Tag: pandemic

Ramaphosa eases Level 1 restrictions

Source: IOL

President Cyril Ramaphosa has announced the lifting of some restrictions, yet experts have warned of a Deltacron-driven fifth wave in April/May.

In his national address on Tuesday night, the president announced the country will remain on alert level 1, but has scrapped some restrictions including that of mandatory mask-wearing outdoors and gatherings for social events.

Despite this, the Deltacron variant has been currently driving up Covid-19 cases worldwide.

The variant, which is a mixture of the Omicron and Delta variants, has also appeared in South Africa, and experts warn of a fifth wave at the end of April/May.

In a television interview, medical expert Dr Vivek Solanki says that the Deltacron variant is expected to be highly contagious but not necessarily fatal.

“It is a mixture of the Omicron and the Delta variant, and it’s where there is one spike of the Omicron variant on the Delta variant. It is expected to be more contagious than Omicron; however, not necessarily more deadly.

“It has been spreading and is mostly in France at the moment, Denmark, Germany, Holland, the US, in Asia, and has now made an appearance in South Africa and will soon spread to the rest of Africa.”

He says that South Africa will see the fifth wave of infections around the end of April/May.

“The fifth wave, we expect it around the end of April/May to take off really seriously. However, we should be at the side of caution and not overreact and panic. This is similar to Omicron. It’s like the flu, chances are a lot of people will catch it.

“Most people, around 95/96 (percent), would just recover the symptoms and signs of it. There will be extremely few people that might end up hospitalised, and those are the ones who are more prone to it with high comorbid conditions and high blood pressure, uncontrolled diabetes and auto-immune disorders,” he said.

Solanki also contends that we have reached herd immunity and immunity against Omicron that we might not need the fourth and fifth booster shots proposed by vaccine manufacturers.

“We will have crossover protection or antibodies against Omicron from the previous exposure and people that have had their booster shots.

“Some of the American manufacturers are saying that we should take a fourth booster, fifth booster and things like that. But I already think that there’s herd immunity present, there’s Omicron immunity present, and there will be crossover protection for the people.”

Solanki says that South Africa is more prepared for the next surge of infections. He says that they do not expect a mass hospitalisation as with the Delta wave.

The government and experts have also expressed concern over the low vaccination rates and have urged the public to vaccinate and lead healthier lifestyles.

Meanwhile, amid calls for the scrapping of the national state of disaster, the president added that the government is intending to lift it after public comments are completed.

 

Understanding the new customer

Over the last two years, there have been numerous developments. The human race has survived a pandemic that spread fear and uncertainty throughout the world. And our way of life has been severely impacted. Businesses have embraced work-from-home and hybrid work models, prioritised employee well-being, and recognised that putting the customer at the centre of all decisions is the key to success.

Businesses must recognise that today’s customer is considerably different from the pre-pandemic customer. While restrictions may be easing and we all cautiously re-enter the world, the interactions that customers have with brands today is one that is changing – and will continue to do so.

This means that the brands that grasp the genuine concept of customer-centricity will be successful. Being customer-centric should no longer be a buzzword; it should be understood and implemented with empathy.

What does the new customer look like, and how can organisations adapt their business strategies to accommodate them?

Digital transformation to customer experience transformation

Today’s customers are more savvy and knowledgeable than ever before. “The client of 2022 expects seamless experiences from all brands, and it is now the customer who dictates how brands should engage with them, not the other way around. Regardless of the business in which you operate, your primary focus should be on customer experience transformation,” says Greg Gatherer, Account Manager at Liferay Africa.

Today’s consumers demand engaging, connected, and actionable digital experiences. “Good” experiences will not suffice. ” With this in mind, businesses will need to identify technology that enables them to meet these objectives and transform their operations,” explains Gatherer.

“For instance, a digital experience platform (DXP) is intended to serve as an integration centre, bringing together disparate applications and systems to enable the creation, delivery, and management of digital experiences across the customer journey.”

Customers will no longer be required to switch between several apps to complete activities. “Rather than that, consumers may rely on the customer portal to be the go-to tool for whatever they require. This streamlines their whole experience, which improves client retention,” says Gatherer.

From browsing pamphlets to exploring virtual reality

Tourism is another area where technology has brought about seminal changes, profoundly affecting the way travel clients search, shop and pay. According to Tshepo Matlou, Head of Marketing and Communications at Jurni, the most obvious change is the growth of online booking. “In the past, people dreaming of a holiday had to rely on travel agents or the pamphlets at tourist boards to find accommodation – a concept that seems ludicrous today,” says Matlou.

