Blog Posts

Buying Insurance Directly Vs Using An Insurance Broker


When it comes to buying an insurance policy, you have two choices: you can either go through a broker, or you can buy it directly through an insurance company. So is one option better than the other?

Here’s a round-up of the pros and cons of the two:

1   Cost vs value

These days most insurers let you buy insurance online, which means you can compare different insurance policies side by side fairly easily and cut out broker fees in the process. However, the danger with choosing your insurance based on cost alone is that cheap policies have high excesses and lots of restrictions, so you may not be covered when you claim.


A broker, on the other hand, can help you select insurance based on value as well as cost. Because brokers are professionally trained and accredited, they can help you find a policy that’s appropriate for your specific risk profile. Having said this, insurance companies have also become smarter at evaluating your risk profile, so they work harder at giving you a fair premium for your risk level.

2    Ease

Buying insurance directly means you have to buy the policy, administer it and do the claims process yourself. However, these days it’s fairly easy to do these things on the insurer’s website or through its call centre.


If you go through an insurance broker, you’ll need to set up an appointment with him/her to go through your choices and buy your policy. Although this may take time, brokers can also shop around on your behalf for comparative quotes. He/She will also help you through the claims process, and if your claim is rejected, he/she can help you contest it.

3    Peace of mind

If you go through an insurance broker, he/she will vet your current insurance policies, do a thorough needs analysis, identify any current gaps in cover and then recommend a product that suits your needs. He/She will also stay in regular contact with you to identify any changes in your circumstances that may alter your exposure to risk.


If you buy directly, you won’t have this level of expertise on hand. However, most insurer call centre agents have received training about the product they’re selling, and the advice they give is regulated by the Financial Advisory and Intermediary Services Act, 37 of 2002.

4   Quality of service

Insurance brokers need to be fully accredited by the Financial Services Board to give you advice. They also have to disclose all information (such as excesses and premiums) and are held accountable if you’re not advised correctly. On the other hand, if you buy insurance directly, you may not know the full extent of the costs and cover of a particular policy, which could cause complications further down the line.

5    Security of personal data

Generally, going through an insurance broker means your data is secure because you’ll sign an agreement with him/her beforehand. This is not the case if you buy insurance directly – often, insurers gain your information and contact you first rather than the other way around. However, insurers risk ruining their reputation by not securing your information, so they usually make an effort to do this. In addition, the Protection of Personal Information Act, 4 of 2013, helps ensure that your information is protected and handled with care.

There are pros and cons to both buying insurance through a broker and buying it directly. On the whole, brokers offer you their expertise and look at your individual needs, so you’re likely to get the right cover for your circumstances. While this may not be the case if you buy insurance directly, call centre agents are held accountable for the advice they give you. What’s more, buying insurance directly means you as the client are in charge of your buying experience, so you’re better able to compare different policies side by side.



Are the first green shoots appearing for South Africa?


By: Maarten Ackerman, Chief Economist and Advisory Partner, Citadel

South Africa’s economic environment is awash with grim news – from disastrous growth of -3.2% in Q1 2019 to and unemployment rate north of 27% – but could there be the initial hint of good news on the horizon?

There is certainly no shortage of tough issues for South Africans to deal with at present. Economic growth has been in its longest declining cycle since 1945 and the question now is whether South Africa is heading for another technical recession.

The consumer continues to reel under the burden of higher administered prices, the VAT increase and rising fuel costs. At the same time, State Owned Enterprises (SOEs), including SAA, the SABC and, most importantly, Eskom which has just been granted a further R59bn bailout over the next two years, are putting the country’s fiscus at severe risk.

Coupled with lingering structural issues, we believe that South Africa will struggle to achieve growth above 1% this year, and we expect this figure to be closer to the 0.7% level instead.

It’s hard to see any light at the end of the tunnel.

And while President Cyril Ramaphosa came to power on the promise of a New Dawn for South Africa, by mid-August he will have been in the position for 18 months and we have still seen little by way of implementation that would lead to a reversal of this situation.

