The recently held inaugural Botswana Life Annual Broker Convention aims to enhance compliance, uphold trust, and safeguard the integrity, stability, and confidence in the insurance industry in Botswana.
Hosted by Botswana Life Insurance Limited (Botswana Life), the convention brought together seasoned professionals spanning industries and socio-economic caps within Botswana and South Africa.
In his keynote address, Oduetse Motshidisi, the CEO of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), commended Botswana Life for convening the event.
He expressed expectations for a focus on ethical business practices, conduct, and addressing issues such as closing the insurance gap.
“If that is not done, or done poorly, there is all the likelihood that the enduring mistrust about the insurance industry will persist to the detriment of all of us in the form of failure to realise the full potential of the industry. We must, therefore, leave this event with a win-win outcome,” he said.
Motshidisi said insurance brokers play a crucial role as middlemen between clients and insurance providers. He highlighted the need for the convention to inform and educate the general public about the distinctions between insurance brokers and insurance agents.
“Generally, we understand an insurance broker as someone or an entity that represents an individual or corporate client for their insurance needs,” he said, explaining further that on the other hand, an insurance agent represents the insurance company.
An insurance broker is an independent agent who works with many insurance companies to find suitable policies and solutions for clients. A typical insurance agent, on the other hand, works for one specific company and chooses from within that company’s policies and offerings what is in the best interest of the clients. While an insurance broker is different from the typical agent in such a regard, the two are otherwise similar to a layperson. Both usually work on a commission basis.
Noting the grave concerns NBFIRA has as a regulator, Motshidisi pointed out that the authority has received numerous complaints against insurance brokers between March and October this year.
“The persistent type of complaint is the repudiation of claims; and while insurance brokers are intermediaries between clients and insurers who bear the risk, the clear underlying trend with the repudiations is failure to make full disclosure to clients at the onboarding stage and the lapse in informing clients of any changes or developments over the life of the policies. That responsibility squarely falls on the shoulders of the intermediaries and it needs to be performed scrupulously,” he explained.
Motshidisi further said another category of grievances is delays in processing clients’ claims. He highlighted that while it was the legal duty of the Regulatory Authority to maintain the strategic focus of fostering stability of the financial system through targeted interventions to achieve financial safety and soundness, fairness, efficiency, and orderliness of market conduct within the Non-Bank Financial Institutions (NBFI) sector, the NBFIs must self-regulate and uphold high standards of professionalism in their business dealings to safeguard trust in the industry by the clients and the public at large.
He noted that the performance of the insurance brokerage sector over the past ten years has shown a growing trend as reflected by the increase in the number of licenced entities, as well as a stronger balance sheet and income statement of the sub-sector.
“Notably, there were 40 licenced brokers in March 2012 and the number had increased to 60 by March 2023. Brokers recorded total revenue of P509 million in 2022, which is a significant increase from P 259 million earned in 2012. Similarly, total assets increased by 73 percent from P 321 million in 2013 to P554 million in 2022. Total commissions were P 177 million in 2012 compared to P 378 million reported in 2022 representing over a 100 percent growth,” Motshidisi said.