Given the vast amount of change in the financial advice industry over the years, a recent NMG survey advisers asked advisers to rank what trends they are most worried about when it comes to their business. The primary worry for advisers (when viewed from an internal perspective) was technology, followed closely by clients, and then succession planning. I had the privilege to unpack these concerns with Jaco van Tonder from Ninety One and Georgina Smith from INN8 Investment Platform, at the recent Morningstar Investment Conference. Source: Morningstar
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On 1 November 2023, Finance Minister Enoch Godongwana delivered the medium-term budget policy statement (MTBPS), providing an update on South Africa’s finances and in particular its progress towards the goals set out at the beginning of the year. All eyes were on Minister Godongwana as he relayed the progress of National Treasury’s budget in the face of a particularly weak local and global environment coupled with weaker commodity prices, which weighed on the budget. The impact of weaker commodity prices on revenue collections and expenditure overruns were the key concerns heading into the MTBPS. Source: Morningstar
Sometimes I find it incredibly difficult to make sense of this crooked world we live in, and I often hear how perplexed investors are as well. The economy feels a little upside down, every headline seems to have a negative tone, markets are selling off, sentiment is low and there is never a dull moment when it comes to politics. It’s hard to try and make sense of it all, and how this utterly confusing world is impacting your investments and life savings today. I want to challenge you today to invert the status quo, and instead of worrying about everything that you don’t know – refocus and remind yourself of things that you do know. I find great joy in reading nuggets of wisdom from some of the greatest investment minds of our time including Howard Marks, Warren Buffett and Morgan Housel and now is a great opportunity to resurface some of those basic investment principles and remind ourselves that regardless of market cycles these principles remain true. Source: Morningstar
For our investors investing in Morningstar Managed Portfolios, click below to access the latest performance snapshot, market commentary and market performance summary:
Morningstar SA Managed Portfolios Morningstar Global Managed Portfolios (USD) Market Commentary - SA and Global Market Performance Summary - SA and Global “Even in this tough economic climate, brokers cannot focus on price alone and must add value to clients through strong risk management capabilities.” This is one of the key findings of Santam’s 2023 Insurance Barometer released yesterday. The third edition of the biennial report offers deep insights into the evolving risk trends impacting South Africa. It surveyed more than 900 consumers, businesses, and brokers from across the country. The findings were combined with Santam’s own claims data. Focusing on the changing role of the broker, the study said the competition between direct channels and brokers will continue. “Brokers add significant value in both the commercial and personal lines insurance space, but they cannot lose sight of why clients choose to transact through a broker, and how they deliver against those reasons,” the study read. The top trends in the changing role of the modern insurance broker include:
Reduced income for brokers The findings of the study show that the challenging economy resulted in reduced income and increased costs for many brokers. Nearly 40% of brokers made changes to the insurers they recommend based on premium increases, while two-thirds of broker respondents reported an increase in volume and value of claims in the past year. Brokers also noted a change in client behaviour because of the increased cost of living:
Momentous shift The study tracks emerging risk trends in the country. According to Andrew Coutts, the chief executive of Santam Broker Solutions, the South African short-term insurance industry is facing a momentous shift in the risk landscape. “Climate change, infrastructure concerns and socio-economic challenges have created a tough environment for local insurers who bear the responsibility of ensuring their balance sheets can sustainably withstand the cost of the risks dominating the environment they operate in; while also protecting the financial well-being of clients, and the safety of communities,” he said. The survey found that 80% of corporate and commercial entities have been negatively impacted by emerging risks in the past three years. The challenging economy (66%, up from 62% in 2021) remains the key concern for business respondents, but other emerging risks are becoming more of a concern. Political unrest (59%, up from 48% in 2021), cybercrime (48%, up from 36%), and climate change (47%, up from 35% in 2021) have become increasing threats over the past two years. The top 10 traditional risks identified by corporate and commercial businesses include:
Power down The impact of South Africa’s deteriorating infrastructure, particularly that of Eskom, and the socio-economic challenges because of the constrained economy and high inflation were visible in Santam’s claims statistics. Economic challenges also manifested in higher volumes of crime-related claims. “Two standout claims trends developed in both the personal and commercial lines categories over the past two years that required corrective actions. The most notable being an exponential escalation of power surge claims related to loadshedding, followed by high-value vehicle hijacking and theft,” Coutts said. He added that Santam has experienced an exponential jump in the volume and value of power surge-related claims across personal and commercial lines of business for two consecutive years, in 2021 and 2022. The combined claims volume was up by 39% in 2022 (37% in 2021) and the value of claims paid across both lines soared to 48% in 2022 (after an astonishing 53% in 2021). On the motor side, high-value-vehicle hijacking, and theft claims increased by 128% year-on-year in 2022, breaking a long-term declining trend. Fortunately, the risk mitigation efforts in the form of tracking devices proved effective and resulted in full-loss incidents declining by 80% in the first half of 2023. “Insurance makes individuals, businesses, and populations more resilient. Insurers that take the lead in democratising insurance – by providing affordable, appropriate solutions to the low- and mid-income markets, the youth, and small and medium-sized enterprises – will help drive financial inclusion through greater insurance uptake, building a resilient, sustainable future for our industry, our communities, and our economy,” Coutts said. Source: Moonstone Information Refinery |
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