Welcome to Matters of Mind July 2023

Economic matters

Interest rate hikes not the only solution to inflation

PSG Wealth’s chief investment officer, Adriaan Pask, said interest rate hikes are not the right mechanism for fighting inflation in all environments – particularly in South Africa, where economic growth is limited.

Inflation is a reality and yet in reality difficult to manage. 3min read.

Reserve Bank’s 2023 load-shedding expectations

The SARB’s latest Monetary Policy Committee (MPC) statement, delivered on 20 July, said the expected load-shedding is 280 days in 2023.

2min read.

South African food price concerns for 2023

The increased likelihood of the El Niño weather pattern could see emerging markets – including South Africa – face stagflationary risks and higher food prices as soon as this year.

This is according to Schroders senior emerging markets economist David Rees, who defined El Niño as a periodic weather pattern typically observed every two to seven years, where a warming of sea waters in the Pacific Ocean disrupts the climate.

2.5 min read.

Financial Services Industry

VIDEO: Everything.Insure aims to demystify SA insurance market

After ruffling some feathers in the South African insurance industry, insurtech start-up company Everything.Insure has set its sights on expanding its operations to India.

This was revealed by Mishaya Chettiar, executive head of Everything.Insure, in a video interview with ITWeb TV.

3.5min read or else watch the interview for 17 minutes.

Data breaches cost SA’s financial sector R73m on average

South Africa’s financial sector has experienced the highest average cost of data breaches totalling R73.1 million, with the industrial and services sectors second and third, with R71.37 million and R58.78 million, respectively.

3.5min read.

Financial Services Leader PSG Konsult Appoints Lizé Lambrechts

PSG Konsult Limited has announced the appointment of Ms Lizé Lambrechts as an independent non-executive director, effective from 14 July 2023, pending regulatory approval. This appointment aligns with the company’s commitment to enhancing its governance and strategic leadership.

Ms Lambrechts holds a BSc Hons (cum laude) degree in applied mathematics from the University of Stellenbosch and is a qualified actuary.

2min read.

Census: Here’s Where Things Stand

The latest census is expected to be published before October, according to Census Project Director Calvin Molongoana. The last one, the 2011 census, was released more than a decade ago in 2012.

The census is very important not only for demographers, but for industry in general. Prof Moultrie from the Centre for Actuarial Research at UCT tells us more about the complexities and how to adjust for the delay.

3min read. 

Winner announcement: Miway’s 2023 Actuarial Hackathon proves the efficacy of creative recruitment drives

The MiWay Actuarial Hackathon – an invitation-only, one-week modelling marathon took place earlier this month and saw participants apply their minds to developing the best pricing strategy based on a provided dataset. This year’s constituent comprised 3rd year and Honours students, across the fields of actuarial science, data science and related fields.

3min read.

Life Insurance

Life insurers’ claim statistics reflect SA’s high murder rate

Last week, Momentum Retail Life Insurance reported an 11% increase in unnatural deaths – including motor vehicle accidents, murder, suicide, and surgery-related deaths – on the previous year’s claims.

4min read.

Liberty Top Five Life Insurance Claims in 2022

I have added this as an addition to the article above for greater spread across lives insured in SA. There is a stark contrast between females and males for cancer and cardiovascular diseases. 2min read.

General Insurance

How to think about climate change risk management in 2023

A must read for this edition. A very well written article answering questions top of mind and how to work together to address the risks. 6min read.

For more insight into how climate research is carried out, please read the scientific paper: A drier than expected future, supported by near-surface relative humidity observations

Insurers and their clients count the cost of extreme weather

With large parts of the country lashed by heavy rains that have caused flooding and extensive property damage in the past few months, it is easy to see why the latest World Economic Forum Global Risks Perception Survey listed “extreme weather” as the second most severe risk on a worldwide scale over the next 10 years.

A comprehensive article covering the impact on premiums and the forecast ahead. 5min read.

More autonomous trucks are hitting the road. How should insurers be changing lanes on coverage?

This article is an informative read covering a wide range of topics and related questions to short term insurers. It also gives you access to the Deloitte FSI report which covers global trends. The SA market in this segment is in stark contrast to the USA. Can you identify the major differences? 5min read.

Backseat driving

Read this article which advises how insurance companies will need to adjust processes and business models for autonomous vehicles. 8min read.

Health Insurance

Council for Medical Schemes taken to task for dragging feet in offering low-cost options

THE BOARD of Healthcare Funders (BHF) was successful in its application to the High Court in Pretoria this week to overturn the moratorium that prohibits medical schemes from providing low-cost benefit options (LCBOs) to South Africans who cannot afford full medical scheme membership.

4min read dated 16 July 2023.