Being able to pick and choose the characteristics you want while browsing through high-quality photos of potential accommodation on online booking sites is just the most obvious route now.

The rapid rise in online bookings and purchases has resulted in travel clients that expect tourism operators, big and small, to have kept up with modern advances, such as letting them explore accommodation in virtual reality (VR) before they make a booking.

“Modern travellers are also increasingly more socially aware and conscious, looking for more authentic experiences that connect them to the areas they visit,” says Matlou. These often can be found at small guest houses and business owners outside of the big cities in areas that are incredibly rich in cultural value and have much to offer visitors who are willing to explore them.” Because of this, localised booking sites will become more prevalent in the coming years.”

Customer privacy is key

The previous two years have seen dramatic changes in nearly every facet of our life.

“Our behaviour as consumers is no different. We have altered not only where and how we shop, but also what we purchase. Regardless of age or demographic, online buying is significantly more accessible than it was previously,” says Dori-Jo Bonner, Strategist at Striata Africa.

While the modern shopper’s expectations of businesses have shifted, a major worry for the consumer is a company’s ability to demonstrate that they value their privacy and are responsible with their data.

“Worryingly, a poll done before the implementation of POPIA discovered that just 22% of South African businesses are aware of the privacy laws governing their marketing efforts. Given the massive amounts of consumer data businesses have accumulated through loyalty and direct marketing programs, they will need to exercise extra caution in terms of compliance,” says Bonner.

Understanding the new customer requires empathy

The contemporary customer’s needs, desires and preferences are constantly evolving and to remain relevant no brand can afford to ignore those nuances believes Reagen Kok, CEO at Hoorah Digital.
“ Particularly in the creative industry, our relevance is reflected in our ability to appropriately respond to the prevailing zeitgeist in terms of those needs and nuances. Empathy has an important role to play in this as the ‘new customer’ needs to be approached with empathy,” says Kok.

Empathy is showing customers that brands “get them” in a way that the others don’t. Brands that understand the value of empathy engage their customers in a more thoughtful way, ensuring it feels like an authentic response to their needs. “Empathy says, ‘We get what you want and need – here’s how we can help you solve it’, as opposed to a ‘look at what we do – we think you need this’ approach to marketing,” explains Kok

Tailoring offers to meet exact needs

Post-pandemic customers are tech savvy and expect far more from brands in terms of tailoring their offering to meet their exact needs at the exact point that they need them to be met.

“For a business this means forgetting the ‘build and they will come’ mentality, and working instead to ensure that they, firstly, understand the needs, frustrations and aspirations of their customers and, secondly, ensure their strategic and operational capacity is such that they can respond to these needs timeously,” says Jonathan Hurvitz, Teljoy CEO.

Hurvitz explains that for retailers, in particular, this means redefining what customer loyalty is in 2022 and responding accordingly.

“It’s seeking to understand not just the evolution of retail but the evolution of the customer, and using that as the foundation from which to over-deliver on customer expectations. This means having the operational capability to effect change rapidly, to adapt quickly, to reinvent constantly and to react to market trends swiftly”

Optimum nutrition has now taken centre stage

It can certainly be said that the pandemic changed the way that consumers think about their overall health – now more than ever paying more attention to what they consume and the overall nutritional value of these foods. This is particularly true for those who cannot necessarily afford to incorporate a vast variety of foods into their daily diets. However, while the changing consumer behaviour towards a more ‘conscious’ intake is a positive response to the pandemic, it comes at a time where the deterioration of soil quality is occurring at a more rapid pace.

“The nutrients in healthy soil are directly linked to the quality of produce from farmers. This in turn, down the line negatively impacts human nutrition and health through adverse effects on the quality of food production. A reduction in crop yields because of the erosion of soil quality can further lead to low concentration of proteins and crucial micronutrients in produce – aggravating malnutrition,” says Andre Redinger, Founder of Millhouse International.

As consumers continue to pay more attention to what they consume, adding foods that are fortified with the missing vitamin and micronutrients owing to soil deterioration and other factors to their daily diets is the number one strategy that they can adopt to ensure they are getting optimum nutritional intake to combat the effects of food that is not optimally nutritious.

