Resurgence, resilience and revival… climate change and inflation set to dominate Africa’s sustainable insurance debateSun City, South Africa. Credit: Shutterstock/Athol Lewis

Resurgence, resilience and revival… climate change and inflation set to dominate Africa’s sustainable insurance debate

There will be no shortage of topics for debate as delegates throng to the 2022 African Insurance Exchange (AIE 2022) conference. This will, after all, be the first time in over two years that South Africa’s flagship non-life insurance event takes place in the physical world, having, like so many others, been forced into a virtual world hiatus by the 2020-2021 Covid-19 pandemic.

Viviene Pearson, CEO at the South African Insurance Association (SAIA), said that the 24-27 July event would present opportunities for stakeholders to reflect on the industry’s challenges and trends and focus on new and innovative business ideas. As such, the two-day conference programme is packed with panel debates on the key issues facing the industry circa 2022; this format allows for the widest range of views to be shared from the conference stage.

Viviene Pearson, SAIA

Viviene Pearson, SAIA

This article sets the scene for the conference with insights shared by Pearson in her welcome note, contained in the AIE 2022 brochure. “During pandemic, the interruption of supply chains, ports and inland transportation was so severe that it significantly impacted motor repair turnaround times; the situation in South Africa was further compounded by the July 2021 riots in parts of Gauteng and KwaZulu-Natal (KZN) that cost the insurance industry more than ZAR35bn,” Pearson writes. Sadly, the country’s non-life insurance sector has since suffered another battering following the April 2022 KZN floods, which claimed more than 450 lives and caused over ZAR17bn in economic losses. It looks certain that primary insurers and their reinsurer partners will pick up a big portion of this loss.

From an Africa Ahead perspective, the most compelling panel discussion on the programme is that covering climate change, scheduled to close proceedings on Monday, 25 July. Industry experts will have the perfect backdrop for their deliberations, given the extreme high temperatures that have afflicted most of Europe over the past few weeks. Many have watched in horror as the mercury crept past 35°C (often topping 40°C) in many cities and towns in the region. The message that the panellists will seek to get across is that climate change is real; that its impact is being felt today; and that the non-life insurance sector will have to rethink its approach to risk identification, mitigation and transfer as a consequence. This debate takes place too late in the day to include coverage in today’s newsletter; but we will share the key observations made in a future instalment.

Overall, we expect two themes to emerge during the programme, both of which will impact on insurers’ long-term sustainability. The first is climate change, and we expect the role that insurers must play in helping society to achieve net zero, and the impact of the increased frequency and severity of natural catastrophes on insurers, to take centre stage. The second, is rising inflation. Inflation is a complex issue that is closely intertwined with both government and industry responses to the problems of the day. For example: today’s inflation is as much due to governments’ monetary policy interventions through pandemic; as it is to supply constraints that developed as the world normalised post-pandemic; as it is to war in Russia-Ukraine, as it is to global efforts to curtail carbon emissions, etc.

The keynote address on the relevance of insurance to the economy and the opening panel discussion on the future of insurance should contain some insurer ‘resilience and sustainability’ gems which Africa Ahead aims to report on under a separate header in today’s newsletter.

The future of insurance panel promises to consider changing consumer preferences; data ubiquity; market saturation (which is quite relevant in the South African context); intermediary remuneration; and retention, among others. Some of these ‘future of insurance’ concerns will be expanded on in subsequent panel debates on ‘the successful intermediary of tomorrow’; ‘optimising the use of data’; and ‘the future of underwriting; to name a few. The bottom line is that to survive and trade sustainably, non-life insurance brokers, insurers and reinsurers will have to go beyond resolving the big picture challenges to ensuring that their approaches to data, distribution and retention are optimal.

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Thokozile Mahlangu, IISA

We close with comment from Thokozile Mahlangu, CEO of the Insurance Institute of South Africa (IISA), from her welcome note to the AIE 2022 brochure. “Our theme this year – resurgence, resilience and revival – reflects the challenges of the past two-and-a-half years on a local and global scale… as an industry we have started viewing risk in a totally new light, which has affected every aspect of the way we do business,” she writes. It is this new way of doing insurance, under the so-called new normal, that this journalist is looking forward to unearthing over the course of the event.

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