The State of the Nation Address (SONA) may have been fairly well-received, but it reinforced the perception that the government is still “dreaming” and it needs to move from talking to doing, as Ramaphosa himself admitted. This will serve to regain trust and confidence in the economy and reignite the much-needed and sought after foreign direct investment (FDI) which will help to kickstart the economy.

It is extremely significant and interesting, therefore, that we are seeing a turnaround in FDI with 2018 seeing the highest FDI numbers achieved in the last five years. Some R300 billion rand was pledged during the October 2018 Investment Summit, of which R250 billion is already in implementation and, if this trend continues, it will create the foundation for more sustainable growth in the future.

The Zuma Years were marked by a sustained slump in FDI as elements such as Marikana, policy uncertainty and state capture took their toll on external investors. After bottoming in 2015, FDI struggled to pick up significantly, but 2018 saw the rebound kick in.

The importance lies in the magnitude of the rise in FDI. After dipping from 2.3% of GDP in 2013 to 0.5% of in 2015, FDI reached 2.2% of GDP in 2018 (showing more than twice the growth in GDP). Accelerating at a faster pace than GDP, FDI is set to give renewed impetus to the SA economy. Such investment is normally a leading indicator, with very positive economic growth following some three to five years later.

In fact, the last time that we witnessed a spike such as that from last year was in the early 1990s, an era renowned for the end of sanctions, the opening of the SA economy and the peaceful election of our first democratic government.

This paved the way for South Africa to experience a decade of very robust economic growth. If this trend can continue and the government stay on course with reforms, South Africa should benefit from much better growth in the next few years.


How To Teach Your Child About Investing


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How To Teach Your Child About Investing
By Andrew Beattie

Have you taught your children about investing? As they become aware of money and other financial concepts, it is vital that you arm them with investment tools that can last a lifetime.
Children mature at different rates so it may take time before they’re ready to tackle concepts like portfolio creation and asset allocation. However, the basics of investing can be taught quite young. Before your kids start cruising the Internet to check company profiles, you should explain risk and reward. Risk is the possibility that an investment loses some or all of its value while reward is the gain that an investment earns over time.
Let’s sketch a brief picture of two common investments: debt securities and stocks.

Stocks & Debt Securities
Stocks are variable risk, variable return investments. On the whole, they are categorized as high risk and high return. Make it clear that many risks involved in stocks can’t be predicted because corporate records can be tampered with or CEOs can lie but, despite those outliers, the stock market has risen consistently in the last hundred years, offering healthy returns.
A bond is a low-risk, low-return investment. Typically, bonds pay a small amount over the prime interest rate and are backed by stable institutions (usually banks or governments). You can buy lower rated bonds that offer better returns but they can default and you can’t necessarily count on getting the income when expected. Given the complexity of these instruments, you may wish to start your child with stocks and explain that bonds become more important later in life.

Keeping Your Child’s Attention
Show your child what stocks you own. Interesting companies might get their attention – plane manufacturers like Boeing, sports gear specialists like Nike, technology companies like Apple – look at the company’s investor relations page with your child to learn how much they earned, what they make and how many people work for them. Then ask your child what company he or she would like to buy. Kids have favorites even if they are not aware of them. For example, Facebook and Disney are popular with most children.
Once you have introduced your kids to basic concepts, sit down and let them select a company. If you have the money, buy the stock and look at it at least once a week to show how investments can rise or fall. If you don’t have the money, make an model online portfolio and track stocks for fun.
When your child is older, you can provide a more in-depth explanation of stocks and other investments. Eventually, you want to let your children buy their own stocks. Your child may have enough cash diligently saved up in a savings account by the time he or she is interested in investing. Don’t put it all into a bond or the stock market, but invest a third in each and keep a third in savings. This will allow your child to compare the returns of different types of investments.
You have two options if your child doesn’t have money to participate in the learning process. You can use your own cash to open a small brokerage account for your child to make investments or build a model portfolio of stocks that your child wants to buy some day. In the latter case, you will need to find innovative ways to maintain their interest.
Allow your child to make real decisions and take real risks. Money may be lost but the purpose of the exercise is to familiarize them with investing and part of this process is learning that investments have advantages and disadvantages. Whatever the outcome, the experience of gaining and losing money will be valuable.

