BUSINESS: Survey Reveals Brokers Confident
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More than two thirds of South Africa’s insurance brokers polled in a recent survey by CIB Insurance Solutions (CIB) say they are confident of expanding their business in 2010. 69% of the 88 respondents in the quarterly CIB Broker Confidence Index Survey say that they are either confident or very confident of attaining new clients in 2010.
According to JonJon Smit, Director of Sales at CIB, the results indicate that despite the tough economic conditions over the last eighteen months, intermediaries are confident that there are opportunities out there to grow their client base.
The CIB Broker Confidence Index survey also reveals that 76% of respondents are either confident or very confident of retaining their existing clients over the next year. Only 5% say they are not confident of keeping their clients. This could be attributed to a perceived threat from the ‘discount’ type of players (as can be seen in the figures below) that attract clients based solely on price rather than overall value.
Smit says this is not surprising as most brokers have established very strong relationships with their clients. “However, these high confidence levels are also an indication that intermediaries do not expect most policyholders to cancel their insurance policies.”
He advises anyone who is finding it difficult to maintain their current financial commitments to contact their broker to discuss their options. “There are various ways of tailoring cover so that the important elements are still in place should a catastrophe occur.”
While the outlook for their own businesses remains sound, respondents were less optimistic for the wider local insurance industry with only 49% expressing confidence in the industry over the next year and 36% remaining undecided.
For the economy as a whole the situation was even dimmer with only 33% expressing any confidence in their outlook for the South African economy over the next year and 58% remaining undecided in their outlook.
According to the survey, brokers see direct insurers as a major threat. 35% of respondents said direct insurers were likely to pose the biggest challenge to their business over the next year. 26% cited the economy and 24% said complying with new legislation and regulations would be the biggest obstacle. Only 15% cited skills shortage as a reason.
Smit says brokers will seek to combat the effect of direct insurers by looking to provide additional value to their clients in 2010. “The short term market for personal insurance is an ever churning market, with clients constantly shopping around for the best deal at the best premium. However, what a broker provides is personalised service and advice, which direct insurers cannot match.”
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