Survey reveals confidence has decreased amongst brokers
The latest CIB Broker Confidence Index (BCI), which measures the confidence levels of South African insurance brokers, revealed a 3% overall drop in confidence in the second quarter of 2011 to 65% from 68% in the previous three months. The CIB BCI measures broker confidence on a number of factors, including outlook for the local economy and business conditions in the insurance industry.
Outlook for the South African economy amongst brokers continued to fall in the second quarter of 2011, dropping 4% to 57% since the first quarter of 2011. This is a drop of 8% in comparison to the confidence levels recorded in the same period last year.
The survey also revealed that brokers are continuing to lose confidence with regards to their outlook for business conditions in the local insurance industry over the next 12 months. Confidence levels dropped by 4% to 58% during the second quarter in 2011, from 62% recorded during the first quarter. According to Jonjon Smit, sales director of CIB Insurance Administrators, this is partly as a result of the uncertainty around global reinsurance costs after the natural disasters which have occurred throughout 2011.
Brokers continued to lose confidence in their prospects of attracting new business as well as retaining existing clients.
Smit says that consistent with the results of the first quarter, brokers referenced new legislation and regulation as the biggest challenge facing them for the next 12 months. “It is however worth mentioning that respondents now consider the amount of skilled brokers in the industry as more of a challenge, a likely indication of the growing concerns around the effects that the recently introduced Regulatory Exams are going to have on the skills base in the short-term.
“While there is no doubt that these additional qualification requirements will benefit the industry in the long-term, we may see some short-term challenges as certain brokers opt out of the industry or look at mergers, rather than complying.”
