Insurance Brokers are worried about business conditions over the next 12 months, according to results of a survey done a few days ago.
This contrasts sharply with the finding of another survey done by Ernst & Young.
CIB’s survey focused on their confidence levels in the economy and brokers ‘ability to attract new business in a market where consumer spending is slowly recovering from a credit-fuelled buying spree prior to the downturn.
CIB sales director Jonjon Smit, says the firm’s survey reveals that insurance brokers ‘confidence in the economic outlook has dropped to 61% in the first quarter of this year, down from 66% during the last quarter of last year. Confidence levels in business conditions also dropped amid worries about broker ‘ability to write new business.
The findings are diffrerent to those recently released by Ernst & Young. Those showed that business confidence in the life insurance sector rebounded in the first quarter of this year from the last quarter of last year.
This was mainly due to a boost from strong investment and premium income flow, says Tim Rutherford, Ernst & Young’s life insurance spokesman.
Mr Rutherford says life insurers also experienced lower outflows, a reflection of stabilizing lapse rates as fewer policyholders stop paying premiums of cash in their policies. But Mr Smit says brokers have yet to experience this optimism. “Confidence levels (in business conditions) dropped to 62% during the first quarter in 2011, from 67% recorded during the last quarter 2010,” he says.
“This might be an indication that the economy is not recovering as well as many may have thought,” he says.
Brokers ‘confidence in attracting new business over the next 12 months dropped to 71% from 76% in the last quarter of last year.
Mr Smit says the decline was hardly surprising because it shows that debt-laden consumers are battling to make ends meet. The ratio of SA’s household debt to income is estimated at about 79%.
Brokers are, however, optimistic that they will not lose their existing customer base, with at least 79% saying they are confident about their ability to retain existing clients, a slight increase of 1% since the previous quarter.
BusinessDay, 11 May 2011