Revitalising, remarkable, relevant and in some ways routine – this is how the South Africa short-term insurance industry can be described during this last year. In retrospect, a number of lessons can be learnt from 2014, with new ideas, innovations and trends shaping the year ahead. Here are 5 developments we could expect to see in the sector in 2015…
- Reinvigorating renewable energy – According to the International Energy Agency (IEA), gas and renewable power are expected to be the two major sources of energy growth on the African continent in the coming years. The organisation’s Africa Energy Outlook report goes on further to say that almost half the growth (45%) in electricity generation to 2040 is expected to come from renewable energy. This presents ample opportunity for insurers in this space – those who have global networks will have an advantage over the rest, being able to draw on the experience and expertise of colleagues who have insured similar projects before. Insurers and brokers will need to keep up with evolving technology in renewables ensuring that they are able to provide a product offering for every type of project be it wind, hydro or solar; understanding and mitigating all associated risks.
- Realising the reality of smart cities – The concept of a smart city is closer to becoming a reality than ever before. This means effective service delivery for all citizens, empowered by smart innovation technologies. A big component of this is ‘smart mobility’ which encompasses telematics. This could have an enormous impact on how insurers do business – being able to see if all information provided during the creation of a policy is true (is the car really being parked in a locked garage at night?) and being able to ascertain where exactly an accident took place. There has been some reluctance from consumers in terms of utilising telematic devices however, as more apps for mobile phones enter the market, we may see consumers easily slot these into their already technologically driven online lives.
- Readjusting reputational risks – With approximately 11.8 million SA users on Facebook and 6.6 million South Africans using Twitter (World Wide Worx and Fuseware, SA Social Media Landscape 2015 Report), businesses have become more exposed to online reputational risks. This is particularly pertinent within the hospitality sector – guests complaining about a guesthouse or B&B or even naming an insurer if a theft or injury claim is not paid out. Here, in addition to effective motoring systems, containment cover is vital; ensuring that a crisis is dealt with timeously and that the damage done to a brand is limited. Insurers will need to relook at how they package a ‘social media’ offering for their customers.
- Recovering from cyber threats – In South Africa, according to McAfee, cybercrime has an economic impact equal to 0.14% of GDP. Comprehensive cybercrime cover will no longer be a ‘nice to have’ but essential to long-term business sustainability. Clients will need to choose insurers who understand the complexities of protecting IT systems and who know how to deal with the potential reputational losses that could come from a data breach.
- Reemphasising the power of relationships – The intermediatery model will still provide unprecedented value to clients, ensuring that they receive the best expert advice for their unique insurance needs. Insurers who partner with their brokers to provide market insights, in-depth research, tailored solutions as well as flexibility will go a long way in securing and strengthening client relationships for the long-term.