A tough agenda
Lizé Lambrechts, CEO, Santam
As part of its desire to achieve Radical Economic Transformation, government has set out a tough agenda for businesses to focus their efforts on.The financial services industry has not been immune to this hard line. National Treasury and the Financial Services Board (FSB) has made their intentions regarding this clear and have asked every insurer to do their part in achieving this goal.
Moving the needle
So, what must be done to achieve Radical Economic Transformation? Is the needle moving towards a definite goal? This was one of the questions asked during a panel discussion at the recently held 2017 Santam Broker Conference.
The problem with Radical Economic Transformation is that it has not been defined. There are no definite guidelines in place that a company can measure their performance against. However, government is adamant that efforts must be made.
“We need to sit with brokers and discuss what transformation means to the industry,” said Lizelle van der Merwe, CEO of the Financial Intermediaries Association of Southern Africa (FIA), “the transformation issue is an opportunity for insurers to sit with brokers and put systems and processes in place that will ultimately contribute towards improving the image of the financial services industry. This can only be done through working together to achieve the strategic directives established by regulatory reform.”
Challenging engagements
Santam Chief Executive, Lizé Lambrechts, pointed out that engagements with government over the issue have been challenging; particularly in the last year. She pointed out that the perception from government is that the insurance industry is lagging when it comes to the transformation issue.
“This has forced us to sit down and ask some serious questions. Are we doing enough? Are we doing enough to support small business development? What can we, as an industry, do to support procurement and supplier development?” Lambrechts asked and added that this is a perfect opportunity for the financial services industry to leave a lasting legacy when it comes to transformation.
Industry action
But is transformation taking place in the financial services industry?
The dictionary describes transformation as the changing of something from one form into another form. By this definition alone, Mokaedi Dilotsotlhe – Executive Head of Brand and Marketing at Santam – believes that transformation is taking place.
“The industry has already come to terms with Treating Customers Fairly (TCF) and is preparing itself for the Retail Distribution Review (RDR), so the foundation of transformation has been laid. However, the issue is still troubling government,” said Dilotsotlhe.
He added that government expects financial services products to be inclusive, and they are. “There is systemic growth in the industry. The number of black policyholders in the short term industry has doubled over the past ten years as has the number of black people who own cars. This shows that when black people are purchasing cars, they purchase insurance and make sure that it doesn’t lapse. Over the past ten years, there has also been a significant increase in the number of black people who have registered mortgages, this presents another opportunity for brokers,” said Dilotsotlhe.
Make it bigger
We are seeing the signs of transformation; a growing middle class is being presented to brokers as a source of new business.
It depends on how they can communicate with Millennials. Not only is the racial demographic of clients changing, but the age demographic is changing as well. This presents its own set of challenges that brokers need to address.
“The insurance industry is definitely making an effort to pull its weight when it comes to Radical Economic Transformation. However, more needs to be done. Our procurement and support of small business development needs to take centre stage. We need to increase our efforts in supporting suppliers to the insurance industry which are black owned businesses. Business support and job creation needs to be the legacy of the insurance industry, because if small businesses grow, jobs are created and the economy grows,” said Lambrechts.
Editor’s Thoughts:
Government’s view that the insurance industry is dragging its feet when it comes to the transformation issue is a bit unfair. Yes, the progress is slow, but it is slow in every aspect of society. The issue of Radical Economic Transformation cannot be changed overnight as behaviours need to change; and this takes time. Do you agree with Lambrechts’ view that a lot more needs to be done to address this issue? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za
The article has been edited to correctly reflect Lize Lambrecht’s sentiments. We apologise for any inconvenience caused by the article.
Comments