Are your insurance partners cut out to be a cut above the rest?

There are massive challenges in the market and the country, with underinsurance, dated risk management practices and/or complete lack thereof, aging risks and little to no maintenance or risk improvement, and one of the biggest, the uninsured populace

Most prevalent on this is our motor insurance with only about 30-40% of the populace with automobiles being insured, and an estimated 800 000 accidents a year (increasing yearly). With average recovery rates of less than 30% on uninsured risks, we face substantial unrecoverable financial losses on the uninsured market and the slim possibility of recovery on these claims. These figures in themselves should give any actuary several panic attacks.

These factors all impact the underwriting books of all insurers, leading to high loss ratios, less underwriting profitability, higher reinsurance costs, and even so far as impacting our customers with rates far exceeding what the risk warrants.

In addition, the market is poised atop a knife’s edge when it comes to insurance premiums, further increasing potential financial underwriting deficits.

Client’s buildings are antiquated and adequate risk management processes for their business activities are not a widespread practice. The risks especially amongst the manufacturing, production, storage/warehousing, and transporting industries with high-risk businesses such as waste recycling, plastic manufacturing, and woodworking are high on top of risks requiring insurance, but with poor risk management practices and inadequate fire protection.

These Risks all influence the insurance market and leave insurance with more problems than solutions, with factors playing a major role in industry performance, to mention a few:

• Post-COVID recovery
• Economy, both national and global
• Crime
• Labour
• Environmental issues
• Technology
• Fierce Rivalry
• Rising costs

Simply stated, risk cannot be avoided, it’s a part of everyday life and will forever be. We, however, can mitigate/reduce it, transfer it, and more evenly distribute the costs of these risks.

This has been a tumultuous period for all South Africans, people, and companies alike. It has forced us to reconsider what is important. Businesses have been forced to adapt to changing markets, more regulated operations, an exodus of talent and knowledge, and a convergence of market players.

The field is no longer a niche field. There is a veritable number of insurers and UMA’s and it is incumbent as Financial Advisors to ask yourself, what has my insurer done to improve their value proposition?

Have they remained current do they actively involve themselves in the client’s risk? Do they motivate Risk Management with the proverbial “carrot” or do they beat the client with the proverbial “stick”

What to look for in your insurance partners:

• Inclusion of Digital data and analytics
• A positive product value proposition to you and/or your business
• Trend Monitoring, staying ahead of the curb
• Constant transformation in Talent Models, Risk Management, Customer Engagement, Service Delivery
• Cost and Process Optimisation
• Tech Development and Deployment

As Brokers and Financial advisors our advice and concern should not just be client-related, we also need to consider the macro, all these things play a role. Behavioural science in the insurance market is undoubtedly allowing for improved decision-making on risks and clients, but this is a two-way street.

My parting comments, study the behaviour of your insurance partners and improve your decision-making for yourself and your clients, and let us create a better South African Insurance environment.