The past two years will be remembered as a time of laying the foundations needed to implement the solid changes that will better align the life industry with changing consumer needs.
Lize Lambrechts, chairman of the Life Offices' Association (LOA), says that 2007 will reveal a number of new initiatives aimed at providing clients with better value and restoring customer confidence in the industry.
The life industry is still the largest custodian of this country's savings through its contractual savings products - only 5% of unit trust inflows, for example, are of a recurring nature.
The challenge
"Our challenge is to continue fulfilling this important role by encouraging an improved long-term savings environment for consumers through fair costs and greater transparency," says Lambrechts.
The life industry started 2007 in full swing with most life companies in the process of implementing the various aspects of the Statement of Intent (SOI).
Statement of Intent
Better early termination values have already become a reality for some clients as the life industry began implementing the SOI at the beginning of December last year. "This is a pragmatic solution for dealing with the problems of the past, and something that will help to restore the credibility of our industry."
Lambrechts adds that most of the Pensions Fund Adjudicator's determinations pointed to a lack of clarity in the regulatory environment. Many of these have already been fixed as a result of the SOI and greater regulatory certainty has already been achieved with the promulgation of the changes to the regulations under the Long-term Insurance Act and the Pensions Fund Act.
New Projects for 2007
The LOA will be launching a number of new projects in 2007, key to improving consumer confidence in the long-term insurance industry going forward.
Products for low-income earners
In the first quarter of 2007, the LOA will launch the first products for low-income groups under a set of minimum standards aimed at protecting these consumers. Lambrechts says while this is a similar initiative to the banks' Mzansi, the life industry's approach is far bolder.
"Not only do we put in place minimum product standards, we also implement price regulation, with maximum risk rates. We think that consumers at this end of the market need this protection, especially because there are so many illegal operators out there."
Funeral products will be launched first, together with the life industry's unique brand, which will be revealed by the LOA.
Improving consumer confidence
A huge focus area for the LOA will be to work on an initiative to enhance the credibility of the life industry through ensuring that customers have a positive experience when they engage with the industry.
Retirement reform
Lambrechts hopes that the new year will also see the 2nd Treasury discussion paper on retirement reform that will no doubt also bring fundamental change to all aspects of the contractual savings industry.
Jargon busting
The LOA's jargon busting project will also be revealed during the first quarter of this year. The LOA appointed a "jargon busting" committee which was given the mammoth task of explaining the most common and important product and medical terms used by the life insurance industry.
Lambrechts, the LOA's second female chairman, says the LOA would continue playing a crucial role in 2007 to ensure the essential resurgence of the life industry.
Get the latest issue of FAnews