Flexible strategies

To succeed, businesses must be willing to adapt to the ever-changing consumer, and strategies must be able to adjust to changing situations. One thing we’ve learned from the pandemic is that the only constant we can rely on is change.

The businesses hardest hit by liquidations

Statistics South Africa has published its latest report on liquidations and insolvencies, showing how South African businesses fared in 2021.

Liquidation refers to the winding-up of the affairs of a company or close corporation when liabilities exceed assets and it can be resolved by voluntary action or by an order of the court.

According to Business Tech, the data shows the following:

  • From January to December 2021, there were a total of 1 932 reported liquidations in South Africa
  • Total liquidations decreased by 29.2% in the fourth quarter of 2021 compared with the fourth quarter of 2020
  • There were a total of 2 035 liquidations in 2020
  • There was a year-on-year decrease of 20.3% in December 2021
  • Financing, insurance, real estate, business services suffered 625 liquidations
  • Trade, catering and accommodation suffered 414 liquidations
  • Community services suffered 157 liquidations
  • Gauteng and KwaZulu-Natal lost a combined 323 000 jobs during Q3 2021
  • A total loss of 660 000 employment opportunities occurred in the third quarter of 2021
  • South Africa lost 2.24 million jobs during 2020 Q2
  • South Africa lost a net 742 000 jobs during the first three quarters of 2021

 

Marketing lessons from 2021

The country has been resilient as we unpack the meaning of a new variant and South Africans and the business community continue to remain agile as our economy evens out and rebounds alongside other countries.

South Africa’s back to work momentum is gaining traction as optimism to open up the country’s sectors and regain 2020 losses has become more apparent. Corporate resilience has risen and businesses have weathered many storms and learned vital lessons to fortify their bottom line into 2022.

Gareth Grant at The MediaShop says that some marketing lessons in the financial sector stood out for him this year. “We’ve seen a continued rise in contactless payments. Covid-19 has had a dramatic impact on the rise of contactless and cashless payments in South Africa. As much as cash is still king in the informal sector, we are seeing a rapid increase in the adoption of other cashless solutions in the form of POS devices linked to mobile phones,” he says.

“Another observation during this year has been the growth of money transfers which has rocketed during the course of continued lockdowns and as consumers have limited movement,” says Grant. “As long as someone has a mobile phone, they can receive a money transfer and withdraw the cash from an ATM. Money transfers transcend more than your traditional banks, we see the likes of telecom companies operating heavily in this space, and we expect this to continue to grow in popularity, along with the received funds being spent via contactless payment solutions as well. This will ultimately lead to a better end user experience.”

In the entertainment space, The MediaShop’s Louise Hefer adds that lockdown accelerated the growth of streaming services and viewing behaviour during 2020. “Although that slowed slightly in 2021, not reaching the same levels as the initial lockdown in 2020, all indications show that consumer viewing habits have changed permanently compared to pre-Covid-19 levels.

In the war for audience share, there are two categories that continuously tip the scale – sport and local content,” she says. “With various sporting events kicking off again in 2021, viewership has shown an increase around these. Most of us know the power of local content – and there has been some noteworthy ones this year – we can see that whenever a new local production has launched, viewership spikes and viewer engagement and conversation increase on social media channels. Sport and local content will always have the ability to attract great audiences.”

In the beauty category, Maggie Pronto says that as with most sectors, this industry was massively impacted by Covid. “With working from home and having to continuously wear a mask, beauty product usage declined with cosmetics being the most challenged. On the flip side, some categories like hair colour experienced growth when salons were not seen as an essential service and consumers needed to colour their grey away.”

“Although lipstick is steadily recovering to its pre-pandemic popularity the industry still faces an uncertain path with consumer behaviour being impacted and adjustments being made for months to come,” she says. “The beauty industry has always been at the forefront of innovation and reinvention and with their increased eCommerce drive, this year has been no exception. From clean beauty (eco-friendly) to AI cosmetic solutions, not to mention a drive to support sustainability, brands will be looking to enhance their customer experience and build more meaningful connections going into next year.”

The cyclical recovery in global economic growth will transcend gradually into 2022. The year has been forecasted as a year impacted with renewed confidence. This momentum will complement an increase in ad spend as digital channels increase their consumption and reach. The MediaShop look forward to an engaging fiscal with our clients to explore innovative and resilient business solutions.

