The South African short-term insurance industry experienced a wave of knocks and entered a hard market cycle from about mid-2017. This was triggered by the terrible storms in the Cape last year, followed by the devastating fires that swept through the Knysna and Plettenberg Bay areas; spreading across to PE. Floods in Durban, a R1bn warehouse fire, and a catastrophic bulk carrier crash in Durban harbour added to the turmoil.
In his 37 years in the industry, Econorisk CEO – Guy Scott, says the last real hard market we experienced in South Africa and globally was post 9/11. “But that was short-lived; there was the typical spike in premiums and pricing was driven by re-insurers – but there was a fairly fast return to pre-9/11 pricing.”
Now we find our local environment has become increasingly volatile, challenging and uncertain. While last year’s fires and drought were said to be about climate change, the spectre of the 2018 listeria outbreak continues to have an extremely costly impact on the food and retail industry along with more than a whiff of reputational damage for some. In April we saw scenes in the media of 32 trucks being burned in protest action at the N3 Toll Plaza near Mooi River, where according to the Road Freight Association, the SA trucking industry suffered R300m worth of losses in one month alone. That’s how we find ourselves in a hard market cycle.
We definitely don’t want to put the fear of God into businesses or dampen entrepreneurial spirits. Risk is what drives innovation and growth in SMEs.
The ultimate threat to SMEs may not lie in the possibility of a catastrophic event, the real threat is the danger of small and medium businesses ticking boxes, and getting basic cover that couldn’t possibly cover them adequately. Take a look at the tips below.