Wayne Abraham, AIG Africa Region CEO
After all that has happened this year, it is a brave person who would make predictions for 2021, beyond hoping for better circumstances.
CEO AIG Africa Region
The big and unprecedented story so far is undoubtedly COVID, which has had massive structural impacts across the entire insurance industry – employees, brokers, business partners, clients – and many of these impacts will last long after any resolution to the ongoing pandemic.
It is inevitable that the disruption to the economy and business as usual has meant additional pressure on consumers and certainly small to medium businesses. While insurance is generally considered an essential service in a modern society, the reality remains that, consumers will look to save money. This has had a ripple impact on insurers, driving retention rates lower and increasing lapse ratios.
While the changes forced upon everyone were sudden and drastic, AIG had already established and tested the technical infrastructure needed to be able to work from home, in fact, we closed our offices before it was mandated to do so, with employee safety a primary concern. It helps that in terms of technology, our people – and arguably, most people in the insurance industry more broadly speaking – are well set up for this structure.
The insurance industry is a people business, but we have learned it doesn’t have to be face-to-face especially thanks to the communication tools we enjoy today. This means customers shouldn’t experience any reduction in service delivery into the future, though a more balanced approach which features less travel, and in-person engagements is likely.
In this changed risk landscape insurers, brokers and our clients must ensure there is a clear understanding of what is covered in any policy. While we don’t know what the next event will be, COVID has shown the impossible can’t be ruled out – but at the same time, creating any new products that cater for ‘COVID-scale’ events will be more complex as ensuring a product is correctly priced requires enormous amounts of data.
Despite promising news around a vaccine, the pandemic is far from over, so continued challenges are likely into the new year. Growth will be hard to come by, although there is undoubtedly opportunity in volatile markets. Rates are hardening in the commercial space, and those (like AIG) offering commercial insurance have a good opportunity to grow with improving profitability. Some insurers have withdrawn from specific areas of the market, which in turn creates additional scope for growth.
From AIG’s perspective, we will continue our focus on partnering with brokers and clients to plot the way forward, which is likely to include looking beyond South Africa to Southern Africa with a specific focus on the commercial space and if 2020 has left everyone with one lasting realisation, it is that the technology we already relied upon has proven indispensable in times of crisis. Expect more digitisation, more simplification and more granular insurance offerings into the future as technology is further harnessed to create better solutions for the market.
2020 has also shown that we are resilient as a company, an industry, and a society. We’ve made it through the most unusual of years in recent memory, so it’s fair to think we can hope for better in 2021