By Given Majola for IOL

Research released by Visa this week shows that consumers were optimistic about economic recovery, increasingly comfortable spending on non-essentials, luxury items, dining and travel.

The study that tracks the impact of the pandemic on consumer attitudes and spending across Central and Eastern Europe, the Middle East and Africa (CEMEA) revealed that in South Africa, 42% of consumers said they now shopped for groceries online.

Overall, Visa’s survey found that the Covid-19 pandemic had created significant opportunities for the e-commerce channel, especially those retailers entering the digital economy for the first time, and those consumers who made their very first online purchases.

Visa South Africa Country Manager Aldo Laubscher said their research showed how the Covid-19 pandemic had transformed the way the region’s consumers spend their money, with many of these significant behavioural changes likely to continue after the pandemic.

“As online shopping and contact less payments become the ‘new normal’, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience, which is increasingly seen as a safer and more seamless alternative to cash,” Laubscher said.

Remote working is here to stay

Source: IOL

Since the outbreak of the coronavirus pandemic, the corporate world has seen a huge move towards remote working or, at the very least, more people working from home more often.

And considering this trend has been in place across the world for almost two years, there is strong belief that it is here to stay, forever altering the office property market as we know it.

Some professionals are even refusing to return to the office or to accept new positions at companies which insist they work on site.

This presents corporates across the globe with a dilemma, and it is playing out differently from company to company. Some are luring top talent simply by allowing them to work remotely.

The compromise appears to be a hybrid approach which allows employees to work from home a stipulated number of days a week.

International trends

PwC’s US Remote Work Survey, released in January, found that remote work had been an overwhelming success for both employees and employers, with 83% of employers saying the shift had been successful for their company, compared to 73% in its June 2020 survey.

Fewer than one in five executives say they want to return to the office as it was pre-pandemic. “The rest are grappling with how widely to extend remote work options, with just 13% of executives prepared to let go of the office for good.”

The survey also found that real estate portfolios are in transition, with 87% of executives expecting to make changes to their real estate strategy over the next 12 months. These plans include consolidating office space in premier locations and/or opening more satellite locations.

“Over the next three years, while some executives expect to reduce office space, 56% expect to need more. These mixed findings show that some companies are planning to reinvest the remote work dividend in new ways in order to create a special experience in the office.”

In the UK, recent research released by the CIPD, the professional body for HR and people development, similarly reveals that employers are now more likely to say that the shift to home working has boosted productivity than they were in June 2020.

The figures are, however, lower than their US counterparts, at 33% and 28% respectively. The findings are part of a new CIPD report exploring how organisations can learn from ways of working during the pandemic to make hybrid working – a mixture of working at home and on site – a success.

The CIPD stresses the need for employers to look at flexible options beyond home working, recognising that not all roles can be performed from home.

“The pandemic has shown that ways of working that previously seemed impossible are actually possible. “Organisations should take stock and carefully consider how to make hybrid working a success, rather than rushing people back to the office when there are clearly productivity benefits to home working,” says Claire McCartney, senior policy adviser for resourcing and inclusion at the CIPD.

Employee demands

Another survey, in the US by insurance company Breeze, found that the work-from-home trend as a response to the pandemic has turned into a revolution in how people want to work.

Results showed that:

• 65% would take a 5% pay cut.

• 38% would take a 10% pay cut.

• 24% would take a 15% pay cut.

• 15% would take a 25% pay cut.

• 39% would give up health insurance benefits.

• 23% would give up 50% of their paid time off. • 36% would give up their retirement plan.

• 47% would give up mental health benefits.

• 34% would give up “their right to vote in all future local and national elections for life”.

Weighing in on the remote working debate, FNB commercial property economist John Loos says remote working has been shown over many years to work well, and is getting better as technology improves. What is surprising is that some work-from-home opponents do not see the opportunity for cost reductions.

On his LinkedIn page, Loos writes: “Employees reduce costs through less commuting, time and transport. Companies reduce costs through less office space and related infrastructure.

“On top of this, surveys… suggest that the labour market may adjust in such a way that market-related salaries of remote workers may in future be lower than office-bound employees.”

The potential savings opportunities seem “huge”. “Many employees want better quality of life, and they are prepared to take a pay cut for it. The progressive companies will see opportunity and drive greater work from home. The denialists and resisters will pay higher salary bills and battle more to retain and attract top skills until the market has punished them enough. This will be the continuation of a multi-decade trend and the office property market is likely to battle and ultimately to shrink in relative size as a result.”

