FOREWORD INSETA BOARD CHAIRMAN

1 August 2016

FOREWORD The Board of INSETA is fully aware of the challenges expressed around previous SETA Sector Skills Plans. The concerns around reliability, accuracy and validity is shared in its sentiments with the changing environment in the Insurance industry and the landscapes of the SETAs under review, the Board of INSETA has risen to the challenge of ensuring a credible, insightful and high quality Sector Skills Plan for 2016/2017 that reflects the complex dynamics of the insurance sector and the challenges in meeting national, economic and social goals. The 2016 Sector Skills Plan produced by INSETA underpins the industry strategies where they exist and serves as a driving force to improve skills planning and productivity in the sector. This SSP also underpins the government s agenda of reducing unemployment and combating inequality and alleviating poverty. The aim of this SSP is to ensure that this document is used as a source of reference by all stakeholders concerned with: The workforce profile of the Insurance sub sectors The supply and demands for skills wihin the insurance sector Employment trends Industry transformation and various occupational levels, and Responding to the national agenda. In responding to the expectations of the DHET, the Board of INSETA boasts the following viewpoints on this 2016 SSP: The foundation of this SSP is rich in evidence based research; Compounded by a wealth of sub sector stakeholder inputs, Focused on the state of skills in the sector; and Research powerful enough to provide clear and reliable direction to INSETA towards discretionary grant spend to support industry and economic goals. The INSETA inhouse turnaround strategy to produce this Sector Skills Plan has yielded positive results in the eyes of the Board. To this end, we endorse this Sector Skills Plan of 2016. INSETA BOARD CHAIRMAN 1

COVER PAGE 30 July 2016 Ms Weziwe Sikaka Department of Higher Education and Training Dear Ms Sikaka It is with pleasure that I present the InSETA s Sector Skills Plan (SSP) 2016 to the DHET. In this year s submission of the SSP, InSETA has positioned itself to become an authority on labour market analysis in the insurance sector. This was only achieved through a strong employer-led process. Inseta has furthermore, taken the responsibility to up-skill its internal capacity on Labour Market systems and tools that will assist with research and development and data analysis. These are some of the noticeable updates in this year s SSP. We are certain that the current form of the SSP sets out an agreed sector strategy to address skills needs. InSETA, in turn, has a central role to play in supporting the insurance sector to meet its skills needs. New theoretical input has been added throughout the August 2016 SSP. The Executive Summary not only summarizes the content of the 5 chapters but is coupled to the objectives of the National Development Plan. A separate section on research methodology has been positioned before chapter 1 as requested by the department, along with the inclusion of the PIVOTAL list. The Continuous Improvement Plan (CIP) has been rewritten according to the DHET CIP matters template. In terms of what has been done differently in relation to the CiP of 2015, the Seta also has embarked on a Strategic Integrated Project in collaboration with GIZ (skills for green jobs), the Construction SETA and the short-term insurance industry as well as the Dept. of Energy, are in discussion around replacing electric geysers with solar water heating systems. This project which is still in the early stages of discussions will provide training opportunities for apprentice and qualified plumbers who want to pursue this trade at TVET colleges. We are confident that this Sector Skills Plan will add impetus to the skills development initiatives activated by our Seta and give direction to them. We have no doubt that this SSP will become the key planning tool for skills forecasting and development within the insurance and relatedservices sector. SANDRA DUNN INSETA CEO 2

ACRONYMS ABIB ASISA ATR B-BBEE BBF BUSOSA CEO CIPRO CPI CRFSA FAB FIA FAIS FET FETI FPI FSB FSC FSP GDP HEI HEMIS HRDSA ICT IISA ILA InSETA JSE MoA NC(V) NDP NGP NMMU NQF NSC NSDS NSFAS OFO PESTEL PIVOTAL QCTO RPL SAFOBS SAIA SAQA SAUMA SETA SIC SMME SSP SWOT TVET UMA WSP Association for Black Insurance Brokers Association of Savings and Investment South Africa Annual Training Report Broad-based Black Economic Empowerment Black Brokers Forum Burial Society of South Africa Chief Executive Officer Companies and Intellectual Property Registration Office Consumer Price Index Council of Retirement Funds for South Africa Funeral Assistance Business Financial Advisory and Intermediary Association Financial Advisory Intermediary Services Further education and training Further Education and Training Institute Financial Planning Institute Financial Services Board Financial Sector Charter Financial service providers Gross domestic product Higher Educational Institution Higher Education Management Information System Human Resource Development Strategy for South Africa Information and communication technologies Insurance Institute of South Africa Institute of Loss Adjustors Insurance Sector Education and Training Authority Johannesburg Stock Exchange Memorandum of Agreement National Certificate (Vocational) National Development Plan New Growth Path Nelson Mandela Metropolitan University National Qualifications Framework National Senior Certificate National Skills Development Strategy National Student Financial Aid Scheme Organising Framework for Occupations Political, economic, social, technological, environmental and legislative Professional, vocational, technical and academic learning Quality Council for Trade and Occupations Recognition of Prior Learning South African Federation of Burial Societies South African Insurance Association South African Qualifications Authority South African Underwriting Managers Association Sector Education and Training Authority Standard industrial classification Small, medium and micro-enterprises Sector Skills Plan Strengths, weaknesses, opportunities and threats Technical, vocational, education and training Underwriting Managers Association Workplace Skills Plan 3

