It can be tough putting together a programme for a diverse membership of intermediaries who conduct business across the insurance and investment sectors; but the 2023 FIA Advice Summit achieved exactly that.
The event segued seamlessly between reporting back on the Financial Intermediary Association’s role in the domestic economy; to the systemic risks presented by climate change, cybercrime, pandemic and social upheaval; to practical M&A advice for advisory practices; to how technology can improve client outcomes and support intermediated distribution.
In her brief opening remarks, FIA CEO Lizelle van der Merwe said that advisory businesses were an integral part of the evolving insurance and investment landscapes. “The FIA and our intermediary members are part of a dynamic movement toward shaping the future of financial advice,” she said. “This event illustrates our members’ commitment to excellence, knowledge sharing and the relentless pursuit of providing sound financial advice and risk management guidance to individuals and organisations”.
South Africa’s financial services providers (FSPs) depend on the domestic economy for much of their annual growth. In recognition of the growth challenges facing the country, the 2023 FIA Summit kicked-off with an update from Business Unity South Africa (BUSA) CEO, Cas Coovadia. He assured the audience that BUSA, through its Business for South Africa (B4SA) implementation arm, was reimagining collaborations between the private and public sectors.
“Our traditional role has been policy influence and advocacy, striving to create an environment in which we can conduct sustainable and profitable business,” Coovadia said. B4SA is more hands-on, and will work tirelessly to enable and capacitate government to deliver an environment more conducive to growth and investment. “If we are successful in what we do, South Africa will reach a 3% GDP growth rate and 300 000 jobs will be created,” he said. FIA members can look forward to business-led progress in three areas: energy; combating crime and corruption; and transport and logistics.
The rising frequency and severity of climate related extreme weather and other systemic risk events featured strongly on the programme. These events threaten the resilience and sustainability of the insurance industry, with a massive cost to business and society. Two of the country’s largest insurers, and long-term champions of intermediated distribution, took to the stage to present their take on the emerging risk landscape and explain how FIA members could improve outcomes for their clients.
Soul Abraham, CEO: Retail Insurance at Old Mutual Insure, shared valuable insights into how brokers, clients, insurers and reinsurers should respond to the realities of climate risk. He used internal claims data spanning back to 1982 to illustrate how the frequency and severity of extreme weather events were impacting South Africa, confirming a 10-fold increase in average annual natural catastrophe claims costs in the latest decade compared to the period 2001-2011. “More frequent and severe catastrophe losses lie ahead; all stakeholders need to work together to make sure the insurance industry remains sustainable [by protecting] insurers’ balance sheets and giving the right advice to clients,” he said.
Santam considered whether systemic risks were insurable. Lerato Matthews, Head of Broker Solutions Johannesburg said that the industry needed to develop and offer hyper-tailored solutions to navigate climate, geopolitical, macroeconomic and regulatory risks. He acknowledged the role of insurers in building resilience and championed a new risk model that elevated repair over replace; moved from commoditised risk transfer to collaborative risk mitigation; and focused on holistic risk solutions over product sales.
South Africa’s specialist risk insurer presented on the future of the non-life insurance sector amidst increasing global challenges, most notably social unrest. Mpumi Tyikwe, CEO at Sasria SOC Limited, reminded the audience of the country’s July 2021 nightmare, when looting in KwaZulu-Natal and parts of Gauteng resulted in R32 billion in damage and loss claims over just nine days. “It took nine days to destroy the reserves we had built over 42-years … and we now have to rebuild to sustain a similar magnitude loss event,” he said. A shocking slide from his presentation pegged Sasria’s loss ratio for the 2021-2022 year at 1056%; traditional insurers aim for 70% or lower.
The FIA’s investment- and life-focused members were kept entertained by various tech-focused presentations, starting with CEO of Discovery Bank, Hylton Kallner, who presented on ‘Enhancing engagement and fostering loyalty through personalised experiences’. “The core components for delivering advice are hyper-personalisation, integrated advice and robo-assisted advice,” Kallner said, adding that two out of three clients now expect every product or service to be personalised for them. His presentation concluded with a financial plan created by the AI-backed large language model, Chat GPT, with the last point in that plan being a reminder to “engage with a financial adviser”.
The technology theme was further explored by Hymne Landman, Head: Momentum Wealth and Momentum Wealth International, who discussed all matters fintech. She challenged the audience to identify areas of their practices that would benefit from technology, and to leverage technology to improve efficiencies, reduce costs and strengthen the overall offer to clients.
From a non-life perspective, Herman Scheepers, CEO at Renasa, noted that tech adaptation and adoption was critical for brokers. An interesting observation was that technology had empowered South Africa’s brokers to give real-time service, and that this had been the broker’s best defence against direct insurers. Another short-term insurance focused presentation explored the overlap of safety and technology and its impact on both the environment and the broader insurance sector. Steven Lurie, Commercial Director at PG Glass noted how governments were driving tech adoption in the motor segment; new vehicles sold under EU safety regs must have emergency braking and lane assist technology as standard from 1 January 2024.
Cliff de Witt, CTO at Netstar furthered the tech discussion under the big data, cloud storage and processing power themes. “We are using AI to look at multi-dimensional data to predict forward-looking outcomes for our industries,” he said. And for something completely different, Graham Easton, Divisional Director: Research and Insights at Liberty explained how crafting compelling narratives to communicate impact and connect with clients was critical for success. Storytelling precedes AI and machine learning, he explained.
The day concluded with a panel discussion which explored the M&A outlook for South Africa’s financial advisory businesses, featuring representatives from Garrun Group; Miton Optimal; Origin Group; and Wealth Associates. Far too much was covered to summarise here, though the main reasons for selling a practice were described as the ageing broker base; growing compliance burden; scale considerations; and taking money off the table. Acquirers were warned to see advisers as for what they are and not as a means to accumulate assets or write product. For advisers thinking about selling: “the cheque may be attractive but you must study the onerous T&Cs” and consider your clients’ interests.
Diversity and inclusion got a ‘look in’ under the ‘navigating challenges and maximising opportunities’ tagline, courtesy Vic Saunders, Head of IFA at Momentum Insure. He noted that an inclusive workplace was conducive to client engagement, creativity and innovation before concluding his presentation with a quote from D&I strategist, Andrés Tapia: “Diversity is the mix; inclusion is making the mix work”. Finally environmental, social and governance (ESG) factors were considered by Johan Jordaan, Chief Winemaker at Spier Wine Farm.
We wrap this reporting on an exception event with a quote from the FIA CEO: “The knowledge shared at the 2023 FIA Summit was not only for members’ benefit, but for the betterment of the broader financial services industry … without this sector, there can be no economic growth”.
