Further professionalization
At the Insurance Institute of South Africa (IISA) Annual Conference, which was held in Sun City at the end of July, a regulatory panel discussion was held which discussed the regulatory roadmap.
Unlocking potential
Dr Reshma Sheoraj, Director of Insurance Policy at National Treasury, said that there were a lot of meetings to discuss regulatory reform as all stakeholders wanted to create a collective vision for the insurance sector.
“We need to realise and appreciate that this is also happening off the back of a change in politics where the people are getting wearier of policymakers. This is a time when we need to inspire confidence in the industry; to unlock untapped potential from within the sector,” said Sheoraj.
In order for regulatory reform to be a success, Sheoraj added that there needs to be a strengthening of relations between government and industry in order to figure out a smarter way to allocate industry resources and to coordinate efforts.
The industry’s army
If government and industry can allocate its resources in a better way, society stands to be a major benefactor when it comes to professional financial advice.
Lizelle van der Merwe, CEO of the Financial Intermediaries Association of Southern Africa (FIA), pointed out that intermediated insurers make up 87,5% of the short term insurance industry. Further, intermediated players employ 45,6% of the industry’s workforce.
Yet, it is estimated that only 2% of households in South Africa actively participate in the financial services industry and have access to the professional advice that intermediaries offer.
The vision of regulatory reform now becomes clear, to find a way to deploy the industry’s army of intermediaries to provide professional financial advice to every household in South Africa. “Intermediaries are relevant today and will remain relevant in the future. Regulatory reform forms a major part of this relevance, and it has been a pleasure to work with the regulator to contribute to this framework,” said Van der Merwe.
What is concerning though is the fact that local policymakers are looking at markets such as the UK and Australia and are using their frameworks, bar a few tweaks, to regulate the local landscape. While optimistic about regulatory reform, Van der Merwe reminded Treasury that South Africa has its own environment and that advice is critical in this country.
The FSB speaks
While Treasury has been the major role player when it comes to regulatory reform, the other role player, and the face of regulatory reform – the Financial Services Board (FSB) – was also present at the discussion and gave its point of view.
It is a view that has been shared many times before. One of the major criticisms of regulatory reform is that it is trying to damage the intermediated model of insurance in some way. Caroline da Silva, DEO of FAIS at the FSB, said that this is simply not true.
“The FSB has always valued the role of intermediaries in the country and acknowledges the role of the sector in the future of South Africa. However, we need to bear a few things in mind. There is a significant divide between the rich and the poor which needs to be bridged, and this cannot be done off the back of the current lack of confidence in the sector,” said Da Silva.
We may fight regulatory reform at every chance we get because we want to protect the sovereignty and integrity of our business models. However, we cannot be the only country in the world that adheres to the old ways, other markets around the world are debating regulatory reform, and we must remember that South Africa is connected to this global market, whether we like it or not.
Editor’s thoughts:
At the end of the day, regulatory reform – while still a topic that polarises the industry – is a deliberate attempt to further professionalise an industry that will be a key role player in realising radical economic empowerment. How can this be a bad thing for the industry? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