Corporate response

Recently, the BBC reported that, in June, Apple chief executive Tim Cook sent out a company-wide memo telling staff they would be required back in the office by early September, and workers would be expected to be present for three days a week, with two days of remote work.

But some employees pushed back with their own letter and some even quit their jobs. This trend has been unfolding in several big corporates in the US.

Others, however, have bucked the trend by offering a full or partial switch to permanent remote working. Some of these corporates, who will no doubt attract top skills looking for such working conditions, include:

Remote working looks to be the way of the future, with some on-site work part of the mix.

What South Africans owe on their credit cards

Source: Supermarket & Retailer

The findings of TransUnion’s Q2 2021 South Africa Industry Insights Report covers a period where unemployment was still rising, but prior to July’s civil unrest and peak in the third wave of Covid-19 cases.

The report shows that a number of the trends, seen immediately after the outbreak of Covid-19 more than a year ago, have continued to advance with some notable exceptions, especially when looking at delinquencies.

Understanding the delinquency picture

Delinquency rates during the pandemic have been influenced by a number of important factors, the credit specialist said. Deferrals, payment holidays and other accommodations by lenders have helped borrowers in need. A decline in new borrowing in the past year since the onset of the pandemic has also shifted the overall ratio of good versus bad debt within lenders’ portfolios.

While a general increase in overall debt has been apparent, the total number of new loans and accounts has decreased as a result of the decline in originations. This means that while the numerator in the delinquency equation (i.e., existing accounts with delinquencies) is rising, the denominator is not growing at the same pace, said TransUnion.

Add in other drivers for which accounts financially distressed consumers choose to repay – e.g., prioritising product utility such as credit card functionality for online payments or car loan payments to ensure you can avoid public transport- and it’s clear that there are often multiple drivers for changes in delinquency levels, the group said.

Typically, delinquencies have often followed wider macroeconomic trends such as GDP growth and changes in unemployment.

In the latest Q2 2021 figures, although there were improvements in most of the major consumer credit categories, unsecured personal loans recorded a significant increase in balance-level delinquencies – bank personal loans were up 260 bps YoY and non-bank personal loans 700 bps.

A higher delinquency rate for non-bank personal loan providers is to be expected as they have historically targeted higher-risk consumers who are more likely to default and will be less resilient to sustained financial hardships, such as those caused by the pandemic.

“Finding and funding resilient consumers becomes even more crucial during challenging economic periods when looking to maintain a healthy portfolio delinquency ratio.

“The key is to fuel new credit growth by finding good consumers, who are likely to perform within lenders’ target thresholds and in return can help maintain a healthy bad-to-good ratio for longer-term lending growth,” said Carmen Williams, director of research and consulting at TransUnion South Africa.

Credit demand in a post-pandemic world

Throughout the pandemic, TransUnion’s data has shown reduced appetite from both consumers (demand) and lenders (supply) for new account openings (as measured by originations), and this continued in Q2 2021.

“However, with the world economy slowly starting to reopen and vaccination programs gaining pace, the future shape of the consumer credit market will depend on a number of important variables,” it said.

Historically, macroeconomic conditions have been an important factor in the pace of credit growth. Equally, consumer sentiment also has a significant bearing. Although the latest IIR data is for Q2 2021, TransUnion also conducted its regular Consumer Pulse Study in August 2021, which was post the civil unrest and the initial peak of wave three Covid-19 infections seen in early July.

This study showed a number of important trends relevant to potential future demand and direction of the market in South Africa, the credit specialist said.

The number of South African consumers anticipating in August that they would apply for new credit or refinance existing credit within the next year was just under a third (31%). Personal loans (43%) and new credit card (35%) applications continued to be top of the list, said TransUnion.

“There continues to be significant turbulence in the South African consumer credit market, with a number of potential new trends emerging, especially in the delinquencies space. Wider economic and political news continues to impact consumer sentiment and outlook, and these will shape the recovery as it continues to emerge,” said Williams.

“Lenders need to constantly monitor for shifts in consumer behaviours and adapt to the changing demand and future preferences of consumers if they are to succeed. There is no doubt the road to recovery will be a bumpy one, but by being informed, lenders will have the best possible chance to compete and succeed.”

