Insurance industry must adopt a pre-emptive approach to systemic risks
Stakeholders in South Africa’s insurance and reinsurance industry must adopt a pre-emptive approach to systemic risks and enshrine spirituality, morality, values and ethics in their response to major loss events. This message emerged on day one of the African Insurance Exchange (AIE 2023) conference, during an inspiring keynote address by Gift of the Givers founder, Dr Imtiaz Sooliman. His talk, titled ‘how insurance companies can partner with government and non-government organisations (NGOs) in response to climate change’ drew a standing ovation from the audience, a rare occurrence at such events.
The triple-C of insurance success
The 49th annual AIE conference, hosted from 24-25 July 2023 at the Sun City Resort conference venue, South Africa, was themed ‘collaborate, cultivate, create’ in recognition of the role of partnerships in furthering resilience and sustainability in insurance and reinsurance. “This conference serves as a platform from which we revive and reenergise the insurance industry, and reflect on and plan for its future,” said Thokozile Mahlangu, CEO of the Insurance Institute of South Africa (IISA) during her brief opening remarks. She extended a warm welcome to both returning delegates and first-time conference attendees.
Collin Molepe, President and Chairperson of the IISA Board, and a long-standing executive in the South African financial services sector, then took to the podium to introduce the keynote speaker. He described Dr Sooliman as the leader of the largest disaster response organisation on the African continent, and a provider of aid to millions of people in well over 40 countries, over more than three decades. “The best way for South Africa and other African economies to get things done is to form strategic partnerships that are not focussed on profits; we must have a common desire to make a difference in our lifetimes,” Molepe said. He singled out unrelenting extreme weather events as among the biggest risks facing the global insurance and reinsurance industries.
It is time to get off the fence…
Dr Sooliman wasted little time in calling out South African conference attendees for their somewhat apathetic approach to the country’s environmental and social challenges. He reminded the audience that South Africa was a resilient country with unmatched potential, and that positive mindsets were critical for the country’s long-term success. “There are four qualities needed to fix South Africa, and money is not among them,” he said. “These qualities are spirituality, morality, values and ethics; we must act with utmost good faith in our profession and everything we do in our country”. It is advice that translates well to any country or community affected by crisis or struggling under the weight of hopelessness.
One of the reasons why this keynote address received a standing ovation was that it created a new lens through which insurance professionals might view the industry. The industry, in turn, was challenged to spice-up its clinical and often reactionary corporate social investment (CSI) initiatives with compassion. Dr Sooliman welcomed the ‘rewiring’ of the social stance taken by corporate South Africa during and following the Covid-19 pandemic. “The executives and companies that called us during this tough period asked the same question: how can we save lives, and how can we save the South African economy?” he said. The willingness of corporate South Africa to support Gift of the Givers through various South African crises was explored in detail.
For example, after the disastrous flooding along areas of the KwaZulu-Natal (KZN) coastline in April 2022, corporate South Africa queued up to ask the charity: “what and how much do you need”. This hands-on approach was repeated following the widespread civil commotion that afflicted parts of KZN in July 2021. Here, the CEOs of companies who responded first were heading up the very companies whose assets were being destroyed. Although this event was not the focus of the presentation, the speaker dismissed suggestions that the riots had been an insurrection, but rather one in which the poor had been exploited by “treasonous” bad actors.
Mitigating against man-made social catastrophes
According to Dr Sooliman, the best way to prevent a relapse of the June 2021 man-made catastrophe was to restore the citizenry’s dignity. He lamented that a country with South Africa’s phenomenal human and mineral resources was still blighted by incidences of children dying of starvation, or falling into pit latrines while attending school. “We have to make sure that we hold hands with government and return dignity to our people; we have massive resources, yet children are dying of starvation in the Eastern Cape province,” he said.
The insurance industry was commended for its extensive post-crisis responses. For example, insurance professionals flocked to Knysna in the Western Cape province to give assistance following a devastating fire event in June 2017. And local insurers have responded similarly following severe flooding and other extreme weather-related disasters countrywide. But to take insurance to the next level … and to truly enshrine spirituality, morality, values and ethics in the industry’s response to crisis … requires a pre-emptive approach to risk.
There are countless examples of this approach in action, courtesy local insurers helping out at municipalities by offering risk expertise, providing funding for fire-fighting equipment or conducting hands-on infrastructure repairs, to name a few. Gift of the Givers has done its share of risk mitigation too, chipping in with fire-fighting resources to prevent a potentially major fire loss event in the Eastern Cape city of Gqeberha, around November 2022. From an insurance industry perspective, the argument is that any initiative that mitigates risk and / or limits losses is worthwhile.
The value of partnerships in disaster response
The triple-C theme was emphasised by Dr Sooliman, who called on insurers and reinsurers to go next-level on their risk mitigation and response initiatives in partnership with both government and NGOs. Could it be time for insurers to outsource part of their disaster response plans to an NGO such as Gift of the Givers, and thereby reduce duplication of on-the-ground efforts? Until such time as the country reaches this level of collaboration, we leave readers with the doctor’s closing remark: “Our job is about humanity; with spirituality, morality, values and ethics we will save South Africa”.
Note: This article first appeared in Africa Ahead, and is reproduced here with minor changes.
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