What a year we have had thus far. We are facing times that was never seen or experienced before. From 3^rd waves and back to adjusted level 4 lockdown to unrests. Insurers, clients, and service providers are all adjusting to the new normal. We at the IING trust that our members and their families are all still well and keeping safe. We wish you a better half to 2021. Challenges will always be there. How we react to them is up to us. 

“If something is important enough, even if the odds are stacked against you, you should still do it.” – Elon Musk

Written by Claude Hamman, Head: Specialist Risk Advisory at Indwe

Going back in history, there have been many defining moments for human beings over the centuries of our existence on planet Earth. In recent times we have survived The Great War, The Great Depression, World War II and The Great Recession. Now, we are facing The Great Infection, as the COVID-19 crisis of 2020 sweeps across the planet. 
If we look at viruses specifically, the Black Death was the most fatal pandemic recorded in human history, resulting in the deaths of up to 75-200 million people in Eurasia and North Africa, peaking in Europe from 1347 to 1351. The Spanish Flu was an unusually deadly influenza pandemic lasting from January 1918 to December 1920, infecting 500 million people – about a quarter of the world’s population at the time. 

Many have called this event a Black Swan, defining it as unforeseeable, unpredictable, unexpected and devastating but hindsight will show that this was a Grey Rhino event. Grey Rhinos are hard to miss as they follow a predictable path and have numerous warning signs. The important distinction is that Grey Rhinos give us the opportunity to respond. 
Unfortunately, history will show that humanity chose not to respond until it was too late, resulting in the widespread global outbreak of COVID-19. Many countries became the proverbial ostrich, sticking their head in the ground and ignoring the signs of a brewing global crisis. Others initiated crisis plans and accelerated the execution of response mechanisms, in order to limit the spread of the virus, and they are reaping the benefits. | Read more : Click here

The players were greeted on a rather crisp winter morning and the greenkeeper at Wingate Country Club Mr. Pieter Cooper prepared a challenging but yet forgiving course set up with some very auspicious pin placements. The format for the competition was: 

• Better-ball Stableford with one (1) score to count 

Light refreshments were supplied on various sponsored holes to keep the festivities going and the competitive nature of all in the insurance industry was done by the way side every so often as to not dampen the spirits.

Although the pandemic has placed a huge burden not only in our industry but a country as a whole – great memories and stories were shared over a few refreshments and light supper followed by the brief prize giving as to adhere to all Covid-19 protocols.

We look forward to yet another year of celebrating the inaugural IING Presidential golf day in 2022

You can sail a 22-foot yacht across the Atlantic by yourself if things go right, but you will struggle to survive if they don’t. The man holding the helm at the South African Special Risk Insurance Association (Sasria), managing director Cedric Masondo, has just sailed into a huge storm in a boat that is probably too small to reach land without serious damage. Sasria’s latest annual report creates the impression that the recent unrest, looting and vandalism will create the biggest challenge the association has ever encountered since its establishment in the late 1970s.

The last few years were relatively easy. Sasria paid claims for damage resulting from the odd service delivery protest or wage strike, and – if the annual report is anything to go by – spent the rest of its time on less pressing social issues. Sasria collected just more than R2.4 billion in premiums during the year to March 2020, a satisfactory increase of 11% compared with the previous year. It paid out fewer claims than in the previous year, with claims decreasing to R992 million compared with nearly R1.6 billion in the 2019 financial year. This enabled Sasria to spend R113 million on salaries and another nearly R10 million on staff training.

It also transferred R43 million to the community by way of socio-economic development. There was also no pressure on the investment advisors to work too hard: they stuck 71% of the investment portfolio in low-risk cash and near-cash assets, which yielded a low return.

R992m vs R20bn
The R992 million in claims paid out in the 2020 financial year – the 2021 annual report is due soon – is a drop in the ocean compared with the potential claims Sasria is facing now. The SA Property Owners Association (Sapoa), which represents over 800 organisations in the commercial property sector, with 90% of the nation’s commercial real estate owned by its members, estimates the damage at more than R20 billion. It says it has collated figures showing that some 800 stores have been looted and/or severely damaged while 100 malls have been either burned down or have suffered significant fire damage. A number of distribution centres in Durban have also been looted, with serious structural damage.

