May 10, 2020

South Africa’s leading intermediary experience survey succumbs to pandemic concerns

Article by Gareth Stokes

FAnews

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The 2020 FIA Intermediary Experience Awards and its accompanying survey are the latest in a long line of industry events and initiatives to yield to the global coronavirus pandemic. The decision to cancel the 2020 event follows deep deliberation between the FIA executive and the association’s sponsors about the viability of conducting the survey, and hosting the subsequent celebrations, in the current economic environment. This will be the first time in 22 years that the association’s members are unable to celebrate the financial product suppliers that deliver the best overall experience to financial intermediaries across a wide range of advice disciplines.

“The FIA could not justify the financial commitment to run an extensive member survey and host a glamorous awards ceremony at a time when our members, our partners, and product suppliers are struggling with the economic consequences of the coronavirus and ensuing nationwide lockdown,” said Lizelle van der Merwe, CEO of the FIA. “Another consideration is that our members’ focus will be on retaining clients and rebuilding their businesses as the country emerges from lockdown”. She also questioned the sense in conducting a comprehensive survey of intermediary experience at a time when global economic upheaval had resulted in ‘business unusual’ in the insurance and investment sectors. 

Strained broker / provider relationships

It is quite probable that relationships between FIA members and product suppliers will be strained over coming months as clients, brokers, and insurers get to grips with their respective exposures post-lockdown. FAnews has already heard rumblings from short term insurance brokers about claims outcomes under the business interruption (BI) and contingent business interruption (CBI) sections of their client’s short term policies. South Africa is not alone in this regard and there are already dozens of class action lawsuits starting up in the United States (US) to challenge insurer’s categorisation of pandemic-related losses. Local stakeholders will be watching offshore developments with interest as governments enter the fray. 

On 25 April, Mel Stride, chairman of the United Kingdom’s Treasury Committee urged insurers to do their part in sharing the financial burden of the pandemic. “We are concerned that the insurance sector goes the extra mile in meeting claims wherever possible, for example where there may be grey areas within policies,” he said. Insurers in the US, meanwhile, are trying to come up with alternative solutions due to the non-performance of BI cover. “[US] Insurers are doing this after facing multiple lawsuits, fierce political pressure and criticism from customers with BI policies over not covering their recent financial hardships due to the novel coronavirus pandemic,” wrote Suzanne Barlyn, in a 29 April article on Reuters.com. The US Insurance Information Institute estimates 40% of small businesses in that country had BI coverage; but that such policies either “exclude or do not specifically cover a global pandemic, however much it may interrupt business”. 

Government cannot intervene

When asked if the South African government might attempt to coerce local insurers to relax certain policy conditions to pay more COVID19-related claims, Seamus Casserly, CEO at Lockton SA, said he would be surprised if they did. “Imagine the constitutional position of a government instructing an insurer [or broker] on how to conduct its business, despite a legal contract being in force,” he said. But we digress. 

Many in the industry will mourn the loss of another standout event on the 2020 calendar. The FIA Intermediary Experience Awards has a credible history that spans more than two decades and is acknowledged as the most comprehensive ranking of financial product providers that are active in the intermediated distribution environment. It is a survey conducted among FIA member advisors, brokers, and employee benefit consultants that aims to give providers a holistic view of what is crucial in each service experience dimension. As such the awards serve as a reminder of the complex relationships that exist between advice givers and product suppliers as they join forces to deliver the best possible financial outcome to consumers. 

All is not lost. The FIA said that there were two interim initiatives on the cards to maintain the awards’ momentum and ensure a ‘new and improved’ FIA Intermediary Experience Awards in 2021. “We are busy with a review of the intermediary experience survey questionnaire,” said Van der Merwe. “An internal process by FIA staff, assisted by the various FIA executive committees, will simplify the survey and strip out unnecessary repetition”. 

Increased transparency in selection process

Product providers that have partnered with the FIA for 2020 will be asked for their inputs during the final stage of the review process. This initiative aims to increase transparency around the awards selection criteria and make it easier for product providers to deliver on intermediaries’ expectations going forward. It is further hoped that the initiative will engender a clearer understanding among financial product providers about which aspects of their distribution support and product design most resonate with intermediaries. 

A second initiative is proposed for the final quarter of 2020. “We have undertaken to meet with our 2020 FIA Partners to discuss an alternative research product to be conducted towards the end of this year,” concludes Van der Merwe. “This research will focus on the development of financial advice and intermediated distribution throughout the financial services industry, rather than a narrow focus on intermediary experiences”. The FIA will team up with is current Awards survey partner, Ask Afrika, to question its members and the broader market to get ideas for the development, evolution and recovery of the financial services sector post-COVID19. 

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