The IIG Insights session – focused on Succession Planning – was opened by Mr. Bukhosi Khumalo (AIRMSA, FIISA) President of the Insurance Institute of Gauteng (IIG) for 2024. Along with welcoming attendees, Bukhosi also introduced the speaker for the session, Mr. Rogerio Cabanita, CEO and Succession Planning consultant at Perpetuity.
Mr. Rogerio Cabanita is a qualified actuary, CFA charter holder and qualified CFP with 17 years of consulting experience.
The speaker began the session by impressing upon the audience that succession planning is not just a compliance issue and tick-box item but is crucial to the long term and continued success of a business.
The speaker proceeded to highlight the risk the insurance industry faces in respect of an aging broker-force which could result in a lack of knowledge in respect of the provision of sound and ethical advise. This risk not only impacts clients but their families and businesses too. It also has the potential to leave employees at risk in respect of job security. The speaker acknowledged that the industry faces many compliance and regulatory requirements which could leave brokerage owners looking at succession planning as yet another compliance issue. However, failure to adequately plan for succession can result in loss of business value; and reduced business growth as clients fear the loss of the key-man. In the unforeseen instance of the loss of the key-man, the business could be forced into a rushed and messy transition to new management. This too could result in employee loss as staff fear job security.
The speaker proceeded to present 3 types of Business Continuity/ Succession Plans which addresses the above-mentioned potential risks/problems. The first, a verbal agreement between industry colleagues. The second option would be to draft a simplistic contract. The last option would be an internal succession plan which could be agreed upon between the owner and whomever is deemed to be the successor.
The speaker stressed that drafting an effective succession plan was a simple way to ensure continuity of the business. For clients, their needs are preserved; they are assured of getting the best advice; and they feel confident that there will not be any gaps in cover when business transitions to new management. For the business and employees, there is business continuity; the value of the business grows; and the business owner is able to preserve the integrity, confidence and reputation that has been established. Lastly, the benefits of a succession plan to Brokerage Owner is the peace of mind it affords clients and employees; it assists with the owner’s retirement plan; it ensures that the owner extracts value out of his/her life-long work; it can be a means to assist the owner’s family financially; the owner can access estate planning (tax efficiencies); and it gives the owner control of transition terms.
The speaker concluded his speech by once again highlighting the importance of succession plans and impressed upon the audience that the drafting of a succession plan is simple to do with the help and guidance of a knowledgeable person or company who specialises in this.
The session was closed out by Bukhosi Khumalo who once again thanked the sponsor, Perpetuity and Mr. Rogerio Cabanita.
Article Written by Linroy Peters | IIG Head of Education