Sapoa president Andrew Konig quoted from estimated figures supplied by the eThekwini Economic Development and Planning Committee, stating that:
    Some R1.5 billion has been lost in stock;
    Property damage exceeds R15 billion;
    Over 50 000 informal traders have lost their livelihoods; and
    Approximately 1.5 million people have lost their potential to earn an income.

There are also some 150 000 jobs at risk.
Konig says the overall result of the past five days of devastation is an estimated loss to GDP upwards of R20 billion.
Sasria has publicly estimated the damage at anything from R3 billion to R10 billion. An earlier report quoted Masondo as saying that damage could amount to between R3.5 billion and R7 billion, while he said in a later interview with Reuters that damage could be as high as R10 billion. Coincidently, he also mentioned that Sasria will be able to settle claims of up to R10 billion with its “own balance sheet”. Masondo later said that damages could be as high as R12 billion. Sasria describes itself as the primary short-term insurer in SA, providing cover against special risks such as civil commotion, public disorder, strikes, riots and terrorism. It notes in its marketing material that cover is needed as seen by recent increases in service delivery protests, student protests and labour strikes, as well as the increase in international terror incidents. However, it is unlikely to have expected damages on the scale seen over the last few days. The annual report states that Sasria has assets under management of R8.5 billion as at the end of March 2020, and disclosed an equity value of R6.9 billion. Claims of R10 billion would be likely to bankrupt Sasria if it was a traditional private sector insurer.
| Read more about Sasria and Re-insurance|

Written by John Patch, Senior Risk Engineer at Indwe

PAST: Pre-COVID Crisis

The insurance industry, which has gone through high and lows, has traditionally been a sure bet. Through many of the disasters all around the world, the global insurance market has remained resilient. The insurance market recovers from disasters through:

• Collective accumulation of insurance premiums into global underwriting markets (major investors or financial institutions).

• Sound investments (hedging – property market).

• Increasing premiums post-disaster (the majority must pay for few significant global events or claims) to the end user, as a result of these disasters.

Insurance and insurable interest was a prerequisite to doing or staying in business and it became part of the due diligence framework. Professionals were employed to look at ways of limiting exposure to insurers through complex structures and wording, and foreseeing the extreme inevitable disaster. The insurance market, in order to protect its investment value, started imposing risk management, risk engineering and standards of audit and self-governance as a means of protecting the insurable value, both for itself and the client base.

Clients were encouraged to spend fortunes on protection measures, including financial mechanisms, physical protection, and policies, procedures and systems. When losses were fortuitous, insurers would pay out (After all, wasn’t that the reason for taking out insurance?) but when their interests weren’t 100% protected, the standards of protection weren’t 100% or the market hardened, insurers would take action such as imposing further rules of protection, deductibles, and threatening clients with coming off risk.

The domestic market, including life, home owners and householders, is also being continually squeezed for increased premiums (15% increase vs a 6% GDP increase) without any grounds of justification. An increase in costs was going to be a hard sell going forward, particularly when head counts have been slashed and with the advent of technology replacing humans.

| Read more |

Technology, data, cultural and behavioural change of the consumer is transforming the role of the broker – and the importance of advice – in South Africa’s intermediary insurance market. 

Soul Abraham, Old Mutual Insure’s Chief Executive for Retail Insurance examines the fascinating disruption of the intermediary market and its implications for dramatically improved customer service in the fourth industrial revolution. 

Remote control

In today’s digital era customers expect instant and ubiquitous service and this is driving innovation within the global insurance industry. Insurers are leveraging technology and data to roll our previously undreamed off capabilities. These innovations are also redefining the broker’s capability to give advice to customers and significantly improve the customer experience. 

Long before the COVID-19 lockdown, understanding the customers’ behaviour has been key to building the technology solutions and products of the future. Emerging customer culture is redefining the structure, priorities and capabilities of the insurance industry. COVID-19 has only increased the pressure – and urgency – for the industry to deploy technology and data to support customer challenges and goals – remotely.  | Read more |