1
31 October 2018 | www.moneymarketing.co.za
First for the professional personal financial adviser
WHAT’S INSIDE
YOUR OCTOBER ISSUE
MoneyMarketing's insight on the short-term insurance industry
A
frica’s insurance industry is facing more disruption than any other industry, posing challenges for some while providing business opportunities for others. That’s the word from Victor Muguto, Long-term Insurance Leader at PwC Africa. “Africa’s insurance market is largely unpenetrated and needs all the resources at its disposal to grow,” Muguto told MoneyMarketing, following the recent release of PwC’s survey *Ready and Willing: African insurance industry poised for growth. Main themes of the survey The survey finds that four main themes are influencing the continent’s insurance industry. Firstly, the increased use of technology across all of Africa – due to the exponential growth of mobile phones – has contributed significantly to the large number of new customers and more tailored products. Technology presents insurers with powerful tools to better understand customers and their expectations through data mining capabilities and artificial intelligence (AI). Secondly, insurers see stringent risk-based prudential capital and market conduct regulations as disruptive – although most insurers in Africa are now accustomed to and willing to comply with new legislation. However, the introduction of the international financial reporting standard IFRS 17 is also expected to add new pressure.
page {I}
COLONOSCOPIES AND THE SA MARKET
A HOLISTIC, COST-EFFECTIVE HEALTHCARE SOLUTION
It’s been a pretty unpleasant ride for investors in the SA equity market over the past few years.
Consumers want flexibility to structure their medical scheme benefits to not only meet their needs but suit their pockets Page 14
Page 9
Africa’s insurance industry poised for growth Some new regulations will drive insurers to redesign simpler products. South Africa’s Microinsurance framework will offer alternatives to reduce the costs of insurance at the lower end of the market. Thirdly, there is a ‘scramble’ for the continent’s customers. Africa’s rising middle class is driving insurers, bankers and non-traditional players such as mobile operators to compete for the power of owning customers and customer information – however, human intermediation is still required for complex products. Lastly, the survey notes that talent shortages in both technology and actuarial skills are notable. This means that insurers need to spend more in training their future workforce. Added to this is an increase in employee expectations of wanting to achieve a better work-life balance. Responses to disruption While insurers across the continent may be adopting multichannel distribution strategies and taking more direct ownership of their customer relationships, this applies mainly to simple products such as car insurance that can easily be sold through direct channels, Muguto told MoneyMarketing. “Africa’s insurance industry needs its brokers, and always will, given their detailed understanding of insurance risk, knowledge of Africa’s insurance clients and markets, as well as their extensive network
of relationships. The more complex products, such as commercial, engineering and marine insurance, require the technical underwriting and expert intervention of experienced intermediaries.” Muguto points out that existing broker channels have not always been able to support Africa’s customer needs. “As an example, technology in the form of mobile devices now offers insurers the opportunity to more directly access and interact with those customers in Africa’s rural areas who could not be reached through bricks and mortar channels in the past.” While the survey finds that some less established brokers may find it difficult to remain competitive in the market, more established ones are expected to consolidate in order to achieve scale and compete. * The survey was developed by PwC South Africa in conjunction with the PwC Market Research Centre in Luxembourg. The online survey was conducted over the months of July to November 2017 and collected the views of insurance CEOs, CFOs and CROs in Ghana, Kenya, South Africa, Uganda, Zambia and Zimbabwe. The online survey was supplemented by face-to-face interviews with six CEOs of South African insurers.
Victor Muguto, Long-term Insurance Leader, PwC Africa
120 months 521 weeks 3,652 days 87,648 hours 5,258,800 minutes and still committed to you. Thank you for choosing Laurium. Here’s to the next 10!
We know Investments
T +27 11 263 7700 E laurium@lauriumcapital.com www.lauriumcapital.com Laurium is an authorised financial services provider (FSP No 34142).Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). CIS’s are traded at the ruling price and can engage in scrip lending and borrowing. There is no guarantee in respect of capital or returns in a portfolio. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to www.lauriumcapital.com.