i-Fundi hosted its popular monthly series this past Friday, (30 October). The Community of Experts event is a forum where varying industry topics of common interests to the practitioners of different professional communities are addressed.
This time, the Community of Experts discussion focused on the challenges faced by the insurance industry.
Leading the discussion was Peter Atkinson, from the Financial Intermediaries Association (FIA), With over 40 years of in-depth experience in the insurance industry and as Technical Portfolio Manager at FIA, Peter provided an insider perspective of the latest developments in the sector.
The insurance industry is rapidly changing and faces numerous challenges. Amongst the major developments are the international expansion of South African insurers, mergers and consolidation, new distribution models as well as the increasing use of technology.
Of special concern for the intermediaries are the ever increasing regulatory demands by the FSB, the disappointing growth of the local and emerging markets, the aging of intermediaries and the difficulty of finding and nurturing new talent.
For the South African industry, the threats which keep the insurance executives awake at night are undoubtedly the socio-economic issues the country is currently facing, namely, the business environment, including political instability, unemployment, and corruption, amongst others.
Other concerns which threaten the growth of the industry is the subdued nature of the macro-environment, the regulatory changes including SAM, Twin Peaks, TCF, The backlog of technological development, threats from non-traditional competitors, the aging intermediary market, the low level of savings, the disappointing progress with entry-level products and access.
The threat which seemed to resonate most with the audience is the industry’s huge skills shortage. Companies struggle to attract and develop quality advisors – which is seemingly the reason why the industry is not transforming as quickly as it should.
An overwhelming consensus with regards to steering the transformation wheel in the right direction is that, the seasoned players of the industry need to transfer their learned skills and knowledge to the youngsters entering the field.
The silver lining is that, there are indeed some talent development initiatives in the works. Although they are still of limited scales, they provide successful models of how new talent can be brought into the industry.
In one of the projects, brokers and insurance companies partner in the implementation of learnerships. The learners are trained by insurance firms and then hosted by the brokers.
The “Para-planner” model has also proven to be successful. Instead of placing the learners into advisory positions, the new hires are first placed on learnership as support back-staff in the back office. As these learners prove their mettle, they are increasingly afforded the opportunity to take on the more challenging sales role.
Another topic which was discussed was the status issue of the Regulatory Exam 2 (RE 2). What emerged from the presentation is that, the industry as well as the Financial Services Board (FSB) is making a concerted effort to rectify the mistakes which were made in the first Regulatory Exam. It is expected that outstanding issues will be resolved by the end of the year. It is important to note that it will however take time before the new systems are updated and for the approach to be piloted. The large scale roll-out will be launched, presumably, in 2018.
Also being part of the “Fit & Proper” discussion, the approach to Continuous Professional Development (CPD), which are short courses for continued learning, is also currently being debated. Since RE 2 will proceed the implementation of CPD- there is considerable time to address the issues at hand.
To conclude a rather informative session, Atkinson made mention of the Financial Services Sector Charter being developed. Although this Charter may prove to be a challenge for medium-sized intermediaries, it could help to change the landscape of the insurance industry, as well as to help solve some staffing problems. The new BBBEE codes for the insurance sector will ready to be implemented in January 2016.
The next Community of Experts Event topic will be discussing e-learning as an alternative form of training for their staff and the tentative dates for the event are the 26th and 27th of November. More information will be communicated closer to the time.