Opportunities and Challenges for The Insurance Sector 2022

Despite lingering concerns about the impact of Covid-19 variants, the GIB Group is positive about growth prospects for the industry in 2022. The expected accelerating global economic recovery will encourage the demand for insurance. With more people likely to return to their workplaces, business recovery is expected to improve, and the accelerated business activity should positively impact the need for clients to access professional advice around the optimum structures for their business as well as personal insurance. In addition, the increased demand for protection against emerging risks such as cyber insurance and kidnap and ransom, amongst others, will continue - combined with a hardening of the insurance market and the resultant premium increases.

SUPPLY CHAIN

Yet the optimism must be measured against opportunities and challenges. The unpredictability of global supply chains will continue to disrupt the flow of goods around the world, not only presenting operational challenges for businesses at large, but also increasing supply chain cost of risk for insurance carriers and insurance buyers alike. Whilst this is not unique to our region, the supply chain challenges being experienced at South African ports are well documented and are impacting numerous sectors across the country. The necessity for a holistic risk management plan including all the risks that arise from these challenges will become very important for clients.

CLIMATE

With financial losses from climate risks continuing to escalate, heightened attention from sustainability advocates can be expected to continue. Regulators and government departments are likely to increase their focus on climate related insurance risks. Wide of the focus on climate risks, the industry at large is expected to increase efforts to tackle pressing environmental, social and governance (ESG) concerns, a factor that has recently cemented itself into risk analysis in the insurance sector. As the world recognises the increasingly interconnected and complex environmental, social and governance challenges, the insurance sector is bound to adapt and attempt to address and manage these challenges, both in respect of premium levels offered as well as coverage.

CONSOLIDATION

M&A activity in the insurance industry is expected to increase as brokers and insurers seek scale and growth. The Africa region is expected to come back onto the radar as an investment frontier as local and international players seek growth outside of their home markets post Covid. Deals are likely to be strategic, spurred by capital from private equity firms and national and multinational broad-based financial services players. Further consolidation is expected to take place in the mid-tier insurance broking space with continued investment from brokers and insurers in the InsurTech space to accelerate technology transformation and acquiring talent.

TALENT

This points to the significant challenges and opportunities of the critical requirement of attracting and retaining the right talent for the insurance industry in 2022. Digitisation will drive demand for new technology and analytical skills in the industry. The development of non-conventional product solutions for emerging and specialty risks will increase competition for talent. Climate change, cryptocurrency and the cyber risk arena present opportunities for innovation and non-conventional insurance solutions, but with a key dependency on specialist skills, e.g empirical statistical analysis and the use of data to inform insurance portfolio optimisation.

We believe that a multi-pronged approach will be required to attract the right talent, which is likely to lead to greater focus on upskilling, flexible work arrangements, the return of skilled and experienced retired personnel to the workplace and increased utilization of contract workers.

We envisage this year to be the start of a return to normality and there is hope that Omicron has brought the world closer to the endemic stage of the virus. Several high-impact business trends are shaping and reshaping the insurance industry. The risk landscape is changing - yet the last two years have shown that the combined imperatives of agility, market knowledge and the ability to stand by customers and serve their needs has firmly cemented the absolute relevance of the insurance broker and risk management advisor in the insurance sector.

Jurie Erwee, CEO GIB Group