Minister of Police Mr. Bheki Cele
Assupol Board Chairperson Mr. Andrew Birrel
Group CEO Mr. Riaan Van Dyk
Assupol Life CEO Ms. Bridget Mokwena- Halala
Assupol Board Members
Programme Director; it gives me great pleasure and immense pride to be standing here tonight, and addressing you on this auspicious occasion namely the Assopul Top Awards (ATA) 2018.
We congratulate all the winners tonight. Just remember that, “we are what we repeatedly do. Therefore, “excellence is not an act but a habit,” that you must continuously inculcate in yourself every single day.
As a wise man once said, “Excellence is not a skill, it’s an attitude.” As a company Assupol must never tire in inculcating this attitude of excellence in its workforce across the value chain of insurance. Long-term insurers are a pride and joy of this industry and our country. It is recorded that this industry has more than four times the required amount of assets/reserves – making them especially secure investments.
Before, I proceed, Programme Director; I must say we are thrilled that Assupol has responded to the call by the President to invest in dignified sanitation for our learners. It’s with gratitude that I announce today that Assupol has agreed to invest in building 100 ablution facilities in selected primary schools across the country. As we know this announcement comes hot on the heels of the President’s undertakings that some 1 100 projects will be completed in this current financial year as part of the Sanitation Appropriate for Education (SAFE) initiative.
We also acknowledge other CSI work you do for the less privileged in our society. Just last week, you donated money to bury one of our teachers that was killed by a learner in Zeerust. We also know that you assisted in burying the children that were killed by fire in Alexander, and finally you buried a schoolgirl who was murdered in the East Rand few months ago. NgesiZulu, sithi, Izandla zidlula ikhanda! Do unto others as you would have them do unto you!
Programme Director; as a country, we expect and deserve the unrelenting pursuit of excellence in all aspect of our financial sector. We expect this excellence because this industry plays a fundamental role in supporting a sustainable economy, by protecting both our Government and our people from uncertainty and losses. Peter Dempsey, deputy CEO of the Association for Savings and Investment South Africa (ASISA), is quoted as saying, “the financial stability of the country’s long-term insurance industry is of critical importance, considering that the provision of risk cover to consumers is its core business.” He adds that, “the life industry is also recognised as the custodian of a significant portion of the country’s long-term savings pool.”
Hence, I believe that the old adage that insurance is grudge purchase must be thrown out of the window.
In a modern economy, insurance is a key ingredient of a proper financial planning for households and Government. Therefore, It’s no brainer that if we were to improve access to insurance, thus we can contribute to the country’s growth strategy. The financial services sector is one of the largest contributors to GDP.
Programme Director; the good news is this industry is poised for growth. Many South Africans remain underinsured or without any form of risk cover. Whereas, a large proportion of the population, continues to be excluded from access to formal insurance products, and services. According to the Finscope 2015 survey, only 18.5m are approximately insured, only 6.6m have non-funeral insurance and 5.5m have two or more funeral products. There are 11m cars on South African roads and only 30%-35% are insured. Household insurance is mainly sold to upper LSMs. We need disruptors to turn this around. I see no reason why Assupol can’t lead the revolution in this space. Another survey by the FinMark Trust (2016) revealed that only 22% of adult South Africans had an insurance policy outside funeral cover.
Even scarier is that South Africans are woefully underprepared for retirements.
A recent Global Investor Study found that South Africans were under-saving by six percentage points, when looking at what they expected to get out of retirement savings, versus what they were putting away.
The study showed that the percentage of their monthly salary South Africans think they should put away to have a ‘comfortable’ retirement is close to 20% – however, saving trends indicate that they are only putting away 13%.
There is also a gap between what non-retired people believe should be put into investments (10%) compared to what retired people have actually allocated (27%). South African retirees are receiving a much lower proportion of their final salary in retirement (59% on average) than people approaching retirement think they will need to live comfortably in their golden years (80% on average).
Programme Director; this isn’t an encouraging picture. We need all South Africans to have access to insurance and savings so that they will be able to protect themselves from unforeseen events. This is especially important for low-income households, where the effects of job losses can push them further into a poverty trap. As we know insurance cushions the loss and can prevent them from sinking further into a poverty trap.
Programme Director; it will be remiss of me if I don’t decry the lack of transformation in the financial sector in general, and insurance industry in particular. We need to create diverse, and a skilled workforce, which reflect the demographics of our country. Thus, transformation should be at ‘the heart’ of the South African company as a tool to reduce inequality. As we know South Africa has one of the most unequal societies in the world.
Fore-instance a 2015 National Treasury Report noted that the pace of transformation in the insurance industry has been slow, and not reflective of the realities of South Africa. The Report further observed that there were few black executives, and even fewer female executives. Today, I call upon Assupol to assume the mantle of a leader in the transformation of the insurance industry. We need more teams with diverse backgrounds and skills sets that must be built as this makes for innovative business. I insist that Assupol must to join hands with Government to create opportunities to train and skill young people to enter formal employment in this crucial industry.
Equally important is for Assupol to drive consumer education on insurance products and their relevance in the bigger scheme of things. I am opening up the Department of Basic Education for this type of consumer education.
Don’t sell products but educate. Only educated people buy products that fit in with their overall financial planning goals. You’re also called upon to rethink insurance products so that the poor can also be included.
Programme Director; I am harping on the importance of accelerated transformation because the insurance sector is an important pillar of our financial sector of South Africa. According to the 2017 Long-Term Insurance Industry Statistics (on 14 March 2018) by the Association for Savings and Investment South Africa (ASISA) show that despite the healthy increase in benefit payments, South African life insurers remained strongly capitalized. South African life insurers injected R469 billion into the economy last year through benefit payments to policyholders and beneficiaries. Total benefit payments increased by an inflation beating 10% from 2016. The significance of the R469 billion in benefit payments for 2017 becomes evident when compared to the R528.4 billion in social grants committed by Government over the next three years.
Of the total benefit payments to policyholders in 2017, more than R60 billion was paid to individuals who had experienced either death or disability in their family circle. This marks an increase of almost R5 billion from 2016.
The life insurance industry alone held assets of R2.84 trillion at the end of 2017, an increase of 6% from the R2.67 trillion held at the end of 2016.
As Government, we are committed to remain an enabler of private enterprise to strive in our country. The President of the Republic, the Honourable Cyril Ramaphosa has committed to implementing structural reforms to promote investment by reducing policy uncertainty, and act decisively to strengthen governance and sound financial practices at state-owned companies. We have a stable macroeconomic environment that provides a strong platform to attract much-needed foreign savings that can fund additional investment. Our country’s prudent macroeconomic policies are highly regarded by international investors, as are its well-developed and well regulated financial markets. Government remains committed to fiscal discipline, a flexible exchange rate and inflation targeting. In conclusion, we are in this together. Let’s join hands and build our country together.
I thank you.