BU S I N E S S DAY.CO. Z A
Business Day Insights INSURANCE BROKERS
Tuesday 24 February 2026
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Brokers navigate a new insurance reality Their role is evolving from a simple intermediary to a sophisticated risk management adviser, writes Lynette Dicey The South African insurance sector is currently facing a perfect storm of emerging risks that are fundamentally altering the traditional relationship between insurers, brokers and clients. As traditional risk profiles become obsolete, the role of the broker is evolving from a simple intermediary to a sophisticated risk management adviser. Insurers have fundamentally changed their expectations, moving most of the responsibility for risk requirements to the broker. Cedric Masondo, CEO of PSG Insure, says the three main drivers of this transformation are volatile weather patterns, escalating geopolitical and social risks and the deterioration of national infrastructure, especially at municipal level. Whether labelled as climate change or simply a permanent shift in weather behaviour, Masondo says the patterns of a decade ago no longer apply. For clients, this means their risk profile is no longer determined solely by their own actions.
Risk profile “Your risk profile is not only impacted by your actions. If you live in the Western Cape you’re exposed to more fires than you were previously. If you live in KwaZulu-Natal or Gauteng, you face a greater risk of floods,” says Masondo. Insurers are reacting to this volatility by repricing risk, derisking in some areas of the country or, in extreme cases, excluding certain types of business altogether. Not only are
insurance brokers now required to develop a deep understanding of evolving weather patterns and historical data, but they are also required to advise clients on proactive risk mitigation rather than just policy placement Cedric Masondo. and clearly communicate to clients how insurance companies are likely to respond to these regional threats. The growing risk of social unrest is also impacting the insurance sector. “The landscape of social unrest in South Africa has shifted from a theoretical possibility to a practical certainty. Since the July 2021 riots, the necessity of Sasria (Special Risks Insurance Association) and related extensions has become a critical conversation for every business,” says Masondo Many clients, he says, still fail to buy adequate insurance cover or sufficient limits for special risks. “The broker’s role is now different. We have to understand the social tension, what Sasria extensions a client can buy and what limits are available. Increasingly, brokers are now required
From price wars to data-driven advisory The South African short-term insurance landscape is undergoing a fundamental transformation with the price-led brokerage model for commoditised personal and small to medium commercial insurance rapidly reaching its expiry date. In its place, a more sophisticated, data-driven advisory model is emerging — one where the broker functions less as a transaction handler and more as a proactive risk partner. Fanus Coetzee, CEO of Santam Broker Solutions, says the industry is at a crossroads. “Our guidance to our broker partners is to shift the narrative from price to value and risk mitigation.” This shift, he says, is not merely a preference but a necessity in a high-inflation, price-sensitive environment where the race to the bottom on premiums is no longer sustainable for any party involved. In a low-growth economy, one might expect consumers to cancel their insurance policies to save costs. However, current market data reveals a different trend: clients are not necessarily leaving the market, but they are responding to risk advice. Instead of wholesale cancellations, consumers are adding risk-management measures, switching providers or strategically adjusting cover. “Clients value security over a slight monthly saving,” says Coetzee. “Modern brokers are repositioning themselves as trusted advisers who provide personalised, data-driven guidance. By moving the conversation away from cheap premiums towards risk-based consultations, brokers can provide peace of mind for their clients while ensuring their own long-term relevance.
Digital evolution One of the biggest barriers to more in-depth advisory work has traditionally been the administrative mental load. Transitioning from an admin-heavy office to a client-facing advisory requires a significant digital evolution. As a result, the industry is seeing a surge in AI-driven tools designed to generate renewal comparison reports and facilitate self-service journeys via digital platforms. “Digital and AI-driven tools are removing the operational burden and freeing capacity for forward-looking risk conversations,” says Coetzee. “For the independent broker, leveraging insurersupplied digital infrastructure is no longer an optional upgrade; it’s a prerequisite for competing with larger intermediary businesses.” As risks grow more complex — ranging from cyber threats to global climate volatility — the technical fluency required of a broker has escalated. The industry is moving toward a feefor-service model around risk management advice, where brokers monetise their expertise
rather than just earning a commission on a transaction. This evolution requires a commitment to continuous learning. “Brokers must become more data-aware, consultative and technically fluent,” Fanus Coetzee. says Coetzee. “Those who focus on specialised areas such as cyber or sector-specific infrastructure risks are finding new opportunities for growth, even as the traditional personal lines market becomes increasingly competitive.” Globally, there has been significant industry consolidation, similar to the private equity roll-ups seen in the US. Coetzee says South Africa is also seeing increased M&A activity due to rising regulatory and compliance burdens, technology renewal pressures and succession planning challenges that smaller and medium independent brokerages are experiencing. The trusted advisory layer, however, remains vital. “Santam’s research indicates that 78% of businesses and 56% of consumers still rely heavily on brokers because of the inherent complexity of insurance. Small brokers can thrive, provided they do not attempt to compete on their back-office capacity and the size of their tech stack. Instead, they need to focus on moving into niche markets where specialist expertise is required, adopt automated workflows to maintain speed to market and transition from reactive quoting to resilience planning,” he says. What is becoming increasingly clear is that the window for purely price-focused brokers is closing. Coetzee maintains that those who have not adopted a “trusted risk adviser” positioning will likely soon find themselves disintermediated by digital platforms and embedded insurance models. A cost-effective investment into automation of mundane administrative and compliance burdens, through the introduction of even the most basic AI and data capabilities, in their businesses is essential to free up capacity to focus on risk advice. “Ultimately, the future of insurance brokers lies in their ability to advise on bridging the gap between a client’s current risk reality and their future resilience. “As the risk landscape changes, the most successful brokers will be those who stop selling policies and start focusing on the risk management advice and value add,” he says.
to act as stress managers, helping clients identify which areas are most vulnerable to unrest and ensuring that even if a loss occurs, the financial compensation is sufficient to allow for recovery.” Arguably the most overlooked emerging risk is the deterioration of municipal infrastructure, specifically regarding water supply. “While this is an external factor that clients can’t control, it has devastating implications for fire risk. I’m concerned that we’re moving to a stage where we might have serious problems with water. From an insurance perspective, a lack of water affects the ability of clients to fight fires. If a fire brigade arrives but finds empty hydrants or low water pressure, the risk profile changes completely,” he says.
Brokers are required to advise clients on proactive risk mitigation rather than just policy placement While most insurers are paying claims for now, if particular areas continue to not have water there is a strong likelihood insurers will change their profile and pricing because they underwrite based on the ability to fight fire. In a landmark case, Toyota South Africa
Motors’ Japanese insurer is suing the KwaZuluNatal provincial government, Transnet and eThekwini municipality for R6.5bn for flood damage caused to Toyota’s vehicle assembly plant in Prospecton, outside Durban, in 2022.
Outcome under scrutiny Toyota was forced to halt vehicle production for four months as a result of the damage caused by the flood. The insurer says the defendants failed to maintain waterways and drainage systems that carried the floodwater. The outcome of the case is being carefully watched by other businesses who have had their operations impacted by failing state-owned services and infrastructure. The case could set a precedent: if a municipality fails to provide water to fight a fire, they could be held liable for the loss. “Brokers are transitioning into risk management advisers. They now need to navigate the technicalities of policy wording while simultaneously understanding the macroenvironmental factors — from crumbling storm drains to geopolitical shifts — that threaten their clients’ livelihoods,” says Masondo. Success in this exciting but demanding era of brokerage requires a proactive stance: knowing the client’s business intimately, understanding the municipal failures surrounding them and ensuring the insurance policy will actually react should the worst-case scenario becomes a reality.