Collaboration is necessary if South Africa and Sub-Saharan Africa are to discover any new products within the insurance industry, paving their own way without a copy and paste mentality.
This was the message of Themba Baloyi, founder and executive director of Discovery Insure, at a recent breakfast networking dialogue. The breakfast, hosted by the Insurance Institute of South Africa (IISA) in partnership with the World Bank Group, Multilateral Investment Guarantee Agency (MIGA), the South African Insurance Association (SAIA) and the Insurance Institute of Gauteng (IIG), was held at the GIBS Business School in Illovo on Friday morning. The breakfast was entitled: The role of the insurance sector in unlocking growth and boosting shared prosperity in South Africa and Sub-Saharan Africa.
Baloyi said a new way of thinking through collaboration was necessary in order to impact society in a positive and sustainable way.
"The South African insurance story is being told by outsiders," he said. "We need to tell our own stories."
Baloyi said this was evident in the insurance products being sold to the population, and society's response to them.
"About 65% of the cars on our roads are uninsured. Compare that figure to the UK, where only 4% of motor vehicles uninsured, and you will gain a bit of perspective. Even India, at 55%, has a lower number than we do.
"And it gets even worse when you consider building and structural insurance cover," Baloyi said.
He also lamented the reach of health insurance, which is only accessible to a fraction of the country's population. When comparing to the countries that are "writing our stories" Baloyi said in the United States of America 6% of GDP was spent on insurance, in the United Kingdom 5.8% was spent while in Africa 2.8% was spent. South Africans spend 5.1% of GDP in insurance.
"I cannot get excited about those numbers," he said. "When you break them down and look at the kind of products that are referred to, it's mostly products such as funeral cover. Yes, funeral cover will respond to an event, but it doesn't leave a legacy. When we consider how the insurance industry needs to change to fuel and encourage inclusivity and economic growth, what is our role? Do we fully understand the essence of what we've been called to do? Or is it just a job?" he challenged policy makers and industry leaders in attendance. "Regulators need to identify the key levers that we need to be pulling – collectively – to increase insurance coverage."
Baloyi said part of the solution required being compassionate towards society in the process of building and distributing products.
"There has to be a purpose to insurance over and above profitability, and for that process to have any impact companies cannot operate in silos."
In her address at the breakfast, Vuyelwa Vumendlini, deputy director general responsible for international and regional economic policy at National Treasury, said public-private partnerships were necessary to resolve the current economic impasses of poverty, inequality and unemployment. She said South Africa had been a shareholder of the World Bank since its inception and therefore had an influential position regarding the bank's lending globally. Talking specifically to the country's needs, she said foreign direct investment was necessary if the economy was to grow.
"Our priority is growing the economy faster and in a more inclusive way by creating more business and work opportunities for historically excluded sectors of the population," she said. "This means South Africa needs much higher levels of investment – somewhere in the region of 30% of GDP – to achieve this. Currently it is less than 20%."
Vumindlela said for things to turn around, investor confidence had to improve, which would require policy certainty and stability. These issues, she added, were currently being addressed.
"The country is on the mend," she said. "There is hope, but time is not on our side. We need to move with speed. It is our belief that when South Africa grows it will lift the growth prospects of this great continent of ours. It propels the rise of Africa and her people," said Vumindlela.
Representing the World Bank was Keiko Honda, MIGA's executive vice president and CEO. She shared MIGA's successes and strategy, and reiterated its commitment to significantly increasing support for investment in the majority of economies in Sub-Saharan Africa.
