By: Daryl De Vos, CEO Africa Re South Africa and Chairperson of the Local Organising Committee.
The 2017 OESAI Local Organising Committee and The South African Insurance Market wish to welcome you all to Cape Town, South Africa.
Firstly, I would like to thank all our sponsors who put their faith in us to put together a successful event providing value for all sponsors, delegates and the insurance industry in general. A big thank you also to all our speakers and panelists for sharing your knowledge and experience.
My wish for you is that you have a very successful conference, that you enjoy real South African hospitality and finally, that you have enough time to savour the natural beauty that has made Cape Town an award winning global tourist attraction at the tip of the African Continent.
The 2017 conference programme has been designed to deal with the challenges and opportunities facing the insurance industry across the continent. Firstly, technology provides both challenges and opportunities. Our speakers and panellists will provide a balanced view on both sides.
Agriculture plays a major role in the economies, livelyhoods and health of the people of our continent and insurance should form the backbone of this industry. This interactive session will explore where we are heading.
Education, talent and skills development is a major driver of the success of our industry and requires a combined effort from all stakeholders. Make sure you participate in this informative session.
We will also be looking at various issues affecting the reinsurance industry and evaluate the value of ratings in an environment where this is being questioned globally.
The South African Insurance Market – A brief insight
The most obvious challenge in the local market is the below 1% GDP growth we are currently experiencing, with forecasts for a slight recovery over the next two years. Although it has put pressure on business growth it has inspired healthy competition, innovation and a renewed focus on accurate underwriting and sccientific claims management.
According to PWC’s analysis for 2016 the local long term industry has shown 21% return on equity but group embedded value is down 16% with margin on new business decreasing to 2.7%. All of this on the back of R33,4bn total comprehensive revenue. The short term industry has had a better experience with group return on average equity up 49%, group average premium up 12% and claims ratio improving to 59%, with total written premium for the year at R52.2 bn.
The local financial services industry is well regulated and is currently implementing a few specific regulatory changes. The South African Treasury is implementing a Twin Peaks regulatory model whereby Prudential Regulation (South African Reserve Bank) and Market Conduct (Financial Services Board) will be forming the two pillars of oversight.
On a more practical level we are going through a review of commission and intermediary revenue models (Retail Distribution Review or RDR), which is putting pressure on revenue models in the distribution channel.
Accounting oversight is seeing the implementation of Solvency Assessment Management (SAM) which has received mixed reviews. From a positive perspective, it should be inspiring investor confidence in the insurance sector and could be beneficial to the policyholder, shareholder, management and the board.
South Africa has a strong presence in the African insurance markets with many local players entering a number of African territories while various players from other African countries have also been testing the waters, especially so in the reinsurance environment. The local industry will continue to forge new partnerships across the continent as we see companies like Sanlam, Old Mutual, Hollard and many others strengthen relationships in various countries.
With the African continent seeing strong growth and a strengthening regulatory environment, local and international investment in the insurance industry across the continent will certainly continue to expand.
Here’s wishing you a successful conference and networking.
Daryl De Vos, CEO Africa Re South Africa and Chairperson of the Local Organising Committee.