Insurers critical in reviving SA economy
Insurance companies operating in South Africa have a critical role to play in protecting the current and future public-private projects aimed at reviving the South African economy. This is according to Allianz Global Corporate & Specialty (AGCS) Africa CEO and President of the Insurance Institute of South Africa (IISA) Delphine Maïdou.
She said this while addressing insurance professionals on what the industry needs to do to strengthen its role in understanding plans aimed at stimulating the country’s economy, so they can underwrite the risks adequately. Maidou was a key note speaker at the inaugural launch of IISA’s iToo Premium Learning Centre at their offices in Hyde Park on May 5.
Government’s increasing focus on investment in infrastructure, energy, transport and logistics, water and sanitation, land and agriculture, and telecommunication to name a few needs the insurance sector to know and understand the risks associated with each of the projects to ensure the effective management, control and reduction of risks – wherever and whenever these occur.
“We believe that a collaborative approach – harnessing the combined inputs of all parties – offers the best response to risk challenges, and that the majority of losses can be avoided through diligent risk management and sound insurance solutions. Insurance companies operating in South Africa are well capitalized to support the economic and infrastructure development the country sorely needs but they must to be brought on board early by both government and business and be relied upon to provide trusted risk management guidance and insurance coverage,” she said.
The South African economy is going through trying times at present and the country cannot afford below par risk management and insurance on major projects. Transparency and openness in this area is part and parcel of restoring investor confidence in our economy.
A below investment grade sovereign rating must be avoided as it will affect the insurance industry significantly. The sovereign rating of South Africa affects the rating of insurance companies and this means that local insurers may not be able to place complex local or external insurance risks such as engineering projects if they have a sub investment grade.
“As it is insurers in South Africa are already feeling the effect of a downgraded sovereign rating as global businesses and financiers often insist on an A+ rating. At times they do not even consider parental guarantees for international companies operating in South Africa, which results in local entities losing to companies operating outside of the country,” she says.
The South African insurance sector needs a thriving economy in which it can continue to grow. Insurers need to work together with government and business to revitalize our economy while ensuring that projects and organizational risks are adequately protected to provide a safety net which is greatly needed at this time.
