President Peter Olyott, together with FIA CEO Lizelle van der Merwe attended the World Federation of Insurance Intermediaries (WFII) World Council Meeting in Lisbon. WFII gives a powerful voice to intermediaries so to advance their interests and acquire innovative solutions at an international level. In the following release, Olyott speaks on South Africa’s intermediary market from a global perspective as it relates to regulation.
I recently returned from the World Federation of Insurance Intermediaries (WFII) World Council Meeting in Lisbon, which I attended with FIA CEO Lizelle van der Merwe. Attending a meeting like this at international level inspired me to consider the South African intermediary market in a global context, particularly around matters of regulation. I would like to share some of my thoughts on this council meeting and what transpired:
It is obvious that the South African regulatory landscape is largely driven by what happens in the UK and Europe. Therefore, to understand the ramifications of new and existing legislation on the South African intermediary landscape, it is key for us to understand what has occurred and what is likely to occur internationally, particularly in the UK and Europe.
It has become clear to us that one particular way of engaging with the regulator on future proposed regulation is to use global benchmarking as a reasonable response to equitable reward. For example, if on average the global brokerage allowed for motor is 15% (where accident rates per 100 000 vehicles are lower than in SA), why should we be receiving less?
Obviously global benchmarks can be applied over a number of different disciplines. It would be hard to argue particular cases where South Africa was being singled out in comparison with the world’s most sophisticated and developed economies. The conversation would be entirely different if we were comparing ourselves against other developing markets such as Brazil, China, India, Russia etc.
South African brokers across the spectrum, alongside their international colleagues, are weary for instance of being measured on the principles of TCF, which have yet to be formulated or challenged in court. It is akin to playing a game where you only find out what the actual rules are once you are on the field and the whistle has just been blown. This is an area where, through common ground, the WFII can influence the International Association of Insurance Supervisors (IAIS) and its respective regional regulators.
While much attention has been paid to the regulatory environment, international regulators and the WFII, including its constituencies, have not made much progress in the areas of digitisation. In the case of intermediaries, this is crucial given the current wave of environmental changes impacting consumer decision making. This could prove to be a more immediate danger to the existence of intermediaries than regulation alone. The FIA is pushing the global agenda on this matter with explicit support from regulators both here and abroad.
It is clear from our interaction with our local regulator, as well as in these global forums, that associations such as the FIA must take proactive ownership of our future – once, of course, we have consensus on what this future will look like – and drive our agenda so that regulatory bodies can engage with us. Only then can we promote particular ideologies or goals.
Influencing global regulatory agendas will be positive not only for intermediaries globally but by implication our own local interests as well. From a WFII viewpoint the FIA is also held to be the representative of African insurance interests and not only those of South African intermediaries. We need to act in a manner that sets the tone for sustainability and growth across the continent.
The FIA accepts the fact that we need to be more proactive, both in terms of our membership and as an association. We can play a substantial role in expanding the importance of the intermediary, both from an insurance point of view and in terms of our ability to contribute to other socio-economic issues facing South Africa
We can also enhance our standing and negotiating positions by ensuring we base our engagements on hard facts and not hearsay or market truisms. These are generally un-validated points of view which, over time, become regarded as facts, which, in turn, are seemingly used as a basis for regulatory reform.
Our observations and interactions with our global counterparts convince us of the validity of our proposed strategic direction. In the words of the managing director of the WFII, based on his own observation of the African contribution of the FIA, we should not think we are, as a relatively small player on a developing continent, behind the curve. In fact, in some cases – such as our identification of the emergence of technology as both a threat and an opportunity for intermediaries – we are ahead of some of our overseas counterparts. This is a huge compliment, especially given that the membership base includes representation from the top developed nations across the globe. We would be remiss not to drive the enhancement of this perception across both the WFII and international regulatory bodies.
To continue to thrive and add value to intermediaries, the FIA must grow its membership base and ensure it has the organisational capacity to proactively position itself as an association that understands evolving environmental dynamics and is preparing members for these changes – which are starting to occur in greater numbers and with increasing frequency. As an organisation, we are committed to taking a proactive stance and keeping our membership base well informed and prepared for whatever challenges the world may throw our way.