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Short term Insurance
Monday, May 1, 1989
Too low, too fast

Widely fluctuating insurance premiums are doing nothing to aid the public’s confidence in the insurance industry, and in the long run can only do harm, says Leon Britz, Santam Insurance’s AGM with responsibility for the eastern Cape.
Writing in Focus, Santam’s newsletter for insurance brokers and agents, he says, ‘‘we all know that the industry is cyclical with its ups and downs. But, at present, after two good years almost the entire industry is engaged in fierce rate cutting.
‘‘Both brokers and companies have gone overboard. Rates have fallen far too low and far too fast. One of these days we will hit the floor with a crash and a panic and premium rates will shoot up to the ceiling once more. “This is no way to win the confidence of the public. How can they be expected to have faith in an industry which is so erratic?
‘‘We are effectively mangers of money and the entire industry - brokers as well as companies - should be seen to be responsible managers,” he says.
As part of the way to a more responsible attitude to underwriting, Mr Britz would like to see far more communication and discussion between brokers and insurers, and among insurers themselves.
Turning to business conditions in the Eastern Cape, Mr Britz says that the disastrous economic downturn w Inch hit the area a few years ago is now something of the past. He says that the swing round from gloom to optimism seemed to stem from the time that Delta Motor Corporation (previously General Motors) dug their heels in and decided to stay, as did Volkswagen in Uitenhage.
“The motor trade, which includes a host of fringe activities such as the manufacturing of windscreens, spare parts, electrical wiring, tyres, batteries and gaskets (just to name a few), is still optimistic in spite of the economic slowdown and sees considerable scope for growth.
‘‘Other industries in the area are also generally optimistic on the outlook, says Mr Britz. Mossgas is an extra incentive amid it is being predicted that this will create around 1 000 new jobs in Port Elizabeth whose factories will end up with around 30% of the work on the Mossgas project.
“The only negative factor in the area at present is the drought problem. The coastal region from Mossel Bay to just outside East London has experienced this and it has hit the vegetable, citrus and tobacco farmers.
“The water shortage is also having a negative effect on industry,” he says. “But that is something we have to sit out, and be thankful for the state aid which has just been announced.”

Copyright © Insurance Times and Investments® Vol:2.5 1st May, 1989
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