EXECUTIVE SUMMARY The InSETA sector skills plan is what one can refer to as a program of action of the InSETA. This goes hand in hand with the common goal of all South Africans, the National Development Plan (NDP), which offers a long-term perspective. As a long-term strategic plan, it serves four broad objectives: Overarching goals for what we want to achieve by 2030. Building consensus on the key obstacles to us achieving these goals and what needs to be done to overcome those obstacles. Providing a shared long-term strategic framework within which more detailed planning can take place in order to advance the long-term goals set out in the NDP. Creating a basis for making choices about how best to use limited resources. The Plan aims to ensure that all South Africans attain a decent standard of living through the elimination of poverty and reduction of inequality. Given the mission and vision of the country as a whole, the InSETA skills development plan compliments the above targets by explaining the profile of the insurance sector and the role of the InSETA and its partners in the implementation of different programs. Detailed information is drawn on how InSETA disburses its funds in terms of the skills development levies act. Within the document great emphasis is given to the commitment of the InSETA in eroding unemployment in the South African economy through the insurance sector modification. Focusing on the problem of scarce and critical skills, dealing with the current high unemployment which is largely due to the mismatch of skills supplied by our labour force and what the labour market demands. The InSETA has also clasas rified its intentions and rules of engagement with the public by emphasizing the point of working collectively with FET colleges, universities, private and public sector with the framework of theory and practice. By prioritizing and supporting the objectives of the SETAs sector as a whole and thereby facilitating curriculum and qualification design to be more responsive to industry demands through: Providing quality lecturer, facilitator or trainer Providing access to appropriate learning material Providing relevant student information and support Developing partnerships between public and private sector Ensuring safe and productivity workplace with staff members who are able to sustain quality skills and training provision that is responsive to industry demands. On this new skill development plan document, the focus has not changed from the previous NSDS, but the emphasis of this new national skills development strategy, has indeed changed from the earlier versions of the NSDS. With an interactive skills planning approach, this has led to new performance evolution programs being put in place. When overviewing this skills developmental plan one can also question the planned program of action, given the knowledge of the financial system and the fundamental objectives of financial management. The international financial system is governed by theories which are relevant in 4

financial management but are also centred around maximizing some variable. For instance, maximizing profit, the value of the firm, the share price, shareholder wealth or company growth are often cited as important objectives of financial management. At the outset it is necessary to establish which variable should be maximized, if necessary, at the expense of others. We generally accept this in practice, as investors have expectations regarding the future. It is often possible to quantify such future expectations and express them as a single current value. Much of financial management is based on this concept, often referred to as the discounting of a series of expected future cash flows so that they may be expressed in single aggregated present value. Within this concept the question of which variable to maximize arises in the INSETA skill development plan where variable under concern is the welfare of others, which will make it either difficult or challenging for InSETA programs to work in the financial sector. There must be also a broader initiative where the focus is not only to the insurance sector but on an educational program that will bridge the gap between the general public and the whole financial sector where an attempt is made to restore public confidence in our financial system which was the main reason why the financial crisis was survived. Chapter 1 examines the 10 Sector Industrial Classification codes (SIC), that are represented by InSETA. These being Short Term, Long Term, Reinsurance, Pension Funds, Healthcare, Funeral, Unit trusts and Intermediaries. The intermediaries are represented by the brokers. The occupations identified in the Organising Framework for Occupations (OFO), represent a category that encompasses a number of jobs or specialisations within the various sub sectors. This chapter focuses on the scope of coverage within all sub sectors and gives an analysis of the major role players, the economic performance, and a detailed overview of the employer and employee profile within the sector. A comparative analysis, was done of the 2010 and 2012 InSETA data and interestingly, noticeable trends and progress were made around transformation at certain occupational levels, viz. gender at certain occupational levels and the progress of education within the sector, to mention but a few. Other important statistical areas worth mentioning is the statistics on people approaching retirement in the sector ( 55 65 yrs of age) and those over the retirement age (65+ yrs of age), as well as looking at the Youth Versus the Adults in the sector in relation to the retirement statistics. Feedback from sector partners on these alarming statistics have yielded discussions ong overdue in the sector. This too is in line with the regulatory requirements of the Financial Services Board which stresses the need for succession planning in the sector, where there is little happening from the information provided. In summary, concern is now around what can be done to address all these issues over the coming years so as prevent have businesses closing down especially SMEs and key posts having to be filled in the case of the larger companies. This could result in setbacks for business in the area of productivity. Overall economically, the sector is performing well, despite the challenges experienced in the economy and the high number of jobs lost in Quarter 1 of this year. In relation to economic performance, the percentage of real GDP varied depending on whether it was seasonally adjusted and annualised or the unadjusted market prices for Quarter 1 of 2015. The finance sector performed particularly well, and was second only to mining with regard to industry growth rates. Nominal GDP values and the contributions of the finance sector (of which the insurance sector is part), to GDP performed particularly well. 5