The Bottom Line
If you pick stocks with your children when they are young, they will get a sense of the financial market’s up-and-down cycles. This understanding will prepare them for dealing with market fluctuations and making informed decisions when they grow up.


Read more: How To Teach Your Child About Investing

Undeniable benefits of working with a broker.

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Technological innovation has meant that consumers have far wider choice and far more information at their fingertips than they have ever had. Coupled with this is the stellar growth in recent years of direct insurance, which harnesses technology and connectivity to provide consumers with near-instant insurance covers and greater convenience. Both of these factors have impacted brokers heavily, with consumers no longer necessarily needing to use their services. With a drop-off in intermediated business, as well as the regulatory changes that cap the fees brokers may earn.

I disagree. In fact, we believe more than ever that brokers are a necessity. While consumers have access to more information, navigating it to arrive at the best possible cover can be a nightmare for them. And that is where brokers really come into their own: they provide expert advice, which one will never get with direct insurance; they are able to arrange proper, relevant cover for individual customers; and they are able to assist customers when it comes to submitting a claim.

As the world becomes more generic, more ersatz, even dumbed down, we need specialists more than ever; this applies especially to the insurance industry. We need people who know insurance intimately, who know their clients and their needs personally, and who can help them navigate the sometimes very complex insurance landscape.

When it comes to eyeballs and handshakes, we are saying that there is still no substitute for good old-fashioned face-to-face, human interaction. When you look someone in the eye and grasp their hand, you are ultimately seeing that person and telling them that you have their best interests at heart.

Convenience is wonderful, but it is trumped every time by great advice and service from an intermediary who knows and cares about his or her client. We need to actively look after the wonderful resource that is the intermediary.

Success is better, shared – PPS allocates R3.7 billion in profits to members in 2017

PPS – Built on the ethos of mutuality, PPS, a financial services company focused exclusively on graduate professionals, showed a strong performance in the 2017 financial year, allocating R3.7 billion in profits to its members. This is in addition to the R2.9 billion in total benefits paid.
“Success is better, shared,” says CEO of PPS, Izak Smit. “PPS members enjoy more than just professional cover. In 2017, our members were able to enjoy their share of R3.7 billion allocated to their unique Profit-Share Accounts, further reinforcing our passion for mutuality.”
The company’s ability to perform in a tough economic environment was achieved through leveraging technology for cost-efficiencies, tight expense management and a significant rise in investment profits.
There are currently 4 400 PPS members who have over a million Rand in their PPS Profit-Share Accounts. Profits are allocated to members’ PPS Profit-Share Account annually. These profits accumulate over members’ working lifetime and at retirement, can be transferred to PPS Investments for further investment growth.
Smit is pleased with the company’s robust growth in 2017, which saw gross premium revenue exceeding R4 billion for the first time – a 12% increase year on year. The Group’s total assets, (excluding unit trusts for third parties), increased to R35.3 billion. PPS Investments increased assets under management to R28.6 billion with new investment flows rising 14%. This is partly attributed to members reinvesting their money with the investment business at retirement. Smit adds, “PPS has evolved to an end-to-end financial partner for our members.”
Smit attributes this healthy performance to graduate professionals’ growing appetite for PPS’s unique solutions and the ongoing support the company receives from intermediaries.
“We have seen a strong surge in support from intermediaries and were delighted to win the Long-Term Insurer of the year: Risk Product category, at the prestigious Financial Intermediary Association (FIA) awards last year. Intermediaries are key business partners and we will continue to work closely with them in the future.”
A focused strategy and strong growth have underpinned the company’s evolution into a fully-fledged financial services company, offering a wide range of solutions tailored exclusively around the needs of graduate professionals. The PPS offering now spans long and short term Insurance, investments, financial planning, fiduciary services and healthcare administration.
Looking ahead to 2018, the company will continue to focus on growth across the full range of financial solutions. PPS also plans to roll out digital tools and initiatives which will further enhance the service experience for members and intermediaries.
Additional information:
PPS members enjoy access to a comprehensive suite of financial and healthcare products that are specifically tailored to meet the needs of graduate professionals.
PPS is the largest South African company of its kind that still embraces an ethos of mutuality, which means that it exists solely for the benefit of its members. Thus, PPS members with qualifying products share in the profits of PPS Insurance via annual allocations to the unique PPS Profit-Share Account and those who have qualifying PPS Provider products can also share in the profits of PPS Investments.

