Search:  
Western Cape Business News
810
VIEWS

Send  Share  RSS  Twitter  20 Apr 2011

INSURANCE: Insurance Heads Speak Out

 



Recent Western Cape Business News

The South Africa Market Watch, one of Cape Town-based Alexander Forbes’ signature insurance industry publications, recently recorded the views of CEOs and MD’s from leading South African insurers on the insurance market, current issues and likely future developments.  

Ian Kirk of Santam believed that the difficulties of growing a business profitably in a slow and bumpy economic environment were exacerbated by operating in one of the most highly regulated industries in the world.

The global banking crisis “has seen the insurance industry become even more regulated in response to consumer demands for financial market stability” said Kirk.

This trend was reflected in South Africa in the Insurance Laws Amendment Act (ILAA), the FAIS General Code of Conduct, SAM/Solvency II, the Consumer Protection Act and various conflict of interest issues. 

Peter Todd, MD of Mutual & Federal, predicted that these legislative changes would see a shift in the relationship between insurance companies, customers and brokers.

The ILAA, for example, makes insurers accountable for the activities that they outsource to brokers and other third parties. This will force insurers to disclose whether the broker is independent or acting as the agent for the insurer” says Todd. Furthermore the ILAA together with the Code of Conduct on Conflict of Interest will also ensure that any remuneration between insurer and broker does not prejudice the customer”.

Herman Schoeman of Guardrisk warned that “the costs of compliance, as well as the new capitalisation requirements will impact on both the industry’s structure and the operational architecture of insurance companies.” Increased mergers and acquisitions, or other forms of partnership, can be expected. This is especially the case in the current market for smaller insurance companies and niche specialist insurers, where critical mass is inherently a challenge.

Despite the compliance hurdles that tighter legislation presented Nic Kohler, MD of Etana, believed that “the new legislation was nonetheless laudable in the light of the low levels of financial literacy among South African consumers, allied with a necessary reliance on self-driven retirement and risk planning.”

That said, Schoeman pointed out that “the governments goals of providing broader access to insurance products was coming at a time when, largely due to the cost of compliance, insurance was becoming unaffordable even in traditional markets.”

Moreover, though Basel II had been in operation for a number of years the credit crunch hit hardest in the first world, despite the millions of dollars spent on risk modelling and risk-based capital there. So while the jury was still out on the suitability of first world governance standards for the South African market, South Africa’s immediate challenge lies in “balancing the cost of compliance with the real benefits for the consumer” argued Schoeman.

As such, Schoeman cautioned that while laudable in its intent the true cost of compliance would only become evident over the next two years. During this time the very consumers the legislation aimed to protect might well end up footing the largest part of the bill. 

Certainly Adam Samie of The Lion of Africa concurred that “the cost of regulatory compliance was set to skyrocket as The Lion of Africa endeavoured to add the required professional staff, including actuaries, risk managers and the external consultants required for the implementation of new legislation.”


 
 
 
engineering-cape-townBusiness Profilesmedici-fabricssuccess-motivation-instituteoffice-solutions-cape-town
 
   
 
 
 
  Accomodation
Accommodation


Online Foreign Exchange
Foreign Exchange


Directory
Directory


Fax
Fax 2 Email


Finance
Finance


Furniture
Furniture


Casino
Online Casino


Restaurant
Restaurant


Auctions
Shop Online


Study IT
Study IT Online


Web design
Web Design


Weddings
Weddings


Work
Work from Home
 
 
 
 
 
Company News
 
 

 

© 2019 www.wcbn.co.za. All rights reserved.

Daily Newsletter Subscription

 

Subscribe to the Western Cape Business News Daily News and information email (it's free).

Thank You
Your email address has been added.

Name:
Email Address: