Industry bodies’ advice on navigating uncertain times
In 2023, there are bound to be challenges and opportunities for intermediaries and the industry in general.
FAnews spoke to a few industry bodies/associations about what’s in store for the year ahead, what we can do a lot better of as an industry and their advice on navigating these uncertain times.
What’s in store?
“Inflation has already filtered through, but in 2023, the impact will bite hard. Motor vehicle spare parts, the cost of replacing things lost, the undermining of the value of savings and some secondary issues such as the state of our roads, power grid failure, water quality and the ever-present threat of cybercriminals are all examples of matters impacting on the provision of insurance cover. The cost of insurance to and the narrowing of cover available to the consumer is going to be difficult to manage. This will impact on the intermediary seeking insurance coverage at reasonable terms but faced by an unhappy consumer,” says Steve von Roretz, Chairman of the South African Underwriting Managers Association (SAUMA) and Chairman of Leppard and Associates.
What can we do a lot better as an industry? He says, “we all know that in our world now, data is crucial to the insurance industry and the more granular the data, the better. The problem is, it seems that many consider data to be proprietary and, as a result, data doesn’t flow as easily as it should. Yes, regulators and compliance teams have it harder, given the personal protection of information legislation, but if managed well, the flow of quality data will benefit the consumer. As an industry, we have technology, and we should be able to “talk” to each other seamlessly. What we do with the data is proprietary!”
“My advice on navigating these uncertain times… our industry needs to step beyond the requirements of legislation and tell the consumer, transparently and fully, what costs contribute to the overall premium charge. This will not be a popular comment, but the cost of our classic methods and embedded way of doing things is too high. And new, tech savvy entrants, know this. To the intermediary, there is increasing risk to your businesses, given the complexity of the customer’s exposures, and if the customer’s expectations are not met. So, be clear about what you are offering and specify what you are not doing. Limit your liability in terms of both the scope of services you offer and the monetary amounts,” he concluded.
Abilities to overcome obstacles
Because human interaction is still a key component of the insurance industry, the trusted adviser function will always be important to the sector, says Viviene Pearson, Chief Executive Officer of the South African Insurance Association (SAIA).
“However, we foresee a critical need for intermediaries to continuously gain intimate knowledge and understanding of the digital platforms being used across the industry, as well as the possible limitations of these platforms as they are often the link between the client and the insurer. This will be one of the most significant ways through which intermediaries will be able to demonstrate to clients not only their deep knowledge of insurance products, but also an understanding of where the gaps exist,” she says.
“In terms of digitalisation, we believe that insurance agents’ interaction with customers will evolve alongside technology,” she continued.
On another note, as a result of the COVID-19 epidemic, Pearson says several FSPs shut down their operations, which resulted in an increase in the number of FAIS licences that have expired. Due to the weak business activity, many sole proprietorships had to close, and a sizable number of smaller enterprises turned to mergers to share operating costs and enhance their client offerings.
What can we do better as an industry? “Firstly, simplify the experience. Secondly, allow customisation. Thirdly, provide the right tools. Fourthly, be available. And lastly, connect with clients. Customer experience is more than just one encounter with the brand. We need to create a unified, seamless experience for customers so that they are happy however they interact with the business,” she emphasised.
“My advice on navigating these uncertain times… over the past two years, the financial situations of many South Africans have changed. Financial advisers are in the greatest position to help clients rebalance their portfolios, because of the changing investment behaviour brought on by uncertain times and volatile markets. Investors have become more risk averse and more aware of the importance of building a diversified portfolio because of the increased unpredictability brought on by global events like the conflict in the Ukraine,” she said.
“Brokers in insurance encounter several significant difficulties. But there is no disputing their abilities to overcome obstacles in the dynamic insurance industry. We have no doubt that brokers will continue to deliver a distinctive and effective client experience, while optimising product sales, controlling workflows, and overcoming these difficulties,” continued Pearson.
“We believe that the industry, including brokers are working tirelessly to ensure that communication with clients is simplified, and the appropriate automation of processes is a top priority to help save time and money,” she concluded.
Getting one’s ‘house’ in order
With everyone back post pandemic, Lelané Bezuidenhout CFP®, CEO of the Financial Planning Institute (FPI) says the following areas are important: (re)building a strong company culture that focuses on breath taking client experiences, upskilling staff to close the skills gap that was created due to the implementation of new tech/systems because of lockdown and preparing all, especially Key Individuals/Persons for what is to come in the new Conduct of Financial Institutions Bill (COFI) environment.
“From a regulatory point of view, the industry should not underestimate the regulatory changes that are coming in, in the next three to five years, starting with the new licensing requirements for financial institutions (this includes FSP’s) under COFI. This year is a great year to get one’s house in order, readying it for the incoming regulatory changes. Key Persons (which includes Key Individuals) must ensure that they understand how COFI and the Financial Sector Regulations Act (FSR) link and what the incoming changes are. Even though COFI is not enacted yet – this does not stop the Financial Sector Conduct Authority (FSCA) and/or the Prudential Authority (PA) issuing joint standards or the FSCA issuing conduct standards,” she says.
The looming grey listing, according to Bezuidenhout, will continue to draw attention to anti-money laundering and combating terrorism financing regulations. “We saw the recent amendments in the General Laws Amendment Act. There is already a massive focus from the regulators side on accountable institutions and beneficial owners. By now, FSP’s must have completed the beneficial ownership information as outlined in FSCA Information Request 6 of 2022 via its e-portals.”
“My advice on navigating these uncertain times in 2023… empower yourself with knowledge. Know what is going on around you. Information to empower yourself with knowledge is publicly available at National Treasury, the regulators (FSCA, PA, FIC, etc), professional bodies, trade association etc. Google is your friend too; take part in peer conversations around incoming regulations and best-practice sharing sessions; give input into draft regulations, you too are part of shaping the future of the industry; do not give too much attention to those creating fear around the incoming changes, inform yourself and decide for yourself what the true situation is and focus on being the best you can be for the benefit of your customers, your business and your team,” she concluded.
Read the full article, with more insights from the Financial Intermediaries Association (FIA), Gauteng Women In Insurance (GWII) and more, in the February edition of the FAnews magazine.
Writer’s Thoughts
In navigating these uncertain times, one thing is for sure. South Africa's insurance industry is incredibly resilient. Over the years, it has demonstrated remarkable agility and adaptability in overcoming countless obstacles, especially following the impact of the pandemic, and this year will be no different. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
