Insurers challenged to shift focus from risk transfer to mitigation
What does the world look like if those responsible for risk transfer work proactively to reduce the very risks they offer protection against? This was one of the trains of thought to emerge during an interactive CEO Roundtable discussion hosted by the Insurance Institute of Gauteng (IIG) and iTOO Special Risks recently. Having already covered the thought-provoking, scene-setting address in ‘Insurance CEOs challenged to re-think their risk opportunity mindsets’, FAnews felt it worth unpacking some of the insights the event generated.
Insurers are redefining risk landscapes
To be fair, South African insurers are already stepping up to the plate to mitigate risk. You need only Google the Discovery pothole brigade; OUTsurance pointsmen project; or Santam Partnership for Risk Resilience (P4RR) programme to learn more about the differences being made by leading insurance brands across the business, household and public sector landscapes. But can they do more? Tovè Sithole, Head: Talent & Brand at iTOO, suggested that combining insurance and risk mitigation might improve insurance uptake. “What if part of the insurance premium could contribute towards a solution to climate risk,” she asked.
Climate change, infrastructure and new generation talent emerged as key risk vs opportunity themes during the half-day session. Under the second heading, Steve von Roretz, a Director at Leppard and Associates, raised ‘water scarcity’ as a topic worth exploring further. Interventions that might assist South African consumers in facing up to the country’s looming water crisis include controlling use through regulation; offering some kind of financial incentive for efficient consumption; or punishing overuse through higher tariffs. Futurist Graeme Codrington, who facilitated the discussion, weighed in with some infrastructure thoughts of his own.
“There is a lot of opportunity across infrastructure,” he said before challenging the industry to do more to address consumers’ main concerns. Imagine, he mused, selling general insurance policies that partly solve for electricity, road safety, security and water related concerns in addition to covering for the potential losses arising from use of same. The mindset shift involved here is to go from solving for damage or loss caused by a named peril, to also being a provider of solutions that prevent that loss or damage.
Again, insurers have been doing this for years, and they appear to be getting better at it. One clear example is the huge benefit on offer under the Internet of Things (IoT) technology trend, with connected devices able to give early warnings of fire or geyser leaks etc. Another is telematics, used extensively in encouraging positive driver behaviour across motor insureds.
Skills development, talent retention
The bulk of comment during the ‘open mic’ session focused on skills development and talent retention in the context of enabling new entrants to the insurance sector without losing the wealth of knowledge held by those nearing retirement. Justin Naylor, CEO of iTOO, singled out ‘people’ as central to tackling all of the disruptive forces discussed during the roundtable. “New generation talent is probably the biggest risk or disruptive force facing our industry presently,” he said, before calling on Rianet Whitehead, founder of The Insurance Apprentice (TIA) and editor of FAnews to share insights gained over 10-years of identifying and promoting young talent.
Whitehead pitched the show as an excellent incubator for industry problem solving before hinting that ‘an insurance solution to the water scarcity paradigm’ could underpin one of the apprentice challenges in the upcoming 11th season, set for its television debut in 2025. “TIA is equipping you as an industry with young talent and future leaders,” she said. The show is also spreading the message about the value of insurance, and the awesome career opportunities in the field, far and wide. Junior Ngulube, a stalwart in the insurance industry, also weighed in on the skills and talent challenge.
“Having knowledge and skills was never a precondition to enter this industry; we learned on the job,” Ngulube said. This ‘on the job’ training was supported by a mandatory educational programme offered by the Insurance Institute of South Africa (IISA); employees would receive recognition and salary ‘bumps’ as reward for their progress. He added that over many years, brands like Munich Re and the then Mutual & Federal stood out for the work they did in training for the industry. “Today, we talk of qualifications and lack of talent; but we, as an industry, have dropped the ball on skills development,” Ngulube lamented.
The one-year-long intern marathon to nowhere
The industry veteran held no punches. “We must stop moaning about lack of talent and focus on creating it and being genuine in doing so … the idea of bringing 15 interns and letting them run around the building for 12-months, and then leave the building none the wiser is not elevating talent; we are just offering them something to keep them busy,” he said. The solution proposed here was for insurers and other financial institutions to return to times of old by hiring employees rather than interns and training these employees into the positions they were needed in, treating them as part of the ‘engine’ of the business.
Codrington offered a Mark Twain quote to support this ‘back to the old ways’ thinking. The great American writer and humourist once said, “History does not repeat itself, but if often rhymes”. In this context, imagine a South Africa that reverts to the 1950s United States model of having a broker in every small town. “Sometimes we have to revisit previous models and repurpose them for new ecosystems and technologies to make them more effective,” Codrington said. “It might be that the future of insurance is not to automate everything out of the system and centralise it; we may have got the most we can get out of the industrial-era efficiency centralisation model”.
This interesting observation was made in response to a comment that brokers and insurers were struggling to hire talent in small towns. There was no issue finding talent in Cape Town; Durban; and Johannesburg, but it was next to impossible to get these talent ‘hires’ to relocate to Parys, Polokwane or Potchefstroom. PS, this writer recently spent some time in New Zealand researching that country’s non-life insurance sector, and was taken aback to find branches of a leading multinational brokerage in almost all of the small agricultural towns he visited. We are talking places like Taumaranui, population just over 5000, yet there is a brokerage on the main street.
Beware the talent transfer overload
Bukhosi Khumalo, Executive Head: Business Risk Solutions at OLEA and IIG President also weighed in on the talent debate. He said that solving for talent was a two-part process involving attracting new talent to the industry and addressing the risk of a talent vacuum developing due to the number of industry experts who were only two or three years out from retirement.
“You cannot transfer 40-years’ worth of knowledge in a single year … it is simply impossible,” he said. And even a five-year, planned handover could prove insufficient. Khumalo argued that there was a huge opportunity to tap into the knowledge and skills in those nearing retirement over the next three, five or 10-years. And there was, in his view, nothing better than a young up-and-comer being able to bounce new ideas off the old guard. The conversation wound down with a brief redefinition of the old versus young talent debate.
According to Codrington, the insurance industry had to recognise and respect talent across age groups. “There are different types of talent, and it might be time for us to connect the old and the young talent together,” he said. Your writer chooses to conclude with his earlier suggestion of collating all the experience and skills held in the so-called ‘old hands’ into a large language model for SA and World Insurance. But that, dear reader, is a project for the younger generation to sink their teeth into.
Writer’s thoughts:
Insurers and insurance brokers participating in the IIG CEO Round Table were encouraged to redefine challenges as opportunities. What role can brokers play in reimagining risks, and assisting insurers in their well-documented risk mitigation drives? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
