In its report titled: Economic Conditions Outlook, March 2021, global consulting firm, McKinsey, states that despite the weak demand that continues to threaten corporate growth globally, the Covid-19 pandemic remains the biggest risk to overall economic growth. However, it further states that overall, the expectations for the future are more positive. This sentiment was also echoed by the South African Reserve Bank Deputy Governor, Mr Kganyago on 25 March when his committee handed down the decision to keep the repo rate steady at 3.5%, stating that strong economic growth was expected in the coming quarters, and that the SA economy is expected to grow about 3.8%. Such news is positively received by the markets and is a relief to most South Africans who have been in dire financial straits as a result of the pandemic.
The first quarter of 2021 has come to an end and has done so not without its own unique challenges for the non-life insurance industry. Some of the challenges are spill-over challenges from the year 2020. There is little doubt that the Covid-19 pandemic brought the industry numerous challenges that included subsequent Contingent Business Interruption (CBI) claims, which some of our members are still in the process of paying, among many others.
While the coverage of CBI claims took a dip in the first quarter, we however witnessed other queries coming through from the media, for example queries related to the Vehicle Salvage Database (VSD) and the Insurance Data System (IDS). Our response generally is to cooperate with various stakeholders who seek to understand the purposes of these databases and how the industry uses them. It is also, to educate the policyholders and the stakeholders, and demonstrate how these are used in fraud prevention and widespread vehicle cloning and various motor-related syndicates in collaboration with our industry peers and law enforcement agencies. However, SAIA is also revisiting these issues within its own structures, as well as with related government and non-government stakeholders with a view to improve the databases where required, and/or to establish whether our reasons for not opening up the databases are still valid.
Cyber security continues to be a challenge, not only for our sub-sector, but for the entire financial sector. This has also been the noted trend where at the end of 2020, the New York based Cybercrime Magazine estimated global damages to reach US$6 Trillion annually by 2021. This is a very significant risk which certainly cannot be overlooked by the industry; hence we welcomed a request for information related to Cyber Incident Response and Recovery from the South African Reserve Bank (SARB) whereby it requested that we initiate a start towards the task of mapping processes for the Financial Sector in terms of participants, IT infrastructure, and regulators related to cyber incidents/attacks. SAIA, its members, ASISA and the regulators continue to work on frameworks aimed at minimising cyber security risks in the insurance industry.
I hope that policyholders used the recent Easter holiday as the ideal time to review their insurance policies to ensure that they have the cover they require to protect their assets for now and the rest of the year.
Let us all continue to take note of the Covid-19 regulations, maintain social distancing, always have your mask on, and remember to wash your hands constantly. I hope you all had safe and happy Easter Holidays.
SAIA Chief Executive