He further stated that the short term insurance industry is the grease which ensures that the economy functions successfully.
(READ MORE: Short-term insurance is well capitalised – SAIA)
“It enables businesses to manage their risks and to focus on what they do best. Through transferring risk to an insurer’s balance sheet, a firm can mitigate the negative impact of insurable adverse circumstances,” Samie said.
“The current business environment of low domestic economic growth and rising costs, with relatively pedestrian global growth, poses certain challenges for the short-term insurance industry and we can expect a few difficult years ahead for the sector.”
According to Samie, insurers will also need to adapt to and embrace the new regulatory environment.
This is in light of the new Treating Customers Fairly (TFC) the Solvency Assessment and Management (SAM) guidelines.
“TCF, as the name implies, is policy aimed at ensuring that all players in the industry treat their customers fairly. Fairness needs to be at the centre of a firm’s culture and we need to market products in such a way that they are easily understood and appropriate for clients’ needs,” he indicated.
“The SAM regime is not unlike the Basel II banking regulations. This regime aims to ensure that all insurers will be able to meet the claims made on them and to protect policyholders from a failure of the insurance company.”
Samie added that the SAM regime has been designed to improve confidence and stability in the insurance industry as well.
“We certainly applaud these moves to improve customer experience and the long-term viability of the insurance industry, but they will add to cost pressures for the sector and insurance companies will need to adapt accordingly,” he stated.
While the challenges in the industry are well-noted, Samie stated that there are still definitely opportunities to develop in under-serviced market segments.
“There is great scope for the industry to up its game in the servicing of clients, to create more efficiency in the claims chain and to introduce innovation in procurement strategies,” he said.
“I believe that technology will be instrumental in helping us achieve this – our IT needs to be constantly evaluated.”
(READ MORE: Technology drives down insurance fraud)
Africa seems to be another great opportunity for insurers due to the rise of a new middle class on the continent.
“We expect the financial service industry to benefit from the consumer growth, especially as those consumers move to greater product sophistication. I believe that insurers which look north and find ways to expand into Africa, will be able to take advantage of a great growth opportunity,” Samie said.
“To thrive in 2015, as insurers we will need to place customers at the centre of our business. We need to review our products, policies and processes to ensure that they are relevant to customers’ needs and that they can deliver on the promises that we make through them.”