The junk-food,lazy generation


Fin 24 – A sedentary modern lifestyle and increasing levels of obesity will more than likely lead to today’s children being less healthy than current adults over 65 when they reach the same age, startling results from a global healthcare survey have revealed.

The report, compiled by The Economist Intelligence Unit (EIU) and commissioned by science and technology group Merck, has suggested that modern lifestyle-related problems are already triggering health problems among children, including a rising incidence of obesity.

Polling the opinions of educators and parents in Germany, South Africa, India, Brazil and Saudi Arabia, while respondents consider the current generation of children as “generally healthy”, 58% of educators believe today’s children will be less healthy than today’s over-65s.

A further 81% of educators surveyed say that children run a high risk of being physically unfit later in life, while 57% believe children are at high risk of developing chronic diseases such as diabetes.

According to the World Obesity Federation, over 223m global schoolchildren are currently overweight or obese, with recent figures estimating that 15% of South African children fall within this category. Of the five countries surveyed, however, SA brings up the rear.

Saudi Arabia leads the obesity stakes, with 37% of its children classified as obese, followed by Brazil (34%), India (22%) and Germany (20%).

Paradoxically, decreased average health levels and increased rates of global obesity are expected to occur in conjunction with a jump in expected average life expectancy, with today’s generation of children, according to World Health Organization (WHO) statistics, expected to live beyond 100 years.

This means that, while the current generation of children are expected to live longer than their parents, their quality of health, particularly in their later years, is likely to be below that of the prior generation.

Formal interventions lacking

Investigating the nature of existing formal structures in place across schools to educate children on health matters, the survey found that while schools in all five countries targeted primary healthcare issues, such as a lack of exercise and nutrition, they largely ignored issues of mental health in children.

“The importance of education for child health is widely recognised, with educators ranking teachers alongside parents as the most important sources of health education.

“However, wider well-being issues, such as avoiding stress, are largely ignored, and neither parents nor educators report mental health problems as widespread among children.

“Evidence from Germany suggests that mental health problems, including anxiety and depression, rank alongside obesity as the major issues for child health, leading to physical and mental health problems in later life,” EIU research director Aviva Freudmann told the Merck Global Consumer Health Debate last month.

According to the German public health institute the Robert Koch Institute, 20% of German children suffer mental health problems – the same proportion as those that are overweight.

Freudmann added that there is little evidence that school education programmes are managing to stem rising rates of obesity and mental disorders. This is the result of a larger lifestyle issue.

“Outside of school, children in both rich and poor countries spend too much time on sedentary activities, such as watching television or playing computer games – more than half of South African parents report this as a problem,” she explained.

Moreover, parents and educators express widespread concerns over the poor nutrition of children and the fact that they make poor food choices.
Holistic solutions

While there are gaps in schools’ approach to educating children about health, the study believes the larger problem may lie elsewhere: in the failure to integrate efforts of families, schools, communities and policymakers in promoting healthier lifestyles among children.

Underresourced education systems in countries such as SA, for example, result in schools struggling to meet their primary educational tasks, let alone their responsibility to contribute to child health.

“Lifestyle problems begin and develop at home, with children combining sedentary lifestyles with poor diets – and in some instances acquiring smoking or drinking habits. Parents and communities could do more to counter such development.

“Considering the longer life years that today’s children can expect, it makes sense to focus on health practices that will increase the chances of making those longer life years healthy ones,” concluded Freudmann.

The writer attended the Merck Global Consumer Health Debate in Germany as a guest of Merck.