- Reduction or cancellation of insurance has a knock-on effect on its subsidiaries
The Botswana Insurance Holdings Limited (BIHL) has indicated that in the year 2017, one of the major challenges that it experienced was contraction of disposable income, which compelled customers to spend less on insurance products.
According to the BIHL Group Chairperson, Batsho Dambe-Groth, as laid out in the Group’s Annual Report 2017, “One of the major challenges experienced by our Group of companies is the contraction of disposable income for Batswana who therefore seek to reduce their monthly financial commitments.”
Dambe-Groth indicates that among the measures that the customers take to reduce spending, is interfering with their insurance covers, by either reducing or totally cancelling them. She says; “Unfortunately, there is a widespread misconception that reducing or cancelling insurance cover – both long-term and short-term – is an easy way to ease pressure on household budgets. This naturally has a knock-on effect, particularly for Botswana Life, Legal Guard and Botswana Insurance Company.”
The Group however, is not just sitting back without looking for possible solutions, they are educating consumers about the importance of insurance and how the short-term benefit of a slightly higher cash flow could be eliminated in minutes should something untoward occur while they are un- or under-insured. The Chairperson highlights that on the life insurance covers, consumers also fail to take into consideration the higher costs of reinstating policies or obtaining cover later when their cash flow improves.
It was not all about the challenges in the year under review, there were positives also. “Despite some challenges in 2017, there were also a great number of positive developments, as the remarkable turnaround in the latter half of the review period revealed. At the half-year, the
Group’s results were below target, but by year-end, things not only stabilised, but there were clear indications that we were experiencing the start of a sustainable upswing. It is also clear that while the market in which we operate is increasingly competitive, there is still room for growth and expansion for those organisations that can differentiate themselves by providing the products, and, perhaps most importantly, service levels, that customers want,” Dambe-Groth notes.
She is confident that the uptick in the BIHL Group’s activities in the second half of 2017 is a clear indication that they are one of those innovative, service driven organisations. She continues; “One of the contributors to this achievement is that the BIHL Group always takes a long-term view on situations, from avoiding being sucked into unwinnable pricing wars that
negatively – and temporarily – affect our market share, to loss of key personnel and hiccups in the fortunes of some of our associate company investments.”