INSURANCE: Brokers Remain Confident
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The latest CIB Broker Confidence Index Survey, which measures the confidence levels of insurance brokers on a number of issues showed that brokers remained confident about the outlook for the economy and business conditions over the next twelve months.
The survey for the first quarter of 2010 revealed a confidence level of 65% amongst insurance brokers with regards to their outlook for the South African economy over the next twelve months - unchanged from the previous quarter.
It also showed a 67% confidence level amongst brokers that they would see an improvement in business conditions for the local insurance industry over the next 12 months, down marginally from 68% in the fourth quarter of 2009.
Jonjon Smit, Sales Director of CIB Insurance Solutions, says these relatively confident outlooks are consistent with the more positive economic data that has emerged over the past few months. “GDP growth is back in positive territory for the first quarter of 2010 following three quarters of negative growth and equity markets performed well in the first three months of 2010. I think brokers can feel justifiably confident about the prospects of selling insurance right now.”
However, the survey also showed that there are still some concerns amongst brokers about the impact that the tough economic conditions are having on the industry.
When asked about their ability to retain existing clients in the next 12 months, the confidence levels of brokers dropped by 4% in the first quarter of 2010, from 78% to 74%. In contrast, broker confidence levels of attaining new clients over the next twelve months increased by 1% to 77%.
Smit says that with consumers still feeling the pinch of the recession, policy covers and premiums are being reviewed to the absolute minimum. “Individuals and businesses are shopping around for the best deals and there is a lot of movement by policyholders between insurers. In addition, the direct players and ‘aggregator ’ type websites are becoming more of a threat to traditional brokers.
This is further backed up by the fact that more than a third of brokers in the latest survey believed that direct insurers would be their biggest challenge in the next 12 months.
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