Advertise Here


IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconCompare Medical Scheme Benefits
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconEmergency Medical Rescue
IconExpatriate Cover
IconHealthcare Consultants
IconMedical Aid Brokers
IconMedical Aid Schemes
IconMedical Malpractice Cover
IconMedical Schemes Trustees Liability Insurance
IconMedical Service Providers
IconOnline Quotes
IconRegulatory Authorities
IconWellness Programs
  Subscribe To »

The South African Insurance Association adds its voice to concerns on S&P ratings downgrade






Johannesburg: The South African Insurance Association (SAIA), the representative body for the short-term insurance industry says yesterday’s foreign-currency rating downgrade to BB+, the first level of sub- investment grade by Standard & Poor Global Ratings is of grave concern, as it has immediate, far-reaching and long-term negative implications for the economy and the society at large.
Chief Executive of the SAIA, Viviene Pearson says, “As the representative body for the short-term insurance industry we are very concerned about the latest developments. We note that S&P’s decision comes with a negative outlook, which could result in a further downgrade of our foreign currency rating, as well as impact negatively on the local currency rating”.
“The rating downgrade,” says Pearson, “will impact on the government’s ability to raise debt on the foreign market, and it will be at an unfavourable rate. Our already significant debt repayments will increase and foreign direct investment will be further curtailed. All of which will lead to job losses, increased inflation as well as high interest rates, further exerting pressure on already burdened consumers and businesses alike”.
Concerns have been further heightened by another ratings agency, Moody’s swift placing of South Africa on a downgrade review following S&P’s announcement. The downgrade news has already seen the rand losing value against major currencies and will likely have a negative impact on the Johannesburg Stock Exchange (JSE).
Pearson adds, “The ramifications will be felt for many years to come. This is bad news for all South Africans and businesses. For the short-term insurance industry in particular, this means that the cost of motor parts, which are mostly imported, will increase exponentially, which is likely to lead to increased repair costs followed by increased premiums for policyholders; over and above an already higher cost of living for consumers.”
Short-term insurance products could become less affordable, which exposes consumers to financial risks in the event of a loss of or damage to assets. Furthermore, motor body repairers, the building industry and others, will feel the pinch of potentially less work, leading to job losses. “This is all something our country cannot afford at a time when the economy is growing at the slowest pace since the 2009 recession, and with the official unemployment rate sitting at 27%. What we need is macro-economic stability and policy certainty, which supports sustainable inclusive economic growth.”
This credit rating downgrade also means low investor confidence – something government, business and organised labour have worked hard to avoid over the last 16 months. This too adversely affects the objectives of the National Development Plan (NDP), which the short-term insurance industry is committed to contributing to through its various initiatives. Furthermore, with the resultant confidence being eroded in our critical institutions and economy, lower investment will in turn mean a negative effect on job creation.
Pearson concludes, “We are joining in the call for all leaders in government, business, labour and civil society, who have the interest of our country and all its citizens at heart, to work together. What we need is a South Africa that is on the right path to achieve a stable and sustainable political, social and economic environment for all South Africans.”
Source: Epic MSLGROUP
« Back to previous page Print this page » |

Breaking News »

Covid-19 shines spotlight on gaping holes in personal risk planning and responding insurance solutions

The Covid-19 pandemic has pulled a critical thread, unravelling the fibre of every economic and social structure, across countries, continents and communities. In the wake of soaring infections, hospitalisations ...
Read More »


COVID-19 and guidance for the medical profession

The Health Professions Council of South Africa (HPCSA) has recognised the severity of the COVID-19 outbreak and provided special guidelines that will apply during the pandemic. The HPCSA will continue to operate, ...
Read More »


Notification obligations under a medical malpractice insurance policy

Medical malpractice insurance is a practical necessity in the current litigious environment, writes Aneesa Bodiat of Natmed Medical Defence (http://www. mobi/), as an unfavourable judgment can lead to severe financial ...
Read More »



The COVID-19 pandemic has created a unique set of circumstances for medical professionals, many of whom would do well to be seek clarity from their professional insurers as they are called on to step into unfamiliar ...
Read More »


More News »


Investment »


Life »


Retirement »


Short-term »

Advertise Here
Advertise Here

From The Glossary »


Employer's Portion:

This is the sum of the Employer's contributions towards retirement benefits (excluding costs). Refer to the fund's rules for more information.
More Definitions »






Contact IG


Media Pack


RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2020. All Rights Reserved.