The economic performance of the long-term insurance industry was reviewed. Various economic factors are weighing down on consumers and the growth prospects of this industry. It was highlighted that the short-term insurance industry showed significantly improved results during 2015/16. Claims ratios decreased and underwriting margins increased due to a reduction in claims because of the absence of catastrophes. It is useful to look at the percentage representation of companies within each SIC code, because this indicates on which subcategory of insurance InSETA needs to focus its training service offerings. We also looked at major occupational groupings broken down according to race and its implications for transformation and skills development. Chapter 2 includes a discussion of the change drivers in relation to the supply and demand and the alignment with national strategies and plans. This chapter includes a table which clearly outlines the factors impacting on skills demand and supply in the sector and the implications for skills planning. Chapter 3 shows that the supply of skills for the insurance sector comes from entry and experienced levels. It is stressed that the need for the supply of skills for the insurance sector comes from TVET colleges, but for this to happen, the curriculum design at these colleges would have to be amended. The type of scarce occupations that are required by the insurance sector from 2016 to 2017, is also highlighted. It is also emphasised how critical skills are linked to the skills programmes. A new addition to the SSP June 2016, has been the development of a composite profile of critical skills for the period 2015 to 2019. Employment trends have been the most interesting in this section showing a steady growth of employment in this sector in comparison to any other sector. The PIVOTAL list has been included and it must be noted that this document has been widely discussed with the sector and endorsed. Chapter 4 highlights all the Iexisiting partnerships with the SETA. The successes and challenges of these are explained as well. What is in the pipeline with regards to new partnerships is also discussed in this chapter. The partnerships revolve around the following: registering burial societies as cooperatives, the human capital project and the financial code, making workplaces available for learnerships, making small businesses B-BBEE compliant and successful, as well as promoting the insurance sector as a career of choice. In Chapter 5, findings from previous chapters are identified. It also identifies the skills priorities arrived at from the goals of the NSDSIII. The measures that InSETA has taken to support national strategies and plans are discussed. In Summary, chapters 1 to 5 detail the updates since the 2015 SSP submission, and the focus now will now be on planning towards the skills shortages and addressing these in the SETAs upcoming strategic session. 6

TABLE OF CONTENTS ACRONYMS... 3 EXECUTIVE SUMMARY... 4 RESEARCH PROCESS AND METHODS... 10 RESEARCH METHODOLOGY FOR 2016/2017 SECTOR SKILLS PLAN... 10 CHAPTER ONE: SECTOR PROFILE... 12 1. INTRODUCTION... 12 1.1 SCOPE OF COVERAGE... 12 1.1.1 PERCENTAGE REPRESENTATION IN SIC CODES AND ITS IMPLICATIONS FOR SKILLS DEVELOPMENT... 13 1.2 KEY ROLE-PLAYERS... 13 1.3 ECONOMIC PERFORMANCE OF THE SECTOR... 14 1.4 EMPLOYER PROFILE... 15 1.5 SUB SECTOR DISTRIBUTION EMPLOYER DISTRIBUTION... 17 1.6 LABOUR MARKET PROFILE LARGE AND MEDIUM EMPLOYERS DATA... 19 1.7 LABOUR MARKET PROFILE SMALL EMPLOYERS DATA... 20 1.8 POPULATION GROUP BY RACE AND OCCUPATION... 22 1.8.1 IMPLICATIONS OF THE ABOVE RESULTS FOR TRANSFORMATION... 22 1.9 GENDER BY ORGANISATIONAL SIZE... 23 1.10 CONCLUSIONS... 24 CHAPTER 2: KEY SKILLS ISSUES... 25 2.1 CHANGE DRIVERS... 25 2.2 MAJOR FACTORS AFFECTING SKILLS DEMAND AND SUPPLY AND THE IMPLICATIONS OF THESE FOR PLANNING IN THE SECTOR... 25 2.3 APPROACH TO THE RESEARCH IN THIS CHAPTER... 26 2.4 ALIGNMENT WITH NATIONAL STRATEGIES AND PLANS... 26 2.4.1 NATIONAL PLANS AND STRATEGIES IN THE INSURANCE SECTOR AND THE IMPLICATIONS FOR SKILLS PLANNING?... 26 2.4.1.1 DEVELOP NATIONAL STRATEGY TO TACKLE SKILLS SHORTAGE... 26 2.5 NATIONAL DEVELOPMENT PLAN... 27 2.6 THE NEW GROWTH PATH... 27 2.7 WHITE PAPER FOR POST-SCHOOL EDUCATION AND TRAINING... 27 2.8 STRATEGIC INTEGRATED PROJECTS (SIPS)... 28 2.9 CONCLUSIONS... 28 CHAPTER 3: EXTENT OF SKILLS MISMATCHES... 30 3.1 EXTENT AND NATURE OF DEMAND... 30 3.2 SKILLS NEEDED OCCUPATIONS IN DEMAND AND REASON FOR DEMAND... 30 7

3.3 OCCUPATIONAL WAGE TRENDS... 31 3.4 EMPLOYMENT TRENDS... 31 3.5 CONDITIONS OF EMPLOYMENT IN THE INSURANCE SECTOR... 34 3.6 MIGRATION AND ITS IMPACT ON THE INSURANCE SECTOR... 35 3.7 THE EXTENT OF OCCUPATIONAL SKILLS SUPPLY IN THE SECTOR... 35 3.7.1 PROFESSIONAL QUALIFICATIONS... 35 3.7.2 THE STATE OF EDUCATION AND TRAINING PROVISION... 35 3.7.2.1 FAILING EDUCATION SYSTEM... 35 3.7.2.2 TRAINING CHALLENGES... 36 3.7.2.3 HELP TRANSFORM THE EDUCATION SYSTEM... 36 3.7.2.4 SUPPORT SKILLS DEVELOPMENT... 37 3.7.2.5 SUPPLY PROBLEMS FACED BY EMPLOYERS... 37 RETENTION CHALLENGES... 37 3.8 EXTENT OF SCARCITIES... 38 3.9 SKILLS GAPS WITHIN THE INSURANCE SECTOR THAT REQUIRE IMPROVEMENT... 40 3.9.1 COMPOSITE PROFILE OF CRITICAL SKILLS IN THE INSURANCE SECTOR BETWEEN 2015 AND 2019... 41 3.9.2 REASONS ADVANCED FOR CRITICAL SKILLS... 42 3.9.3 IMPACT OF SKILLS SHORTAGES ON INSURANCE COMPANIES... 42 3.10 PIVOTAL SKILLS LIST... 43 3.13 PIVOTAL TRAINED BENEFICIARIES 1 ST JANUARY 2015 TO 31 ST DECEMBER 2015... 46 3.14 CONCLUSIONS... 46 CHAPTER 4 SECTOR PARTNERSHIPS... 48 INTRODUCTION... 48 4.1 PROJECTS REFLECTING TVET COLLEGE PARTNERSHIPS... 48 4.3 HOW SUCCESSFUL ARE THESE PARTNERSHIPS?... 51 4.4 WHAT IS WORKING WELL WITH THESE PARTNERSHIPS?... 51 4.5 PROBLEMS EXPERIENCED WITH THESE PARTNERSHIPS... 52 4.6 HOW CAN PARTNERSHIPS BE STRENGTHENED?... 52 4.7 WHAT NEW PARTNERSHIPS ARE NEEDED FOR THE SECTOR?... 52 CHAPTER 5 SKILLS PRIORITY ACTIONS... 53 INTRODUCTION... 53 5.1 MEASURES TO SUPPORT NATIONAL STRATEGIES AND PLANS... 54 5.2 FINDINGS FROM PREVIOUS CHAPTERS... 55 CHAPTER 1... 55 CHAPTER 2... 56 CHAPTER 3... 57 CHAPTER 4... 58 BIBLIOGRAPHY... 60 8