Credit card is the only credit product to show high levels of continued origination decline since the beginning of the pandemic (down 23% YoY in Q2 2020, 63.2% YoY in Q3 2020 and 48.6% YoY in Q4 2020 and 42.7% YoY in Q1 2021). This is largely due to lenders implementing tightened credit-granting policies in the midst of economic uncertainty, said the credit specialist.

Lenders remain focused on extending credit to existing customers rather than onboarding new borrowers. Average balances increased by 17.6% and total credit limits increased substantially by 15.2% while new loan amounts increased by only 2.2%.

Outstanding balances for credit cards (up 10.6% YoY) have been driven by consumers’ need to balance household budgets, maintain liquidity, and finance subsistence purchases, especially where incomes have been negatively impacted. However, increases weren’t evenly distributed, and a clear generational divide has emerged.

Younger consumers increased their outstanding credit card balances more than older generations. The Q2 2021 YoY change for Millennials (born 1980-1994) was 9%, compared to 6% for Gen X (1965-1979) and only 3% for Baby Boomers (born 1946-1964).

Younger generations tend to transact more online, and the utility a credit card provides is fundamental to this activity. Credit card account-level delinquencies were down 50 basis points (bps) from their peak in Q2 2020, and in Q2 2021 stood at 12.3%, and were at the same level as Q2 2019.

This improvement provides further evidence that credit cardholders are protective of and value the revolving functionality that this product holds, TransUnion said.

The future of the South African office

A recent Business Day Dialogues LIVE discussion focused on what the future holds for the South African office.

In response to lockdown restrictions imposed in 2020 many organisations moved their staff to working from home. Even as restrictions have eased, some companies have opted to move permanently to remote working, while others have opted for a hybrid model between working from home and time in the office. In some quarters there is a reticence to returning to the office full time.

Clinical psychologist and the chair of the South African Depression and Anxiety Group (SADAG), Dr Colinde Linde said most people soon started to miss human connections during the hard lockdown. Enforced social isolation has resulted in a mental health pandemic.

Working from home suits some people, she pointed out, while others prefer an office environment or a hybrid arrangement. The challenge, she said, is not everybody has the luxury of a dedicated space to work at home where they will not be interrupted.

Irrespective of where people choose to work, work-life balance will always be a challenge, she said.

Rob Kane, CEO of Boxwood Property Fund and a board member of the South African Property Owners Association (SAPOA), said declining demand for office space has had a devastating impact on certain commercial property sector nodes, including Sandton and the Cape Town CBD. However, this was a trend that was apparent even before Covid and was merely exacerbated by the pandemic.

However, he believed the work from home honeymoon is over as more employees return to the office. Although the expectation is that the office market will ultimately shrink by around 20%, he said evidence indicates that office spaces will continue to exist. However, they will become less sterile and warmer environments than in the past.

Linda Trim is a director at Giant Leap, a company which helps companies get the best out of their people by creating award winning workspaces. Innovation, creativity and speed to market are all harder to achieve when staff are working remotely, she said.

According to research conducted by Giant Leap, more than 80% of employees want to get back into the office. However, she stressed that there is no one size fits all solution and that organisations need to find a middle ground that suits them. The future office, she predicted, will offer greater flexibility and less rigidity. Work spaces need to become spaces where people want to be, offering great coffee, ergonomic furniture, enticing meeting spaces and state of the art technology.

Professor Francois Viruly, associate professor at the University of Cape Town and a non-executive director of the Accelerate Property Fund, said the danger of looking at global trends where people are returning to the office more rapidly than locally, is that you lose the local context. He agreed that working from home suited some more than others but was less than ideal for first time workers who had not had the opportunity to pick up on workplace culture or to receive the necessary support.

What the pandemic has shown us, he said, is a trailer of the future and what is possible. However, in transitioning through these possibilities, there are uncertainties as we adapt to a new environment and a new normal.

By Londiwe Buthelezi for News24

With Covid-19 waging a brutal war on human life, 2020 became one of the toughest years for insurers as death claims surged to levels not seen in recent history.

Insurers paid R522.7-billion to policyholders and beneficiaries in 2020 after fielding almost half a million (434 216) legitimate death claims.

But the industry had to deal with another epidemic: fraudulent claims which sought to fleece the industry R587.3 million.

Those providing funeral insurance were the hardest hit as 2 282 of the reported 3 186 cases of fraudulent claims related to funeral cover.

From a desperate family that laid a dead body on the road so that it can claim accidental cover to syndicates who buy dead bodies or prey on drug addicts, fraudsters had plenty of tricks up their sleeves.

