The February 2015 IISA newsletter contains details of an interview conducted with Dr Brian Benfield who recently retired from the University of the Witwatersrand as visiting professor, Insurance and Risk Management after teaching in that post for 25 years. He also had an enormous practical impact in the financial services industry for over four decades.
His responses to five questions put to him by IISA should really be made compulsory reading for everyone who has the interests of the industry at heart.
We publish two excerpts below, but strongly advise readers to read the whole article.
What still needs to be done to improve the professionalisation of the intermediary community and the protection of insurance consumers?
a. Firstly, a clear understanding of the role of the intermediary is now necessary. There seems to be growing confusion between the role of intermediaries and insurers. Nowadays almost invariably, if an insurer correctly repudiates a claim it is argued that the intermediary is liable to settle that claim. The intermediary is increasingly seen therefore as the insurer of last resort.
b. A clear understanding and application of the law of contract, including that of agency and its application to the intermediary is required. Intermediaries are increasingly facing liabilities which do not exist in contract. Greater obligations are imposed on intermediaries than on almost any other comparable discipline. For example, it is often alleged that an intermediary must explain every policy contract term to his client, failing which the intermediary must make good any associated financial loss faced by the client. Not even an attorney or advocate faces such an obligation. It should be clear that unless and until these anomalies are addressed, the development and professionalism of intermediaries will continue to be impeded.
c. Every profession is measured against three yardsticks: Defined educational examinations, professional recognition by an appropriate body run by the profession, and ethical standards. This is true for medical doctors, engineers, actuaries and so on. The professionalisation of intermediaries that encompasses these yardsticks should be recognised accordingly and appropriately.
What does the industry appreciate least about its own worth and role?
Regrettably, the industry in general seems today to have lost its appreciation for and understanding of its immeasurable worth and critical role in the national economy. To the limited extent that it does have this appreciation, it is becoming increasingly confused about it.
Historically, insurance is one of the most innovative markets in the world and as such is one of the most respected. The vast majority of people working in the industry do not seem to understand this and thus tend to find it difficult to actively defend and promote the industry and its long-established values. The industry enjoys one of the best general reputations of all commercial undertakings, notwithstanding the isolated cases of fraud and deception that sometimes dominate the headlines. The evidence for this is legion, including that the industry’s growth out-strips inflation year in and year out.
This is not the sort of success enjoyed by industries that do not enjoy the widespread confidence of the public at large.
Moreover, the industry had well-nigh nothing to do with the 2008 European financial crisis, was little affected by it, and can therefore draw few applicable lessons from it. Changes to insurance legislation erroneously justified by that crisis, or ostensibly to meet obligations to European compatriots in this regard, will therefore do little to prevent another.
This lack of appreciation seems to stem from a general absence of understanding of the history of insurance and its role in facilitating commerce, the development of industry, the provision of infrastructure, the promotion of economic growth and development. In particular, few appreciate the industry’s critical role as the largest local source of capital formation and its concomitant employment creation. Indeed, few commercial transactions can take place in today’s world without the presence of insurance. Cars cannot be purchased, homes bought, contracts concluded or bridges built without it. It is not for nothing therefore, that the insurance industry is known internationally as “The handmaiden of commerce”.
Whatever these concerns may be however, in the long term this great industry is immeasurably older, sturdier and wiser than its latter-day tribulations. One hopes nevertheless, that they are surmounted sooner rather than later in South Africa, before too many of its skills and expertise have been driven out and lost to time.
The other three questions concern his most satisfying experiences, greatest disappointments and concerns about the future. It is certainly well worth reading.
Please click here to read the whole article titled Dr Brain Benfield Retires In 2014 From Wits as Visiting Professor in the February 2015 IISA newsletter.