Doctors' petition urges NCOP to reject NHI Bill

The South African Medical Association (Sama), representing more than 12 000 doctors, has submitted a petition signed by more than 56 000 people to the NCOP, appealing for it to vote against the passing of the NHI Bill in its current form.

3min read.

UK's ‘best in the world’ NHS a good model for SA – Health Ombud

Implemented 75 years ago, it provides access to primary, emergency and psychiatric care, is one of the largest public health systems around the globe, and a good model of universal healthcare, he said.

This article provides facts you may not have known about the NHS. 2.5min read.

Banking

Momint’s new blockchain wallet enables crypto payments

Momint, a local tech start-up based in Cape Town, has launched a blockchain wallet that allows South African consumers to spend their crypto at over 10 000 retailers across the country.

The tension between traditional bank transactions and crypto payments is the cost. 2min read.

Investments

NFT-based marketplace Momint targets artists, athletes

Over R150 000 was raised on Momint for the Bryan Habana Foundation when Momint was launched in May 2021. 3min read.

Orbis’ Cutler: Telling EMs to not use fossil fuels is ‘crazy’

Multi-asset investor Alec Cutler believes the West’s vilification of developing economies for using fossil fuels is hypocritical and goes as far as saying the stance is ‘racist’. 

A well-argued strategy for a “responsible” approach and an accusation not unwelcome. 10 min interview or a two min read.

Ninety One CEO: Outflows are going to developed market fixed income

The AUM decline of £4.5bn (R103bn) that Ninety One reported between the end of March 2023 and the end of June 2023 were partly a result of money flowing into development market fixed-income products.   

This short article hits the nail on the head. The JSE is shrinking and we need to do more to create more companies in SA for a turn around. Where does that leave the investor in the interim? 2.5min read.

‘Cheaper than Covid’: Capitulation and opportunity in SA Inc

Sanlam Investments portfolio manager Vanessa van Vuuren is looking through the cycle.

‘It seems everyone is talking about being stuck in the Eskom loadshedding rut and this low-growth environment. And it’s very easy to get caught up in that extremely negative narrative.’

3min read.

Livestock Wealth adds farmland to investment options

Crowd farming platform Livestock Wealth has expanded its investment offerings, to introduce Farmland Investment on its app, allowing investors to own a portion of land on a farm.

“Livestock Wealth searches and finds the best available farms to purchase directly from farmers or on auction,” Ntuthuko Shezi, CEO and founder of Livestock Wealth, tells ITWeb.

Positive article. 3min read.

Retirement / Pensions

GEPF and other public sector funds ‘will be part of the two-pot system’

All retirement funds, not only those that fall under the Pension Funds Act (PFA), will be included in the two-pot retirement system that is scheduled to take effect on 1 March 2024.

There are a lot of areas impacted by this legislation, knowing how it will work is important for all actuaries who will be called upon to explain it to others! 4min read.

Listen: Take this opportunity to boost your retirement income

In this podcast Maya speaks to Deane Moore, CEO of the Just Group about how to use a guaranteed annuity to boost your retirement income, even if you are already in retirement.

28:45 min podcast.

Financial Planning for Retirement Models: An Integrative Systematic Review

Hundreds of financial planning literature reviews exist; only a few papers discuss the context of retirement. This paper aims to give researchers clarity and confidence on financial planning for retirement (FPR) by incorporating diverse perspectives, including theories, methodologies, and determinants of FPR.

This is an interesting academic read. You may download the paper for free from the site.

About YOU

Unlock the Power of Effective Writing: Insights from Steven Pinker

When we know a lot about a topic, it can be difficult to write about it in a way that makes sense to the layperson.

To improve writing, Cognitive psychologist Steven Pinker suggests several strategies:

1) Use concrete nouns and refer to tangible things instead of abstractions.

2) Assume that readers know less about the topic than you do but are still intelligent and sophisticated.

3) Have someone from the intended audience read your work and provide feedback.

4) Allow time between writing and editing, so you can approach your own work with fresh eyes.

This is a brilliant read and will be useful to anyone, particularly those of you writing a paper or an honour’s project. 10min read.

GPT-4 Fails Final Actuarial Exam

“I gave GPT-4 the 2019 version of CAS Exam 9. This is the last exam in the Casualty Actuarial Society progression to a fellowship (FCAS), the highest designation available to Property & Casualty actuaries.”

Acrisure actuary David Wright unpacks the performance of ChatGPT. We do not have a direct equivalent in SA, but the paper and the rubric are provided which will show which exams would make up CAS Exam 9. 10min read.

AI could threaten some jobs, but it is more likely to become our personal assistant

This common sense approach is refreshing. There will undoubtedly be many who will lose their jobs to AI but all things considered job loss is not down to AI only. 4min read