The insurance industry’s representative body, the Association for Savings and Investment South Africa (Asisa), said it was not surprised. Even before the desperation brought by Covid-19 as people lost incomes and some stayed with bodies they didn’t know how they’d bury, insurance fraud was rife in SA. In 2019, SA insurers reported 2 837 fraudulent and dishonest claims to the value of R537.1 million.

READ | Unlawful for insurers to push exorbitant funeral cover increases, says regulator
Megan Govender, the convenor of the Asisa forensics standing committee, said funeral insurance has always been a soft target for fraudsters. But the Covid-19 pandemic has made it worse as the desperation due to job losses drove more people to resort to crime, especially because the excess deaths last year made it easier to source dead bodies for fraudulent claims.

“Since funeral insurance policies do not require blood tests and medical examinations and are designed to pay out quickly and without hassle when an insured family member dies, criminals and dishonest individuals most commonly try their luck in this space,” said Govender.

Some hair-raising cases

Asisa said the buying of dead bodies often involves syndicates and mortuary employees. The syndicates buy dead bodies and then use them to claim against policies that were fraudulently taken out some months earlier. They usually buy unclaimed bodies.

Another modus operandi involving syndicates targets drug addicts and alcoholics from poor communities with a promise of a job to obtain their personal details and fraudulently buy funeral cover for them.

When the waiting period lapses, the syndicates then have to find a body, which could be done through the purchase from a mortuary. But Govender said in one incident, the syndicate tried to murder the addict they’d covered. But the victim escaped.

However, it’s not just the syndicates that insurers have to worry about. One family collected the body from the mortuary before the death was registered and “purposefully” placed it on the road. It reported a hit and run accident and submitted a claim.

Govender said cases of families so desperate for funeral cover payouts are common, especially when the person died while they were still under the waiting period that insurers impose. Some resort to these tricks as accidental death benefits have no waiting period.

As for the other insurance products, Asisa said there were 388 fraudulent life insurance death claims totalling R264.3 million. Policyholders submitted 325 fraudulent and misrepresented disability claims, 141 hospital cash-back claims, and 50 retrenchment claims. KwaZulu-Natal had the highest number of detected fraudulent claims, followed by the Eastern Cape.

 

By Londiwe Buthelezi for News24

Consumers are facing heavy debt pressure as the impact of the pandemic continues to hit home.

DebtBusters says the number of people approaching it with debt counselling inquiries rose 18% in the second quarter of 2021, compared to the same time last year when SA was under the harshest lockdown level.

DebtBusters said while more people might be back at work now, many consumers are seeking help because of the after-effects of the lockdowns. Reduced incomes because of stop-and-go economic activities in the past year meant that many people’s ability to borrow has narrowed.

“It is clear that the debt situation of SA consumers has further deteriorated recently. In the absence of a meaningful increase in real income growth, SA consumers continue to supplement their income with more unsecured credit,” wrote DebtBusters.

But the company also attributes this pressure on consumers to the long-standing decline in real incomes in SA.

According to DebtBusters’ calculations, while nominal incomes in the country have increased 3% compared to 2016 levels, the cumulative inflation growth of 24% over the same period means that real incomes have shrunk by 21% over those five years.
With real incomes moving the opposite direction of living expenses, more people have been borrowing to supplement their incomes just to get by.

Unsecured debt, which includes credit cards, overdrafts and personal loans – debt usually used for consumption – has increased by 32% for the average client who approached DebtBusters since the second quarter of 2016. Top earners’ unsecured debt levels are now 49% higher than five years ago.

As the debt mounts, more consumers consistently need to spend around 60% of their take-home pay to service their debt, at least until they turn to debt counsellors for help.

DebtBusters said in the second quarter, the debt-to-income ratio for all income bands (among their clients) increased to its highest levels to date. This is the percentage of people’s gross monthly income that goes towards paying their monthly debt obligations.

Among their clients, the debt-to-income ratio sat at the average of 122% across the income bands. But for those taking home R20 000 or more per month, it increased to 152%. In the second quarter of 2016, these consumers’ debt-to-income ratio stood at 126%.

“With all this said, there is some positive news. The number of clients completing debt counselling successfully has increased by sevenfold over the last five years,” wrote DebtBusters.

 

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My Office News Ⓒ 2017 - Designed by A Collective


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