LIST OF TABLES Table 3 Inseta's Sic codes 2016 13 Table 4 Professional bodies and the associated categories under which they fall 14 Table 5 Large, medium and small levy and non-levy paying organizations (employers) in the insurance and related services sector 16 Table 6 Organization size by number of employees 16 Table 7 OFO major group broken down by race and 'other' for large/medium levy-paying companies 1 January 2016 to 31 December 2016 19 Table 8 OFO major group broken down by race and 'other' for small levy-paying companies 1 January 2016-31 December 2016 20 Table 9 Factors affecting skills supply and demand in the insurance sector 25 Table 10 National list of occupations in high demand in 2014 relevant to the insurance sector 30 Table 11 South African insurance related occupations in 2015 31 Table 12 Top 10 Scarce skills for 2016 2017 38 Table 13 Reasons for scarce skill occupations in 2016 2017 39 Table 14 Skills programmes that address scarce & critical skills 40 Table 15 Critical skills which are allied to scarce skills for the financial investment advisor 2015-2019 41 Table 16 Critical skills which are allied to scarce skills for the insurance agent 2015-2019 41 Table 17 Critical skills which are allied to scarce skills for the call centre salesperson 42 Table 18 Inseta Pivotal Skills List for 2016 2017 43 Table 19 Pivotal Programmes for 2015 2016 46 Table 20 Work-based funding experience Memoranda of Agreement with TVET colleges 50 Table 21 Delivery and Invoicing schedule Error! Bookmark not defined. LIST OF FIGURES Figure 2 Subsector distribution by employer 17 Figure 3 Provincial breakdown in small levy-paying companies 18 Figure 4 Provincial breakdown in large medium levy-paying companies 18 Figure 5 Population Group by Race and Occupation 22 Figure 6 Gender by Organizational Size 23 Figure 7 Gender by Occupation 23 9

RESEARCH PROCESS AND METHODS Research Methodology for 2016/2017 Sector Skills Plan Introduction A human capital research project which was undertaken under the domain of Inseta project research where the angle focused on in the answer, is on the critical research methodological aspects. What did this study include which was incorporated into the 2016/2017 Sector Skills plan? An overview of transformation and skills availability in the South African insurance sector including the short-term, life and social security sector (last-mentioned sector includes retirement funding, healthcare and funeral insurance). a. Nature (Design) of the study (Qualitative or Quantitative) The research design included the use of desktop research, 2 variant interview protocols (discussion guide and telephonic questionnaire), and the use of a web-based questionnaire survey in order to achieve the brief and objectives set for this study, which is outlined below. The scope of this study s objectives necessitated the use of both exploratory (qualitative) and explanatory (statistical) research gathered from a broad range of sources. b. Objectives of study Determine the status of transformation in the subsectors of the insurance industry served by Inseta Determine what skills are available and identify skills shortages Highlight areas that offer job creation opportunities Identify gaps between existing and needed levels of qualification and skill Define industry expectations regarding how to address these gaps c. Data collection tool/s Multiple data collection tools were used. The research commenced with a briefing session with senior members of the insurance industry representative bodies. Based on their input, the discussion guide was designed that was used during in-depth face-toface interviews with corporate decision-makers. The outcomes of these interviews informed the design of the questionnaire used in telephonic interviews with companies with 50 or more employees. Finally, a web-based self-completion questionnaire was created that gathered input from SMMEs within the insurance industry. d. Sample size and scope of the study The sample size was the determining factor in deciding what type of methodology to use. In-depth face-to-face interviews with 58 senior representatives of leading organisations Structured telephonic interviews with 228 senior representatives of smaller organisations A web-based survey focused on 4000 SMME levy and non-levy paying members 10

The scoping of this study commenced with an evaluation of the background of the South African insurance industry. Here the focus was on the trends in transformation and skills development, and observations regarding the availability of skills within the insurance sector. It provided a basis for subsequent studies focusing on specific industry needs. The scope of this study follows Inseta s breakdown of the insurance sector. Inseta s membership is dominated by the shortterm insurance, retirement funding, and life insurance sectors. More than a third of Inseta s members play various auxiliary roles to the industry, but most are small companies and individual consultants operating within the SMME sector. For this reason the following sectors comprised the scope of this study: short-term, life-insurance and the social security industries. Reinsurance, risk management and intermediaries are included in the subsectors that they serve. e. List of data sources and data sets analyzed Sectors of the industry stratified according to levy-paying and non-levy paying companies (WSP/ATR data 2013-2014). This analysis determined what sectors of the insurance industry were included in this research study. f. Time frame of the study (when was the study undertaken? Covering which period? From March 2014 to December 2015. Conclusion The primary focus of the answer to this question is on the research methodological aspects of this human capital study. References InSETA Research Report 2014/15 Final Combined Report Overview of Transformation and Skills Availability in the South African Insurance Sector. 11

