IIG Industry Outlook 2018
This year’s IIG Industry Outlook took place on Thursday 22 April. Interesting perspectives from an economical, regulatory as well as global perspective were given.
IIG Insights – Industry Outlook: 2018 and Beyond
In line with this year’s theme of “Striving For Excellence” the first of the IIG’s Industry Outlook events for 2018 was held on the 22nd of March at the GIBS Business School in Illovo and this was a sold out event with 150 delegates in attendance. The theme for these insights was ‘Industry Outlook – 2018 and Beyond” and three experts in their respective fields presented on topics that were of relevance to the insurance sector. IIG held this event in collaboration with the Insurance Institute of South Africa (IISA), Main sponsors were Innovation Group, Marsh and Sasria SOC.
The president of the IIG Mr Daniel Stevens welcomed the speakers and delegates and then introduced the host for the day, Miss Thokozile Mahlangu who then introduced the first speaker of the day Mr Spiros Fatouros, CEO of Marsh South Africa who spoke about “The Global Risk Report 2018” from Marsh. Spiros mentioned that the Global risk report was published at a time of heightened uncertainty and popular discontent with existing political and economic situations. The report also highlights some fundamental reforms to market capitalisation.
Spiros mentioned that the reports highlights that environmental risks have grown in prominence in recent years. This trend has continued this year, with all five risks in the environmental category being ranked higher than average for both likelihood and impact over a 10-year horizon. This follows a year characterized by high-impact hurricanes and extreme temperatures.
The reports also highlights that Cybersecurity risks are also growing both in their prevalence and in their disruptive potential. Attacks against businesses have almost doubled in five years, and incidents that would once have been considered extraordinary are becoming more and more commonplace. The financial impact of cybersecurity breaches is rising, and some of the largest costs in 2017 related to ransomware attacks, which accounted for 64% of all malicious emails. Furthermore the report highlights that headline economic indicators suggest the world is finally getting back on track after the global crisis that erupted 10 years ago, but this upbeat picture masks continuing underlying concerns
In terms of South Africa, the highest risks highlighted were the high unemployment rate which is as a result of low economic growth and political instability which leads to social instability, and from a weathers perspective, the highest ranked risk was water crisis as already seen in the Western Cape.
Spiros closed by mentioning that for the Insurance to improve risk management, there are three key things and these are data, distribution and capital.
The next speaker was Mr Patrick Bracher, a Director at Norton Rose Fulbright, whose topic was “climate change within the regulatory environment”.
Mr Bracher highlighted that there are a number of laws are due to be effective the 1st July 2018 and core being the Financial Sector Regulation Act that creates the prudential authority and the market conduct authority. Then there is also the amendment to the Insurance Act which is not yet in force however there are plans to bring into force on the 1st July 2018. And then there is the prudential standards governing the Insurance Industry. What is still outstanding is the conduct of Financial Institution Act which is the Market Conduct Act which deals with Treating Customers Fairly. The prudential laws will deal with governance and financial soundness relating to SAM requirements.
The Financial Sector Regulation Act is not force yet however the South African Reserve Bank (SARB) is the prudential authority in the meantime. Then the other laws coming our way have to deal with foreign reinsurers doing business in SA: from 1 July they will have to secure approval for same. Micro-insurance limits will require a separate license and the limits will also be amended; the relicensing process will take up to two years.
Mr Bracher closed by encouraging the industry bodies to play a bigger role in engaging with the relevant authorities.
The final speaker for the day was Professor Nick Binedell from GIBS Business School who spoke about being in period of the fastest change in human history and the challenges we face as a country and business. The challenge we face is that the rate of learning must be faster than the rate of change. Prof Binedell pointed out that SA is not a normal country as it has a complex history. He compared SA in the last ten years with a thousand piece jig saw puzzle but tragically someone has gone off with the box and therefore we can’t build a picture of where we are heading. He mentioned that the “future is history waiting to happen “and our job is to figure out what that something is and that SA future is the sum of the past unless something else happens. He is also highlighted that South Africa is at the centre of the centre of the centre of the African economy.
Prof Binedell summarised that there are three categories of things we need to focus on which are the “known knowns”, and second one is the “ known unknowns “ which are the disruption, the digital and the changing markets. The last one is the “black swans” or the “unknown unknowns “and this is an emotional and systematic preparedness to respond to the “unknown unknowns” and this is the drum beat of our times.
The session was concluded with an interactive question and answer session between the speakers and the delegates.
Mr Daniel Stevens closed the day by thanking the sponsors speakers, delegates and GIBS hosting this successful event.
The IIG would like to again thank the sponsors: Innovation Group, Marsh and Sasria SOC for making this event possible.
Article By: Letlhogonolo Tau - IIG Councilor