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Growing, Learning, Together – musings from the 2019 AIE conference

ARTICLE BY

  • Volker von Widdern

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Every year the African Insurance Exchange (AIE) serves as a good indication of industry trends. The conference remains vital in prioritising best practice content that illustrates future industry developments while providing effective networking opportunities, as was evident in the Constantia Broker Lounge at the conference this year. I even saw a few of our competitors utilising the lounge, for which we won’t send them a bill, but in keeping with this year’s theme of “Growing, learning, together” we may borrow a few of their clients from time to time…  

But this year’s AIE theme is a serious and pertinent one to grapple with –  how do we as players in the industry learn from each other to evolve, to grow, and remain competitive? In other words, how do we add value while improving our insurance environment, which includes insurers, brokers, and, of course, our clients.

One of the biggest obstacles to growth in South African insurance is the continued lack of a substantial middle tier in both the insurer and broker markets. The largest players dominate the market, which constrains growth in the small to middle sector, and the same applies to solvency and capital requirements. This also has a bearing on the development of IP and funding of research and development. Would it be contentious to suggest that we allow mentoring and the sharing of specified business portfolios as an exception to Competition Law that prevents brokers or insurers acting in concert, as part of supplier development?

In working together towards building industry capacity, why can’t we put the surplus capital of insurers and brokers to work for the greater good of the industry and our clients? For example, insurers could jointly invest in an RSA Bond of say R1 billion in proportion to their gross investments and allocate the interest  solely to industry-growth initiatives. Insurers would be able to voluntarily invest in this bond and in return receive CSI/SED credits for the interest allocated to growth initiatives. Such an investment would have a minimal impact on the total investment return, and would provide a sustainable and meaningful platform for industry growth initiatives.

Agility, data, and disruption

The industry should closely look at sources of disruption. In the retail market, for example, data- or platform-based organisations, such as Amazon and Google, can offer their clients so much more because they are constantly engaging with them. This should serve as an example to insurers, who should grow service models rather than sit back and wait for claims to happen.

We have enormous resources at our disposal, including procurement networks and access to data, among a myriad of other information outputs, so why can’t clients have the same access to information? Insurers can create value when providing clients this service, and we can use this platform to engage with clients continuously.

The content at the AIE was mainly retail-focussed, but looking at disruption on the corporate side, this could be caused by peer-based risk pooling in preference to the use of insurance capital, especially seeing that peers have industry expertise.

Employing insuretech to optimise insurance has been high on the agenda at the AIE for years, as it was this year. However, we also need to talk about how insurers should adapt to enable this technology to function on an integrated basis with legacy systems.

Conceptually, agility is important, but perhaps the flow of money and changes to spending patterns are less fickle. Agility and flexibility in our value propositions can improve the ‘stickiness’ of client revenue, but legacy systems will be a challenge to the delivery of self-service and customisable propositions.

These topics are brought to the fore at events like the AIE to stimulate debate and search for solutions, however contentious or abstract they may seem. We’ll continue to think about ways we can break down the temporaneous nature of insurance; how we can improve our value proposition to clients and partners; and while doing the above, hold front and centre the impact on the insurance environment. I look forward to thought-provoking debate and taking more notes at next year’s conference. 

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