas:

• Challenges facing the short-term sector
• Perceptions of transformation
• Success in addressing skills shortage
• Key drivers predicted for the next five years
• Organisations effective in up-skilling

Success in addressing skills shortage

INSETA’s CEO, Sandra Dunn says the report provides valuable information for all stakeholders in the industry to adjust or fine-tune their strategic priorities with regard to skills development.

“For INSETA in particular, we’ve taken note of the fact that with regard to addressing critical skills shortages, we are not always perceived as leading growth initiatives at a higher level.”

Len Deacon, author of INSETA’s report says a number of respondents indicated that funding from INSETA can assist but the focus of INSETA is more on entry level positions with little to no focus on actuarial levels. Quality from the universities is also deteriorating and students have an image of knowledge but when interviewed their basic business, and language skills are lacking.

Dunn explains that higher level skills such as managers, actuaries, strategists, claims specialist, loss adjusters and the like require very specific interventions such as mentoring and coaching programmes that require careful planning, more commitment from management and incumbents and resources.

Many respondents believe that mentoring programmes will force the mature staff to transfer skills.

Len Deacon points out that there are serious limitations for in-house training, especially coaching and mentoring.

“Industry consolidation has eliminated many of the traditional large multi-line insurers that gave previous generations an apprenticeship opportunity. In the new environment, skills development is largely the responsibility of partially trained managers with limited experience and with large gaps in knowledge. This problem is exacerbated by a culture of entitlement among job seekers who expect high salaries, luxury cars, rapid promotion and status."

In common with most South African industries, short-term insurers are dealing with the shortage of needed skill sets and socio-political pressure for transformation by promoting employees much more rapidly than their peers in developed economies. This results in managers who lack the experience and life skills to handle their responsibilities well. Many lack the strategic management and decision-making skills that are crucial to be a good manager.

Respondents report great difficulty in finding suitable candidates for middle and senior management positions. In some instances it is easier to find a suitable candidate for a senior directorship position than it is to find a candidate with suitable qualifications and skill sets for middle or senior management. People are often placed in these positions before they are ready to assume the responsibilities attached to the role.

Respondents expressed a need for an industry accord to create an environment in which industry players can work together to increase the pool of skills and prevent the ongoing poaching of skills. They believe that if all companies and associations work together, such an accord could benefit the entire industry and not just those with bigger cheque books.

Dunn is pleased to report though that the respondents perceived INSETA and the Insurance Institute of South Africa (IISA) as having the greatest impact within the industry with regard to increasing the employee skills levels and professionalism.

Business Challenges for the short-term sector

Business challenges facing the short-term sector include the following:

Personal lines insurers are feeling the pinch of the economic downturn and the depressed housing market, and this is intensified by continued premium increases.

Industry observers predict several fundamental changes over the next five years, including:

• Greater commoditisation (‘customers perceive no or very little difference between insurance brands’)
• Decreasing profitability
• Automated underwriting
• Greater use of technology
• More proactive loss control
• Disintermediation
• Multiple distribution channels

Respondents say the commercial lines market is more stable, with growing capacity and improved risk management. However, it too is facing changes, including:

• The rise of virtual business affinity groups
• Automated underwriting
• Transformation of business models

Deacon says transformation difficulties appear to relate mostly to the challenge of finding Black candidates with the desire and the skills to embark upon a career in the short-term insurance market, filling either specialist or management roles. Moreover the insurance industry is not seen as a chosen career with most people arriving in the industry by default.

Respondents also feel that the image of the industry needs to be improved, with additional focus on increased professionalism. Deacon believes this will make the insurance industry more attractive to Employment Equity candidates as a worthwhile career path.

Key drivers predicted for the next five years

Industry leaders identified six key drivers that will continue to affect the industry over the foreseeable future.

• Increasing regulation and the rising cost of compliance will put pressure on the need for qualified, skilled compliance officers.
• The emerging upwardly mobile professionals and related market segments will drive a shift toward greater use of technology and social media, as well as direct selling in the personal lines market.
• As new technologies emerge and big data takes on greater significance, more innovative companies will gain a competitive edge.
• The need to develop and retain specialised professional and management skills within the industry will be an ongoing challenge.
• The revised BBBEE scorecard will intensify pressure on companies to meet the demand for social and economic transformation.
• Companies will increasingly seek opportunities to expand into Africa

Quick Polls


The shocking crime and motor vehicle accident statistics shared during a recent SHA presentation suggests that group personal accident and personal accident cover are a no-brainer. Do you agree?


Not sure
fanews magazine
FAnews April 2024 Get the latest issue of FAnews

This month's headlines

FAIS Ombud lashes broker for multiple compliance blunders
TCF… a regulatory misfit initiative?
The impact of NHI on medical malpractice insurance
Fixed versus variable: can you have your cake and eat it too?
The future world of work
Subscribe now