Financial Inclusion has remained topical within the financial sector, as the majority of the previously disadvantaged individuals are still involuntarily excluded from accessing some of the products and services within the financial sector leading to very little traction in terms of improving the quality of life of an average South African. Finscope surveys have demonstrated an improvement of financial inclusion over the years with most of these improvements being predominately around access to banking services. Financial Inclusion is still lacking when it comes to access to insurance products and more so, access to short-term insurance products.
Several research studies have shown that there has been an increase in access to financial services and products. However, such has not necessarily translated into an increase in usage of those products, which is the true measure of the sustainability of the financial sector from an inclusion perceptive.
Both government and the financial sector have therefore remained conscious of the challenges facing financial inclusion in South Africa. This is specifically so in the insurance industries and we therefore continuously seek to find solutions that will help to unlock the pandemic that is stalling economic growth. This could be evidenced by the recent proposed amendment to include Micro-insurance legislation under the Insurance Act and the requirement by the amended Financial Sector Code (FSC) that insurance companies continue to account for Access to Insurance Products on their B-BBEE compliance scorecard.
The current FSC Access to Financial services and products targets expired in June 2018 (compliance extended to December 2018) and the industry is in the review process for the new proposed targets going forward. As a result of the current industry performance which has not been satisfactory according to the Sector Annual Review, the industry has decided to include the review of the Access Standard in the process to ensure that the future Access targets are complemented with equally responsive Access Products developed and distributed by the entities within the short-term insurance industry.
The aim of the review process is to ensure that the revised Access Standards provide a conducive framework for the industry players to develop appropriate products for the intended consumer market segment and that respective targets are realistic and attainable within the prescribed timeframes when implemented from the beginning of 2019.
For more information contact:
Themba Palagangwe , SAIA General Manager, Governance and Transformation