Marikana community members line up to cast their votes.
There are changes happening on all fronts: technological, climate and even regulatory. In recent years with global financial economic crises, the protection of policyholders has become more important for the insurance industry and regulators have responded by increasing regulations to protect the policyholders’ interests. An important aspect of our brand promise to our customers is to protect what is important to them. We aim to be agile and we have systems in place that give us the flexibility to change our pricing and underwriting as conditions change. — Coenraad de Jager
The economic downturn has certainly affected the short-term insurance industry, most noticeably on new business acquisitions, lapses, and cost of repairs and replacements. But insurers will, in the main, record significantly improved underwriting results for 2014 compared to previous years, in part as a result of less catastrophic weather related events and the corrective actions taken during this period. They will however continue to focus on creating a more sustainable risk pool through correct rating and directing their claim spend. It is becoming imperative for insurance companies to start thinking differently about risk and risk behaviour in general. From our own experience we understand the importance of providing real value to consumers in ways that not only help them improve their understanding of risk, but also help them improve their risk behaviour and be rewarded for it.
The use of technology such as Discovery Insure’s DQ (Driver Quotient) Track telematics device in monitoring driving behaviour and providing drivers with real-time feedback on their driving behaviour allows for more accurate risk profiling, where those who improve their driving behaviour are rewarded for doing so. Insurance products also need to meet the evolving needs of consumers and their policy benefits should reflect the new perils that they are faced with in everyday life today. Car jamming (criminals blocking a car’s remote locking system by using a different remote that operates on the same frequency) is a phenomenon that has been in the spotlight for a while now and many insurance products do not provide cover against such losses. Load shedding has become a feature of life in South Africa and the damage caused by power surges to household appliances when the electricity supply is restored isn’t automatically covered in most insurance policies. At Discovery Insure we actively engage our policyholders, making them aware of these risks to help them mitigate against them, and also providing an insurance solution that caters to the real risks faced by our policyholders. — Gerald van Wyk
Trading conditions in the South African insurance industry remain tough, and difficult economic conditions with low GDP growth and higher interest rates are expected to have a negative impact on consumers. It is important to remember that we live through economic cycles and that protecting ourselves against accidents and disasters is no less important during tough times than during good times. The better insurers use their underwriting skills, technology and claims data to manage premiums and therefore the impact on policy holders. — Donald Kau
Reduction in the disposable income of the consumers has and will result in the continuation of a very price sensitive market. For the past few years, the short-term insurance industry has been impacted by low economic growth. The cost of claims continues to increase, mainly due to the devaluation of the rand.
More accidents have been recorded as a result of the rains, both in summer and winter. Motor vehicles have become more expensive and more advanced, so repairing them becomes more complex and thus more expensive, and has resulted in the insurers writing off more vehicles. Crime related claims are growing both in number and in value, which includes stolen vehicles and trucks as well as household goods. For insurance brokers we believe there is the opportunity to continually identify different risks and highlight solutions for our clients. — Craig Pogir
The past year has seen the short-term insurance industry dealing with a host of regulatory changes, the significant weakening of the rand and the impact this has had on the cost of replacing parts in damaged vehicles; in addition the carnage on our national roads and volatile weather conditions affect the industry. These factors have led to significant pressure on underwriting profits for the industry. Looking ahead, there is no respite on regulatory changes and I believe this may lead to consolidation in the industry, as smaller plays struggle to cope with regulatory changes, ranging from the capital requirements to binder regulations.
In the face of the current rise in the cost of living, cost-savvy families are always looking to reduce expenditure where they can. In my experience, the majority of the families with short-term insurance policies know that the answer to the question ‘can you afford NOT to be insured?’ is a resounding NO. So instead of cancelling their policies, they shop around for cheaper premiums. It is estimated that only 35% of the 10 million motorists on South African roads are insured. This number hasn’t changed significantly over the last few years, irrespective of the economic environment. — Frank Magwegwe