The challenges faced by the local insurance industry in accessing foreign exchange to settle their reinsurance debts needs to be addressed urgently, the managing director of Tatil and Tatil Life M Musa Ibrahim has said.
Ibrahim made the statement during an interview with the Business Guardian when asked what he would like to see provided for the local insurance industry when Finance Minister presents the national budget next Monday.
“First of all local insurers, like many others, have challenges in accessing foreign currency (FX) to settle foreign (non TTD) invoices. The Insurance industry is providing a critical and vital service to our citizens, businesses, and by extension, the country’s infrastructure and assets.
“These ‘risks’ are shared and supported by various internationally-rated reinsurers who, in the event of a claim—be it a pandemic or a national catastrophe—will share in the costs of such claims. Sadly, at this time, the Insurance industry is not seen as ‘essential trade’ and does not qualify for priority treatment for FX to settle non TTD liabilities. Non-settlement of reinsurance debt as contracted has unintended financial consequences and must be addressed by the authorities as a matter of urgency,” Ibrahim stated.
In addition to this Ibrahim said that general insurance clients who are under the age of 60 currently pay a tax of six per cent on their premiums.
“This tax was originally implemented with the aim of establishing a Motor Insurance Bureau to reimburse customers with claims where the other parties were not adequately insured—or not insured at all. The taxes are not being used for that purpose and consideration should be given to reverting to the original intent.
“Finally, recognising the importance of the life insurance industry as the largest repository of savings in the country, I would like to recommend that Whole of Life policies be given similar taxation incentives (tax credit) as pensions and annuities currently have. Such an initiative will encourage citizens to be prudent and will foster a much-needed culture of saving for a rainy day.”
Ibrahim said given the multitude of economic challenges, the Government has a very difficult task.
“The upcoming budget should present strategies which continue to address the social impact of the pandemic, and which help alleviate its negative effect on the most vulnerable of our citizens, but done in a manner that is tightly managed and balanced.”
Despite the ongoing pandemic Ibrahim said Tatil and Tatil Life have performed “reasonably well” financially.
“We have exhibited resilience and are positioned to capitalise on future economic growth.
“Operationally, the pandemic compelled us to accelerate the digitisation of many of our processes and to focus on improving our interaction with our clients via digital and online means. These changes have been both refreshing and encouraging.”
Ibrahim said the pandemic has taken its toll on many of Tatil’s customers, both financially and with the loss of loved ones.
“Early on we put financial measures in place to assist customers who were hardest hit, but we have seen some increase in lapses and non-renewal of policies due to the stay-at-home measures which businesses and Government implemented.
“Fortunately, the large part of our client base continues to recognise the importance of having appropriate life and health insurance coverage in place, especially during current periods of uncertainty. As we slowly begin to see some return to the ‘new normal’, we continue to reach out to our customers with affordable financial solutions to provide the peace of mind they seek for themselves and their loved ones.”
One encouraging outcome, Ibrahim said, has been the enthusiasm with which the public has embraced our new Group Health Plan, Evermed, which was launched in December 2020.
He said the enrolment under this plan has exceeded expectations.
“Our clients have naturally gravitated towards the new ways of doing business that we have been able to offer to them. The volume of digital transactions taking place has increased significantly and we expect that trend to continue while remaining highly customer-centric in our service delivery. We will be adding more tools, portals and channels for digital engagement and transformation, and communication one-on-one with our clients.”
With the various phases of lockdown that were implemented in the country, Ibrahim said motor renewals showed signs of mild contraction as some clients opted to “self-insure.”
“It was very visible that there were fewer vehicles on the road. As restrictions began to ease, we saw our motor renewals return to normal levels.”
Ibrahim said the pandemic has required all of us to adapt and innovate.
“Most of our agents have embraced change and continue to serve their customers diligently using a combination of virtual meetings, digital communication channels, as well as face-to-face meetings (where practicable) and phone calls to maintain existing relationships and to create new ones.
“All our agents are equipped with laptops or tablets and cutting-edge programmes which can deliver quotes on the spot. Going forward, even once the ‘new normal’ has resumed, the preferred option for many clients and agents will be via virtual meetings. The engagement is equally as robust, and it provides the opportunity for more productive working days.”
He said the main lesson learnt during the pandemic has been to expect the unexpected and ensure your organisations (or whatever you may be responsible for) is as nimble as can possibly be.
“This includes defining and ensuring that you have business continuity plans in place that are tested and are robust.
“On an individual level, people must protect themselves against the risks posed by the unexpected, and it has to be the appropriate protection for each circumstance. Resilience and adaptability are crucial.
“Insurance has a key role to play in ensuring that individuals and businesses are adequately prepared. As insurers, our responsibility is to educate our clients on the need for the appropriate coverage and illustrate the options which are available to them, and which are customised to their particular situation.”
Ibrahim said a second important, positive lesson has been that “necessity is the mother of invention.
“Companies achieved innovations which they did not deem possible, and in a fraction of the time they might have anticipated.
“We take the confidence we have acquired from pivoting during the pandemic into whatever challenges lie ahead.”
Tatil and Tatil Life serves tens of thousands of clients who depend on the organisations to protect their assets, their lifestyle, and to provide health coverage.
“We had to continue to deliver what was required daily despite the stringent lockdown measures and despite all the challenges.
“Overcoming these challenges has made us stronger, more determined, and more united in meeting our clients’ expectations:
• We created a safe environment for our staff and our clients by implementing stringent sanitising and hygienic practices which remain in place to this day.
• We converted previously paper-based processes into electronic ones.
• Communicating with our large customer base during the pandemic opened up opportunities for us to engage with them in ways we would not necessarily have done pre-pandemic.”