CHAPTER ONE: SECTOR PROFILE 1. Introduction The purpose of the Sector Profile is to present the profile of the Insurance sector and its sub-sectors in terms of the labour market profile and how the sector has been evolving over time. This chapter also looks at these companies from the perspective of their classification according to various standard industrial classification (SIC) codes or also known to many as sub-sector codes. This chapter provides an overview of the scope of coverage of the sector, the key role-players (their contributions to the sector) and the sectors economic performance. The economic performance of the sector was drafted based on data provided by Statistics South Africa and compared against other credible sector economic performance reports. Demographic profiles were constructed using but not limited to data from the 2016/17 Workplace Skills Plan (WSP) and Annual Training Report (ATR), as well as consultative workshops planned during the course of the financial period. A comparative analysis was done with this baseline data against other Labour Market data on the sector demographics. Due to the InSETA not being the only SETA representing companies within the Insurance Sector, and also not holding the full representation of every company within the insurance sector, it was imperative that we gather as much data sources to provide a more inclusive representation of the insurance and related services sector. 1.1 Scope of Coverage The Insurance and related services sector has evolved rapidly over the past 5 years, growing and developing as a major player in the South African economy. The Insurance and related services sector is clustered within the economic group category of Finance, Real Estate and Business Services with the latest GDP statistics showing this sector to be the highest contributor to GDP in comparison to all other sectors. InSETAs sector includes 10 categories of the Standard Industrial Classification (SIC). Some of the economic activities described under the 10 SIC codes featured below are similar and, in order to facilitate more meaningful data, InSETA is in the process of re-categorising the subsectors for better data usage. The SIC code of Insurance and pension funds as well as, Activities Auxiliary to Financial Intermediation includes all insurance brokers and financial intermediaries that cut across a range of the other SIC codes. For this reason, the data and explanations are rearranged into the main categories of Short Term, Long Term, Health and Pension. Where a financial Intermediaries core business is not defined under one SIC code only, their data is then placed into the category of Activities Auxiliary to Financial Intermediation 12

Table 1 InSETA's Sic codes 2016 Sub Sector SIC Codes Unit trusts 81901 Risk management 81902 Insurance & pension fund (except compulsory social security) 82100 Life insurance 82110 Pension funding 82120 Health care benefits 82131 Short-term insurance 82191 Funeral insurance 82192 Reinsurance 82193 Auxiliary activities (includes brokers and intermediaries) 83000 (Insurance Sector Education and Training Authority, 2016) 1.1.1 Percentage representation in SIC codes and its implications for skills development The level of representation of insurance companies within the various SIC a code is useful in the sense that it indicates where InSETA should direct its skills, developmental efforts and interventions. Obviously, an SIC code with a low level of insurance representation does not merit the same level of attention as an SIC code with a high level of attention. Also, when the SETA is planning for internships, bursaries, learnerships and skills programmes, the focus must be on the inclusion of those qualifications that are linked to those areas of insurance and SIC codes that command higher representation. Furthermore, the planning for qualification inclusion needs to go even further by looking at the percentage representation of SIC codes in large/medium core broker companies, small core broker companies, large/medium core training provider companies and small core training provider companies because SIC codes vary among them. As the Insurance SETA, InSETA could even advise its training provider companies on which qualifications they should focus, and align this to their target market, given the variant distribution of SIC codes. 1.2 Key role-players The insurance and related services sector is well organised through professional bodies and industry associations. InSETA is able to remain relevant and meet the demands of the sector through these partnerships which has been developed through the SETAs license period. InSETA partnerships reflected in Table 4 below are made up of these main innovators. 13

Table 2 Professional bodies and the associated categories under which they fall Category Body Role of the Body in the sector Regulator Financial Services Board (FSB ) Regulator to all Finance, Non- Banking and Industry associations Association of Savings and Investment South Africa (ASISA) South African Underwriting Managers Association (SAUMA) Underwriting Managers Association (UMA) South African Insurance Association (SAIA) Intermediaries subsector Financial Advisory and Intermediary Association (FIA) Black Brokers Forum (BBF) Association for Black Insurance Brokers (ABIB) Funeral Assistance Business (FAB) South African Federation of Burial Societies (SAFOBS) Burial Society of South Africa (BUSOSA) Professional bodies Insurance Institute of South Africa (IISA) Institute of Loss Adjustors (ILA) Financial Planning Institute (FPI) Council of Retirement Funds for South Africa (CRFSA) Board of Healthcare Funders Source: InSETA, 2016 Insurance sector employers Underwriting agency Short Term Life Insurance Funeral subsector Short Term Subsector Activities Auxiliary to Financial Intermediation Life Insurance Healthcare benefits administration Healthcare benefits and administration Life Insurance Short Term 1.3 Economic performance of the Sector The Insurance sector forms part of the broader financial services sector the Finance, Real Estate and Business services sector. The total contribution of the Insurance specific sector is unable to be calculated because of the Insurance sector being clustered within the Finance, real estate and business services sector. According to BusinessTech (2016), South Africa is expected to face a tough economic year, with growth for 2016 expected to be less than 1%. The main contributors to the increase in economic activity in 2015 were finance, real estate and business services (0.6 of a percentage point), the mining and quarrying industry and the wholesale, retail and motor trade; catering and accommodation industry (each contributing 0.2 of a percentage point). Based on the latest statistics released, the Insurance sector which forms part of the Finance, Real Estate and Business services sectors contribution to GDP is 0.4% The Insurance sector, which forms part of the Finance, real estate and business services sector, continues to remain the largest contributor to GDP in comparison to other economic sectors. 14

