The short-term insurance sector takes Sun City by storm
The Insurance Conference 2011 was held at Sun City from 24 to 27 July 2011. A record 700-plus delegates joined 43 exhibitors to make this one of the largest industry gatherings yet. “It is absolutely clear that when the Insurance Institute of South African (IISA), the Financial Intermediaries Association (FIA) and the South African Insurance Association (SAIA) agreed two years ago to get together to co-host this conference it was a major step forward for the entire industry, because it has led to greater cooperation between each stakeholder,” said SAIA chairman, Ronnie Napier, in his closing address.
Two days worth of ‘hot’ insurance topics
The theme for this year’s conference was to promote sustainable development and the speakers did well to weave this theme into their various presentations. Ismail Momoniat, a representative from National Treasury, kicked off proceedings with an overview of the Twin Peaks proposal for regulation of the financial services industry. They propose to separate prudential and market conduct regulation and to shift from the old system where the banking industry was regulated on the one side, and the insurance industry on the other. It is still early days, but it seems certain the Financial Services Board (FSB) will be responsible for market conduct across all sectors, while prudential regulation will be enforced by the SA Reserve Bank.
Regulation was ‘top of mind’ at the conference with a number of local and international speakers reminding delegates that there would be more regulation in future years. The FSB was on hand to give their views on Treating Customers Fairly (TCF), Conflict of Interest (COI) and of course the new Solvency Assessment and Management (SAM) project. And there were a handful of international speakers who shared their views on a range of topics, including the regulatory environment internationally and in Europe. And of course a sustainable development conference would be incomplete without broaching the climate change issue. Dr Allan Manning of IICP Australia teamed up with Dr Deon Nel of WWF to present on business interruption, major claims and management of the environment.
Santam chief executive Ian Kirk took the podium as the second speaker on day one of the conference and offered his take on the sustainability of the short-term insurance industry. He reminded attendees of the substantial progress the insurance industry had made over the past couple of years. Personal lines: motor was singled out for special mention after turning around to profit in the latest reporting period. The topic was tackled in more detail by Vivienne Pearson of SAIA, who also updated the audience on other insurance projects the association was working on. Although short-term underwriting margins are cyclical the industry is in a better state than it has been for many years. “We’ve put a mechanism together as an industry including industry associations to handle the various challenges we face,” said Kirk.
The non-insurance crowd
To spice things up the IISA invited a couple of non-insurance speakers to entertain the delegates. Crowd favourite Clem Sunter took the stage and produced his usual blend terrible news delivered with enthusiasm. His “Scenarios, flags and possibilities” speech painted the overall economic condition in which the insurance industry conducts business today.
But the highlight for many was the final address, delivered Tuesday, 26 July 2011, by ex President and winner of the Nobel Peace Prize, FW De Klerk. He provided an extremely detailed assessment of South Africa Inc in his 30 minute presentation and wowed the delegates by taking a number of questions from the floor afterwards. He talked fondly of his interactions with another ex President, Nelson Mandela and passionately about the need for business to stick to their principles when dealing with the government of the day. “It is very important for companies to speak up about their principles, and for organized business to speak up about their principles,” said De Klerk.
“We’ve come through a phase where the relationship between the private sector and government at times became a bit too cosy. There was a theory in the private sector that it was better to be close and influence decisions that way, but if decisions start going the wrong way it is proof of the fact that that cosy relationship does not achieve the desired results. It is time, on fundamentally important issues affecting the economy, for the private sector to draw a line in the sand, stand up for their principles, speak out and enter into solution oriented debate!” he concluded.
In closing
In closing, Napier announced details of ongoing collaboration in the industry. “The industry, with the able assistance of Santam and with full input from the FIA and hopefully also from National Treasury and the FSB, through the Sustainability Risk Forum, will be able to deliver expert and valuable input for the industry over time,” he said. The process has already begun and is proceeding extremely well.
Napier outlined three other areas where collaborative work was required going forward. He said it was necessary for the industry to develop an overall education plan (to complement the work already being done by the IISA), that there was a need to get closer to National Treasury to ensure appropriate communication on the Twin Peaks development, and that the industry would have to work together proactively to ensure SAM, TCF and other regulatory interventions are successfully developed and implemented.
