Index reveals brokers upbeat about business conditions, but losing confidence in SA economy
Published |
|
2011
Thu
17
Nov
|
A recent survey has revealed increased confidence levels among brokers regarding business conditions in South Africa, but that they are still losing confidence in the economy.
According to the CIB Broker Confidence Index (BCI) - which measures the confidence levels of South African insurance brokers on a number of issues - brokers have confidence levels of 73% with regards to attaining new business in the next 12 months, an increase of 4% when compared to the second quarter of 2011. Jon-Jon Smit, Divisional Director at CIB Insurance Administrators says that this might be an indication that South African consumers are not struggling as much as in the past. The third quarter did however see a 1% drop of confidence in the South African economy to 56%.
The third quarter survey also revealed that brokers have increased confidence levels in maintaining their current customer book over the next year. Confidence levels of 78% were recorded, an increase of 2% in comparison to the second quarter’s confidence level of 76%. “Most brokers understand that in the current economic condition, it is far easier to hang on to existing customers than to acquire new business,” says Smit. “This is good news for consumers, as it should see increased service and better pricing from brokers and insurers.”
When questioned about their confidence in the improvement of business conditions for the local insurance industry, brokers expressed confidence levels of 59% - a 1% increase since last quarter. Smit says that insurance brokers tend to witness improved business conditions when consumers are purchasing new items and need to insure these assets. “The slight increase in confidence levels might suggest that brokers are expecting a pick-up in consumer spending, despite the negative perceptions around the current economic situation.”
The BCI also revealed that brokers still consider new legislation and regulation to be a challenge, with 42.5% of respondents citing this issue as the biggest issue facing the local industry. There has however been a dip of 13.9% since last quarter, indicating that this issue isn’t as much of a worry as it was before. Smit says that this is probably due to most brokers having come to terms with the introduction of regulatory exams, and the pass rate being considerably better.
When asked where they think the biggest opportunities for short-term brokers lie during the next 12 months, 39% of brokers cited improved systems, with access to new demographic markets second at 29%.
“Despite some caution with regards to the economy, brokers seem to more upbeat about business conditions than before. These increased confidence levels are a good indication for the short-term insurance industry and a positive outlook for 2012,” concludes Smit.
Source: Epic Communications (Pty) Ltd
Breaking News »
|