The largest industries, as measured by their nominal value added in 2015, were as follows: Finance, real estate and business services 20.9%; General government 17.4%; Wholesale, retail and motor trade; catering and accommodation 15.0%; and Manufacturing 13.0%. In terms of the sectors current performance, there was a 4% decline in earnings for the quarter ended March 2016 from R545bn to R523bn. These decreases were recorded in all industries, except the business services industry which the Insurance sector forms part of. (Fin24.com, 2016 ). Employment declined by 0.2% to 9.2 million people in the formal non-agricultural sector of the economy. The Quarterly Labour Force Survey showed that the largest percentage of job losses took place in the retail, hotel and restaurant sector. In the retail trade sector, 27 000 jobs were lost, while 7 000 people were retrenched in the hotels and restaurants industry. Employment in the mining sector contracted for the sixth consecutive quarter by 4 000 employees in the first quarter of 2016. The Insurance sector which forms part of the Finance and Business services lost 9 000 jobs after employment rose by 42 000 in the last quarter of 2015. In terms of the future outlook for the country and the sector, cost-estimation site, HowMuch.net has drawn up map with countries scaled to show how each one s predicted growth rate through 2024 compares to the rest of the world. The projections are based on a study of economic complexity run by the Centre for International Development at Harvard University. The study captures the diversity and sophistication of productive capabilities embedded in a country s exports, to generate the growth projections. Leading researcher, Ricardo Haussmann, said that gains in economic complexity have historically translated into higher incomes and growth. The research shows that India is expected to see the biggest growth to 2024, averaging 7% annually, followed by a number of African nations Uganda, Kenya, Tanzania, Egypt and Madagascar all close to 6%. The projected data for South Africa is slightly less optimistic at 3.7% average per year to 2024, however, it is a vast improvement on current and expected growth trends just 0.9% in 2016. Growth is expected to be only 1.8% in 2017, according to the International Monetary Fund. (Business Tech, 2016c) In summary, the statistics above and those of 2016 recently released by STATS SA, shows that the Finance, real estate and business services sector remains the most competitive in relation to the rest of the economic sectors. 1.4 Employer profile InSETA received data from 943 employers out of a total of 3415 employers in the 2016/17 WSP /ATR submissions. These 943 employers are represented by both levy and non-levy payers. These also employ a total workforce of 156 968 employees. Some of the limitations in conducting this analysis were in identifying which employers fall within the correct subsector categories. Whilst the FSB have only registered a certain number of short-term and long-term insurers, it is found that employers, mostly intermediaries, have categorised themselves 15

under the short-term and long-term category. This has skewed our statistics in terms of subsector representation. However, the INSETA plans to engage with DHET in 2017 to rearrange subsector codes with the insurance sector. Once employers fall within the correct subsectors, more accurate analysis can be conducted. Table 3 Large, medium and small levy and non-levy paying organizations (employers) in the insurance and related services sector Type 2016 Total Registered Employers Total Registered Employers who submitted data during the 2016 WSP period Large ( 150 + employees ) 210 195 Medium ( 50 149 employees ) 208 139 Small ( 1 49 employees ) 2997 609 Total 3415 943 (Insurance Sector Education and Training Authority WSP data, 2016) Table 5 above shows that there are 3415 levy and non-levy paying companies registered with the INSETA in 2016. The data shows that the total registered large businesses (210) employs the smallest (6893) workforce in the sector and the Small businesses (2997) are the employers of the largest workforce (259 837)(Table 6). Table 4 Organization size by number of employees Type 2016 Employee data for the 3415 registered employers 2016 WSP Large ( 150 + employees ) 6 893 1 678 Medium ( 50 149 employees ) 149 520 4 554 Data received from 943 employers Small ( 1 49 employees ) 259 837 150 736 Total 416 250 156 968 (Insurance Sector Education and Training Authority WSP data, 2016) Kesper, (2001) and Ladzani et al, (2001) state that in Japan most of the businesses are SMMEs and their employees are members of free market and strong market economy. SMMEs do not only provide support for the regional economy through employment, but are also responsible to a day-to-day life of most Japanese. According to Ladzani and Netswera (2001), other countries such as the People s Republic of China and Taiwan have reported that their SMMEs sector accounts for between 60% and 88% of the national total income. To confirm that SMMEs are the engine of economic growth and development in any economy, in many of the countries referred to, have ensured the vibrancy of the SMME sector and this engine has succeeded significantly in reducing unemployment and promoting the standard of living. SMMEs encourage entrepreneurship, (Kongolo, 2010). Egna (2009) confirms that the small businesses also make a contribution to job creation and poverty alleviation strategies in both the rural and the urban 16

work force, thereby bringing stability and innovation in the entire economy. South Africa has taken a serious stance on the support to the SME sector by establishing a Small Business Development Unit in government. However, with the current instability of the South African economy, the focus now shifts to the retention of employment through any means necessary. 1.5 Sub sector distribution Employer Distribution It can be seen from Figure 2 below that the Auxiliary activities which includes brokers and intermediaries sector, has the highest level of representation, followed by Short term insurance, life insurance, Insurance and pension funds, funeral, healthcare followed by the rest. 1.87% 0.70% 7.40% Percentage Unit trusts Risk management 45.60% 9.40% 0.94% 23.60% 3.40% Insurance & pension fund (except compulsory social security) Life insurance Pension funding Health care benefits Short-term insurance 0.70% Figure 2 Subsector distribution by employer 6.40% Funeral insurance Figures 3 and 4 below show the provincial spread of all employers. Majority of the employers being based in Gauteng, followed by Western Cape and then KwaZulu Natal. The Eastern Cape appears to be a growing business hub. InSETA currently has representatives within the public colleges in the Eastern Cape. If InSETA is to ensure that we have a country-wide presence, we will need to ensure that there is a national presence through partnering with other SETAs or placing representatives in the province to ensure that skills development opportunities are reaching even the most remote of areas. 17

