How will Hollard Insure and our broker partners adjust to the new post COVID-19 world? How will we stay connected, while keeping each other safe? What opportunities can we carve from the current challenges?
These were some of the pertinent and topical issues explored in our recent exciting broker webinar – a first for Hollard – under the theme “Prospering in a new normal”.
Hollard Insure CEO Willie Lategan looked at Hollard Insure’s plan for success in a landscape forever changed, while head of distribution Nash Omar explained how the organisation is supporting its valued broker partners during the lockdown and into the future.
Hollard Group chair Adrian Enthoven, deputy chairperson of the Solidarity Fund set up to support vulnerable South Africans and to contain the spread of COVID-19, provided uplifting insight into the incredible work the fund is doing, while Absa head of research Jeff Gable examined the harsh realities of the post-pandemic economy.
‘Brokers are our lifeblood’
The COVID-19 pandemic has compelled Hollard Insure to once again live up to its Better Futures promise – from providing relief for policyholders and suppliers to ensuring the sustainability of broker partners, said Lategan.
Where other countries are balancing public health and their economies, South Africa had an especially delicate three-way balancing act: the health of our people, our economy and social cohesion.
Hollard’s response in preparation for a “new normal” was anchored in three key strategic priorities: to focus on the core; to continue to future-proof the business; and not to do it all alone, but to share learnings and expand.
Lategan said the lockdown had placed great financial pressure on suppliers such as towing businesses, motor body repairers, plumbers and assessors, and Hollard Insure has been assisting them to maintain cash inflows and stay in business.
‘Insurance is about people’
Omar reminded the broker audience that insurance is not really about risk, policies, premiums and claims, but about people: “those who create insurance cover, those who advise on it, and those who buy it” – and “about providing people with a safety net”.
He said policyholders had been offered relief in a variety of ways, including discounts on motor premiums and for trucking policyholders, grace-period extension and cashbacks, but the company realised its broker partners were also feeling the pinch.
In addition to continuing to pay 100% commission, binder fees and outsource fees, it has also taken other steps to ease the pressure, such as leeway to renew policies as is, and extending risk management implementation dates.
“Good, clear communications with our broker partners has been key to successfully negotiating the current reality,” said Omar. “Some say change is the only constant, but they’re wrong: our commitment to brokers and intermediated insurance is as unwavering as ever.”
A ‘phenomenal’ effort
The Solidary Fund is a great example of the best in society achieving a significant impact in a very short space of time, said Enthoven, explaining that the independent Solidarity Fund, working to support a single national effort in the fight against COVID-19, has achieved a “phenomenal amount” in the roughly two months of its existence.
With about 80 full-time pro bono workers, and 15 to 20 companies providing services, all voluntary, every cent was spent on direct impact. By the beginning of June, the fund had raised about R2.8-billion, with about R2.5 billion in the bank, of which it had disbursed R1.4-billion.
The entity’s three main focus areas were to support the government’s health response; humanitarian efforts; and a mass campaign to inspire and mobilise South Africans to combat COVID-19.
The fund had already approved hundreds of millions of rand for the procurement of personal protective equipment for health workers, with additional large amounts for workers doing testing and screening and community health workers.
Faced with the reality that the country will need 20 000 ventilators in the next few months, it has recently approved an amount to build a prototype for non-invasive ventilators to be manufactured locally.
Among other efforts, the fund has also delivered 280 000 food parcels to families across the country, and was in the process of delivering 50 000 food vouchers and cash vouchers.
‘Unprecedented’ economic effect
How will South Africa weather the COVID-19 storm on a macro-level?
The effect is going to be long lasting, said Absa head of research Jeff Gable in his examination of the harsh realities of the post-pandemic economy.
“Our baseline predicts that South Africa will restrict by almost 10% this year,” he noted, something that was “unprecedented in South Africa’s economic data set.”
Absa believed the economy would shrink by about a fifth in this quarter and that, by the end of 2021, it would be 6% or 7% smaller than at the end of 2019.
Gable predicted that the sectors most affected this year would include the motor trade, the construction industry, and “anything to do with hospitality” – a sector that looks likely to suffer losses of more than 50%.
Manufacturing and retail would show “slightly more modest contraction”, while a contraction of 5% to 15% was expected across mining, real estate, wholesale, transport, electricity and other services. “These are really huge impacts that will bring business and their workers to their absolute financial limits.”
It was also estimated that 700 000 to 1.8-million jobs would be lost as a result of COVID-19 – and while some parts of the economy did not seem likely to recover, other businesses would find their models looking very different in the years ahead.
“Some ... businesses will step into new niches, but others who seemed as safe as houses in the last few years will make much less sense in the years going forward,” said Gable.
The webinar was part of Hollard Insure’s ongoing #LongLiveTheBroker initiative to support its broker partners with relevant tools and information.