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Financial Services
Friday, December 1, 2006
Direct challenge

The Financial Sector Charter has changed the way many brokers do business. It requires specific qualifications, transparency and professional advice.

“This,” says Quinten Matthew, Head of Broker Services at Santam, “has put huge pressure on brokers. At present about 15% of all insurance products are sold direct to consumers and this figure is expected to double as clients continue to seek out better value options.
“In order to counter this, brokers will need to prove their worth and dispel the bad press direct insurers generate for them, to stay in business and grow their market share.
He adds that, “Insurance is becoming less about face-to-face interaction and more about convenience and advice. So brokers need to improve their technology and computer skills to provide information, not only about products, but also to manage their customer relationships.
“Consumers are looking for easier, faster and more effective means of amending policies and communicating with their insurers or brokers – and this requires the latest technology.”
Mr Matthew says some brokers cannot afford to implement these systems. Industry figures show that of the 17 broking companies surveyed in 2005, IT spend was estimated at about R225-million. Large broking firms spend around R50-million and a niche broking firm will spend around R65 000 on technologies annually.
“BEE has also been a challenge, especially for smaller operations, many of whom seem to see this as a threat to their ownership instead of a way to grow their businesses by expanding into new and varied sectors.
“Broadening the business base has become essential and old style brokers who do not change will find themselves losing out on growth opportunities. To assist them the South African Financial Services Intermediaries Association (SAFSIA) has set up a Charter/BEE committee to identify issues, understand their impact and guide members.
“Generally speaking, a more regulated environment expects brokers and insurers to place the client at the centre of their strategy,” he emphasises.

Copyright © Insurance Times and Investments® Vol:19.6 1st December, 2006
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