Recession Teaches Insurance Groups Valuable Lessons

November 3 - A report issued by Ernst & Young regarding the way that the South African insurance industry has responded to the changing economic climate, highlights the valuable lessons learned by insurers along the way.

According to the report, while the industry has been hard hit, it still has not suffered as badly as other financial service businesses.

"For the past year, progressive insurers have been responding to the pressures of an evolving economic landscape," said Peter Porrino, the global insurance leader at Ernst and Young.

"Speaking to our clients, we have learnt how companies around the world are deploying approaches to manage credit exposures and regulatory capital, as well as focusing on redesigning and repricing certain products," he added.

Porrino said that executives were not only applying strategies to manage and protect their businesses, they were also focusing on growth and the reshaping of their groups with a focus on the future.

Some of the things learned by insurance groups following the global recession included the need to create a capital buffer that exceeds predictions made by analysts.

Other insurance groups are doing away with specific product lines and are rather reinvesting in their core businesses.

Speaking for the life insurance sector in South Africa, Tim Rutherford outlined the lessons learned by this country's insurers.

"The lessons learned from their global competitors are just as relevant to the local insurers and those that demonstrate flexibility and rapid responses to the market changes will reap the benefits as the South African and global economy emerge from the recession," he said.