During his opening remarks at the recent inaugural FSCA Industry Conference 2024, which followed a theme of “Inspiring Trust”, Unathi Kamlana, the FSCA Commissioner, remarked that insurance is still seen as a “grudge purchase”.
As industry professionals, we really need to spend some time thinking about this statement.
As we all know, South Africa is facing a huge debt crisis; our economic growth continues to be stifled and consumers are, in turn, feeling the pinch. The latest TransUnion South Africa Industry Insights Report revealed a 34.7% year-over-year increase in retail revolving accounts – South Africans are turning to credit cards to make ends meet. As consumers continue to experience a reduction in their purchasing power and an increased strain to service debt, the question each household asks is, “Where can we save?”
Perhaps insurance is seen as a grudge purchase. A purchase which is not fun. A purchase which does not produce that surge in dopamine we experience from the instant gratification of online shopping.
But we well know the risks we face every day. On average, there is approximately one car accident every ten minutes in South Africa. StatsSA report that just under 1 million households experienced housebreaking incidences in the 2021/22 period – and those are only the reported incidence. The average funeral cost can range from anything between R3,000 to upward of R75,000.
When one considers these numbers, the risk of not having sufficient insurance coverage, especially for the financially vulnerable, is an unimaginable risk. If insurance continues to be seen as a “grudge purchase” then the goal must be to change this perception.
In pondering this, one can reflect, once again, on the opening address by the FSCA Commissioner, Unathi Kamlana, at the recent FSCA Industry Conference 2024 and his call for leaders in organisations to champion trustworthy behaviour. We must operate ethically with a focus on good governance practices. When we, as a collective industry operate in this manner, we send a clear message that we, the insurance industry, are trustworthy. This underlying behaviour will inspire confidence and surely change the perception of the purchase of instruments of insurance. Coupled with the assurance that when a legitimate claim is submitted, it is honoured by Insurers, thus giving clients peace of mind and confidence that while the monthly premium does not produce a physical and tangible ‘product in your hand’, you know that you are covered in the event of unforeseen circumstances.
It is probably the most vulnerable amongst us who have the greatest need for insurance as the risk of loss has the potential to lead to financial ruin.
The assurance of protection must be the goal.
Article Written by Linroy Peters | Charter Risk Underwriting Managers