Figure 1 Provincial breakdown in small levy-paying companies 0.7 1.1 1.2 Provincial breakdown in small levy-paying companies (percentage) 14.6 62.1 17.81 0 1 1.1 Western Cape Northern Cape Eastern Cape Free State Gauteng Mpumalanga 1.5 Provincial breakdown in large and medium levy-paying companies (percentage) 1.5 1.2 56.8 21.7 Figure 2 Provincial breakdown in large medium levy-paying companies 8 0 1.2 5.1 2.5 Western Cape Northern Cape Eastern Cape Free State Gauteng Mpumalanga Limpopo 18

1.6 Labour market profile Large and Medium Employers Data From the table below, Technicians & Associated Professionals have the highest level of representation among large/medium employers (38,617) followed by Clerical Support Workers (31,225), by Professionals (27,936), Managers (15,621), Service & Sales Workers (2,412), Elementary Occupations (855), Skilled & related trade workers (581), and Plant & Machine Operators (371). Among Technicians & Associated Professionals, Africans (24,895) have the highest level of representation, followed by Whites (6,651), Coloureds (4,262), Indians (2,687) and Others (132). OFO group Table 5 OFO major group broken down by race and 'other' for large/medium levy-paying companies 1 January 2016 to 31 December 2016 major African African African Coloured Coloured Coloured Indian Indian Indian White White White Other Other Other Total Total male female disabled male female disabled male female disabled male female disabled male female disabled male female Total disabled Managers 2088 2194 30 890 1204 27 1006 1006 18 3524 3518 77 119 72 0 7627 7994 152 Professionals 4536 6114 55 1876 1968 47 1648 1539 27 5463 4547 109 166 79 2 13689 14247 240 Technicians and associated professionals Service and sales 9455 15440 77 1668 2594 35 1210 1477 25 2427 4224 90 65 57 2 14825 23792 229 682 630 2 234 253 1 90 57 1 212 250 1 2 2 0 1220 1192 4 Clerical support workers Skilled related trades workers and 4888 10229 289 2240 5212 158 1186 2215 39 1004 4177 128 24 24 0 9342 21883 614 55 8 0 6 2 0 2 1 0 6 1 0 0 0 0 569 12 0 Elementary occupations 170 578 2 25 63 0 6 2 0 3 3 0 4 1 0 208 647 2 19

Plant and machine operators 297 31 0 17 7 0 10 0 0 9 0 0 0 0 0 333 38 0 Total 15547 1247 455 1172 1529 268 2300 1066 110 3661 4478 405 380 235 4 18079 69805 1241 1.7 Labour market profile Small Employers Data From the table below, Clerical support workers (2591) have the highest level of representation among small levy-paying companies, followed by Clerical Support Workers (2591), Technicians & Associated Professionals (2586), Managers (1561), Professionals (968), Elementary Occupations (271), Service & Sales Workers (174), and skilled & related trade workers (40). Among Technicians & Associated Professionals Whites have the highest level of representation, followed by Africans (382), Coloureds (238), Indians (197) and Others (11). Table 6 OFO major group broken down by race and 'other' for small levy-paying companies 1 January 2016-31 December 2016 OFO major group African male African female African disabled Coloure d male Coloure d female Coloure d disabled Indian male Indian femal e Indian disabled White male White femal e White disabled Managers 76 71 1 56 72 0 23 64 1 693 497 0 5 4 0 853 708 2 Foreign Male Foreign female Foreign disabled Total male Total female Total disabled Professionals 77 90 0 27 47 0 35 39 0 349 297 2 5 2 0 493 475 2 Technicians and associated professionals Service and sales workers Clerical support workers 204 178 14 60 178 1 52 147 0 513 1067 17 7 4 0 836 1750 32 41 22 0 6 25 0 21 22 0 11 24 0 0 2 0 79 95 0 178 481 3 56 280 2 39 148 3 175 1224 20 3 7 0 451 2140 28 20

Skilled and 15 1 0 14 4 1 0 0 0 1 5 0 0 0 0 30 10 1 related trades workers Elementary occupations 65 181 0 1 17 0 1 0 0 1 4 0 0 1 0 68 203 0 Plant and 65 5 0 2 0 0 2 0 0 4 0 0 0 0 0 73 5 0 machine operators Total 721 1029 18 222 623 4 173 420 4 1747 3118 39 20 20 0 2883 5210 65 21

