IIG News

The Role of Insurance in a Distressed Economy

The penultimate Insights session was hosted by Bryte and everyone was warmly welcomed by IIG Deputy President Simphiwe Mtyali. A very pertinent topic as we head to the close of a particularly challenging year. South Africa is seeing an all time high in inflation as well as having to deal with catastrophic environmental and climate disasters.

The Insights attendees were treated to 3x presenters and experts in their fields, two of which were IIG Past-Presidents

Sedick Isaac

Sedick Isaacs is the Head of Business Support Services at Bryte Insurance and joined the company in June 2012, when it was still known as Zurich Insurance Company. Sedick has been in the insurance industry for 36 years. Sedick is an Associate of the IISA and CII of London. He has completed several leadership and management programmes.

Liza Morris

Liza Morris is the Bryte’s Regional Manager in Western Cape and the current President of the Insurance Institute of the Western Cape (IIWC). She is an experienced professional with more than 26 years in the insurance industry, having spent 18 years in the Claim’s arena and eight years in the Sales and Distribution space.

Juan-Pierre Holmes (JP)

JP is the National Head, responsible for the Specialist Property Line of business at Bryte Insurance. JP’s in-depth and global experience in managing construction and engineering-related insurance risks has made him a pivotal member at Bryte, leveraging his technical knowledge of the engineering environment to grow the specialist property line of business. He currently focuses on renewable energy, large and complex risks, engineering, and marine and international portfolio placements, working alongside his team to make Bryte a specialist within the industry in this field.

Sedick kicked off the session with some background into Bryte. An Insurer that is considered to be proactive risk insurance specialists and who also provide asset protection with expertise and foresight. He unpacked the topic and delved into the role of insurance in a distressed economy and what actions can be taken from an insurance perspective. Insurance upholds and underpins a country’s economy.


What is a “Distressed” economy?

This deals with the condition accepting the fiscal and economic viability of an environment. It encompasses businesses and individuals. It is made up potentially of companies and organizations whereby the economy affects a business and visa-versa. When companies are distressed due to various factors including cash flow and defaulting on payments, this then affects the economy at large. High inflation also impacts businesses greatly which have a domino effect on the economy. Some factors are however outside of the control of a company e.g., lockdown as a result of a pandemic. Revenues plummeted down to a zero level. A situation that adds to a distressed company and country. How does one plan and prepare for such emerging risks.

Sedick summarized the current state of the economy:

  • Severe disruptions over the past two years
  • COVID outbreaks and supply chain disruptions
  • KZN floods and higher energy costs
  • Increasing inflation and interest rates
  • CPI dropped to 7.6%
  • Food inflation on the rise, 11.3% since April

The effects COVID-19 will still be felt over the next couple of years as it has disrupted businesses in a big way. The unpredictable nature of climate and weather will mean we need to be prepared for future disasters. Risk mitigation and management are areas insurance can play a key role. The world as an economy is simultaneously experiencing the effects of these global disasters. A few opportunities have arisen as new businesses have opened, and others have navigated changes through the utilization of technology to create cost efficiency. Insurers play a key role in disseminating information.

Liza emphasized that mindsets should not be underestimated during difficult times. There are students currently studying at varsity for jobs that don’t exist, yet which shows a proactive mindset. There is great value in forming partnerships where each component brings their unique expertise to the table. One must be proactive to be sustainable. Liza used Takealot as an example where they’re permitting smaller businesses to use their platform as a supplier. It is not up to government, but companies need to take the responsibility upon themselves to tap into informal economies.

Partnerships for success:

  • Mutually beneficial partnerships are vital for business success
  • Partnerships are a great source in improving performance
  • Informal economies play an essential role in developing local economies

More and more unconventional collaborations and innovations are taking shape. No business is an island and it’s important to note that there’s interdependence between businesses and experts. One has to almost “peacock” in a manner that one can showcase your strengths to attract new partnerships. One also has to create and maintain sustainable growth. Even though Eskom is hugely challenging, it is driving change and adaptability amongst consumers who are forced to explore new and better ways to do business and live e.g., the rapid growth of solar energy sources in South Africa. Sustainable and inclusive growth is dynamic and essential. Economic growth is a key enabler for investments and can provide endless opportunities for societies. Another key element is finding ways to close the unemployment gap to attract more investors into the country. We need to have the mindset of creating the greater good for all to benefit.


JP in his discussion emphasized that this a very pivotal topic and we need to ask how do we add value in a changing world. He touched on the new Metaverse economy where vast amounts of money is being poured into the metaverse, an alternate world where you don’t leave your home. Will it change the way we do business?

The Metaverse is a virtual world where you create your personas, buy virtual assets, go to virtual concerts, play virtual sports and this concept is growing faster than any industry. Initially it appealed to millennials and zennials (20’s to 30’s) but the age group is expanding. However, it may not completely appeal to everyone. Economies are changing the way we plan our business through disruptive technologies. Supermarkets could end up selling an insurance policy for a day or a week.

Enhancing relevance:

  • Businesses must reconsider and try new ways to enable their businesses
  • Adding value for customers requires a proper understanding of their material needs
  • Risk managers are vital to navigating risks and staying relevant
  • It is important to stay proactive and forward looking

If we stagnate in our industry, we stand a chance to burnout, so we are faced with an acid test: am I being relevant in my space? Young people are looking into designing their own insurance cover. Covid-19 exponentially brought to the surface the innovators and forward thinkers who will challenge the status quo. People are focusing on every rand. Environmental and social governance begs the question of do we insure the people who are contributing to fossil fuel emissions? By 2030 companies will stop supporting reinsurance programs that support oil and gas and within 4yrs we will pay vast amounts just to keep petrol and diesel vehicles running. The world focus is changing even if Africa is not onboard any time soon. In 5yrs major areas are going solar to get off the Eskom grid. We must broaden our horizons and align ourselves to a new technology and avoid being blindsided.


Reinsurers are estimating that if they want to return to profitability in South Africa, they need 10yrs of rate increases of 35-45%. Insurer costs and expenses will go down to the end-user. We need to engage our stakeholders and enhance our appreciation for effective risk management. During the Cape Town fires, there was a global system that could identify hotspots and send pro-recovery teams. We invest in condition-monitoring systems. How do we actively address the risk on our own because sadly we cannot wait for the government or Eskom. The new generation of staff wants to be flexible, and we need to adopt our business models around that. Brokers & Insurers need to change the way they now advise clients


Creating agility

  • Businesses cannot operate in silos
  • Brokers sit in a special position, of creating awareness and influencing risk ready mindset.


How to moderate effects of exposures: definitely through partnership. As soon as we stop building silos in industry, we can counter the rising global changes. Prudent risk management can be simple but requires a collective effort. JP relayed the story of a little girl that throws stranded starfish back into the ocean one at a time, and the lesson is not about saving everyone, but making a difference to one life at a time.


Sedick closed off session and Liza oversaw the Q&A


Simphiwe concluded by thanking our sponsor and reiterating that the only constant is change.


Article written by: Asiya Swaleh