TweetSharePinShare0 SharesGary Jack, president of Chubb Insurance South Africa, believes that some of 2019’s key insurance-market challenges are likely to be repeated this year “The economic pressures seem unlikely to abate any time soon,” he adds, “making it more challenging for businesses to manage their inherent risks.” South Africa’s growth expectations for 2020 have been cut from 1,5 percent to 0,9 percent by the World Bank. The institution cites policy uncertainty, fiscal pressures, business confidence and the electricity supply as crucial concerns. “The country also continues to face high levels of household debt and credit extension defaults,” says Jack. He adds that South Africa is currently facing the highest unemployment rate since 2008, at 29,1 percent. “This is especially severe among young people at 58,2 percent,” Jack points out. “From an insurance and risk management perspective, business leaders and risk managers will need to find new ways of dealing with the complexities of South Africa’s rapidly evolving socio-economic environment,” he urges. “However, we should not be lulled into believing that these challenges are only localised, or that they are insurmountable: there are still real opportunities for companies that anticipate these hurdles and build resilience to overcome them,” he adds. Large and complex insurance placements are becoming more challenging “Insurers are calling for more stringent risk management interventions and applying stricter underwriting principles,” Jack highlights. “Businesses in challenged risk classes should, in general, expect to pay more for cover, with capacity becoming increasingly difficult to source.” He adds that the placement process may take longer and be more challenging than it was in the past. “There will be increased difficulty sourcing adequate well-priced capacity without focus and investment on sound risk management,” he notes. Weather catastrophes are increasing in frequency and severity “The past few years have made it clear that South Africa is not exempt from catastrophic events, and changing weather patterns are a reality,” Jack points out. “The frequency and severity of drought, flooding, storms and wildfires have resulted in South Africa no longer being viewed as a low catastrophe region.” He adds that climate change will continue to challenge businesses. “The need for pre-emptive risk management to mitigate risks to property, supply chains and business continuity is crucial.” Intangible and emerging risks escalate “Risk managers need to look further into the future for new emerging and intangible risks that are evolving and impacting the probability and severity of existing risks,” Jack warns. “Chubb’s risk surveys, undertaken with executives across the continent, show that the top-three risks that are of concern to risk managers are technology, political and trade-credit risk and terrorism.” He adds that the speed of digital advancement and the reliance on technology makes cyber risk particularly challenging for businesses. “This will continue to dominate the risk management agenda.” Enterprise Risk Management (ERM) “ERM is crucial as businesses face more complex and inter-related risks, emerging faster than ever before,” notes Jack. “Clients will be relying heavily on insurance brokers with focused advisory expertise, which provides holistic risk advice and solutions across the enterprise – helping them to analyse risk and pinpoint solutions for their complex needs, protecting both their bottom lines and their reputations.” He concludes: “There are many factors at play that are fundamentally changing the risk landscape in which we operate – creating challenges and opportunities. In preparing for some of the risk challenges 2020 will bring, it is vital that insurance buyers, risk management specialists, brokers and insurers work closely together to understand, manage and transfer these complex and interconnected risks.” Print Related Leave a Reply Cancel Reply Your email address will not be published.CommentName* Email* Website Notify me of follow-up comments by email. Notify me of new posts by email.