1.8 POPULATION GROUP BY RACE and OCCUPATION Among Technicians and Associated Professional the Black group (31956) has a greater number of employees than the White group (6651) as indicated in the table below. Among Professionals the Black group (17,873) has a greater number of employees than the White group. Among the Management group the Black group (8445) has more employees than the White group (7042). Plant and Machine operators & Assemblers Elementary occupations Skilled and related trade workers Clerical support workers Service and Sales workers Technicians and Associate professionals Foreigners Whites Blacks Professionals Management Figure 3 Population Group by Race and Occupation 0 5000 10000 15000 20000 25000 30000 35000 1.8.1 IMPLICATIONS OF THE ABOVE RESULTS FOR TRANSFORMATION These findings indicate that transformation has occurred across all major groups. The sector as a whole employs more Blacks (African, Coloured, Indian) than Whites in the sector and at each occupational level, however, in the Management category, Whites still hold the majority of positions against each of the other race groups when broken down per racial grouping. According to the WSP data of 2012 2016, only 1% of the total workforce is represented by persons with disabilities. InSETA needs to take a stronger stance to meet the National Transformational imperatives of employment of persons with disabilities in this sector. New fubding models need to address this. NOTICABLE TRENDS If one compares this data with that of the sector data of 3 years ago, it was evident that transformation was happening, however, not at the relevant occupational levels of Management, Technicans and Professionals. 8 years ago, the sector data showed that the sector employed majority Whites at the levels of Management, Technicans and Professionals. Africans now exceed the Whites in the occupational category of Technicians and Professionals. 22

With the InSETAs support against Governments transformations imperatives (to support 85% Black, 54% Women and 4 % Disabled), it is clear that the SETAs initiatives have made an impact in the sector. 1.9 GENDER BY ORGANISATIONAL SIZE The Majority of workers in the Insurance sector are women, within both the large and small organisations. Women are well represented in the Management and Professional occupational category as can be seen from the graphs below. These comments are also shared by the Financial and Banking SETAs who show the similar representation. 80000 60000 Gender by Organisational Size 40000 20000 Male Female 0 Large Employers ( 50 + employees) Small Employers ( 1-49 employees ) Figure 4 Gender by Organizational Size Females (69805) are more represented in large/medium companies than males (47313) Among small employers the same trend occurs females (5594) have a higher representation than males (3009). Figure 5 Gender by Occupation Gender by Occupation PLANT AND SERVICE AND SKILLED PROFESSIONALS TECHNICIANS AND CLERICAL SUPPORT ELEMENTARY MANAGERS 43 1288 22 14733 25613 24108 860 8732 Female Male (WSP/ATR Data, 2016) 0 10000 20000 30000 23

Among Professionals females (14733) are represented by a greater number than males (14187). Among clerical support workers. Among Clerical Support Workers females (24108) are present in higher numbers than males (9798). 1.10 Conclusions It is the intention to reclassify standard industrial classification codes within the insurance sector because some of the broad sic codes overlap with sic codes, e.g. activities auxiliary ary to financial intermediation. Sic codes within the insurance sector range from unit trust to reinsurance. It is advanced that training within the insurance sector must be directed at those sic codes which command a higher level of representation. InSETA has partnerships with professional bodies ranging from regulators to intermediaries. The insurance sector falls under the finance, real estate and business services sector and this sector made the greatest contribution to economic activity during 2015. The insurance sector which forms part of the business service industry did not experience a decline in earnings for the quarter ended March 2016. Gains in economic complexity usually translate into more growth and predictions with regard to this phenomenon have been made until 2014 but South Africa has fared less well in this regard than countries such as India. Finance, real estate and the business services sector is more competitive than any of the other economic sectors within the South African context. 27.6% of InSETA s registered employers submitted workplace skills plans for the period 2016-2017. An anomaly within the insurance sector is that large businesses employ the smallest number of employees and the smallest employers employ the largest number of employees. It is contended that small business should be the future driver of the economy in South Africa and it is hoped that South Africa will achieve the same successes as what has been achieved in Japan with SMMEs. The subsectors of the insurance sector vary in terms of their level of representation. Provincial representation of employers between the provinces differs. The distribution of occupational categories varies between large and medium and small levypaying companies. Also the distribution of race among the various occupational groupings varies between large/medium and small levy-paying companies. Among the Management occupational category the White group holds proportionally more positions than the Black Group. 24

CHAPTER 2: KEY SKILLS ISSUES 2.1 Change drivers According to a report commissioned by InSETA around change drivers affecting the insurance industry, five key trends mentioned below are driving change in the insurance industry: Social, political and economic pressure toward transformation (covered in a separate section) Legislative and regulatory changes Developments in technology Changes in the competitor environment New market opportunities Technology is changing human interactions at all levels. Sophisticated and ubiquitous technologies are both changing the way humans interact with each other and with their providers, and creating floods of information with the potential to change the way sellers interact with buyers. These trends are creating a need for a new, high-tech skill set within the Insurance industry. Key trends include: Big data Automated underwriting Greater use of technology in marketing, sales and service provision 2.2 Major factors affecting skills demand and supply and the implications of these for planning in the sector Table 7 Factors affecting skills supply and demand in the insurance sector Changes in legislation and regulation Intensive regulation The increased regulation of the South African insurance industry has been driven by the need to achieve social and economic transformation, control the effects of the last global financial crisis, and improve governance. However, insurance industry members are concerned about: The high cost of compliance The difficulty of finding staff with the skill sets needed to ensure compliance Uncertainty regarding many requirements for implementation Possible effects on their ability to do business effectively Compliance officer plays a key role. Most financial transactions cut across numerous pieces of major legislation. The role of the compliance officer has always been important, but it is now crucial. Developing individuals with the industry understanding and insurance and legal skills to play this role has become a priority. A significant concern is that, while in-house compliance officers servicing the large insurers are insurance specialists, the compliance agencies serving smaller players may have little or no insurance industry knowledge. Regulation beneficial but presents challenges. The increased regulation of the entire South African financial services industry, including the insurance industry, has been powered by the need 25