Insurers critical in reviving SA’s economy

Online since 31.08.2016 • Filed under Industry news • From Issue 4 - September 2016 - February 2017 page(s) 35
Insurers critical in reviving SA’s economy

The South African insurance sector needs a thriving economy in which to grow. Insurers need to work with government and business to revitalise our economy while ensuring that projects and organisational risks are adequately protected to provide a much-needed safety net.

According to Global Corporate & Specialty (AGCS) Africa CEO and President of the Insurance Institute of South Africa (IISA), Delphine Maïdou: ‘Insurance companies operating in South Africa have a critical role to play in protecting the current and future publicprivate projects aimed at reviving the South African economy.’ She said this while addressing insurance professionals about what the industry needs to do to strengthen its role in understanding plans aimed at stimulating the country’s economy, so they can underwrite the risks adequately.

Government’s increasing focus on investment in infrastructure, energy, transport and logistics, water and sanitation, land and agriculture, and telecommunications, to name a few, needs the insurance sector to know and understand the risks associated with each of the projects to ensure the effective management, control and reduction of risks – wherever and whenever these occur. ‘We believe that a collaborative approach – harnessing the combined inputs of all parties – offers the best response to risk challenges, and that the majority of losses can be avoided through diligent risk management and sound insurance solutions. Insurance companies operating in South Africa are well capitalised to support the economic and infrastructure development the country sorely needs. However, they must to be brought on board early by both government and businesses, and be relied upon to provide trusted risk management guidance and insurance coverage,’ she adds. ‘The South African economy is going through trying times and the country cannot afford below par risk management and insurance on major projects. Transparency and openness in this area is part and parcel of restoring investor confidence in our economy.’ A below investment grade sovereign rating must be avoided as it will significantly affect the insurance industry. The sovereign rating of South Africa affects the rating of insurance companies and this means that local insurers may not be able to place complex local or external insurance risks, such as engineering projects, if they have a sub-investment grade. ‘As it is, insurers in South Africa are already feeling the effect of a downgraded sovereign rating as global businesses and financiers often insist on an A+ rating. At times they do not even consider parental guarantees for international companies operating in South Africa, which results in local entities losing out to companies operating outside of the country,’ Maïdou concludes.

Issue 4 - September 2016 - February 2017

Issue 4 - September 2016 - February 2017

This article was featured on page 35 of SABI Magazine Issue 4 - September 2016 - February 2017 .

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