SSP Brochure:Layout 1 - INSETA

Table 4.4 Scarce skills: clerical and administrative occupations .....................................................................................................................................36Table 4.5 Scarce skills: sales occupations....................................................................................................................................................................................37Table 5.1 Summary of small business development opportunities in the insurance industry....................................................................40LIST OF FIGURESFigure 1-1 Products sold by brokerages or agencies in the sector..................................................................................................................................3Figure 1-2 Distribution of organisations and employees according to organisation size....................................................................................4Figure 1-3 Employment distribution according to subsector..............................................................................................................................................4Figure 1-4 Geographical distribution of employees..................................................................................................................................................................5Figure 1-5 Trends in net premium incomes of life insurers*: years ended 31 December 2001-2006.......................................................8Figure 1-6 Trends in net premium incomes of link investment insurers*: years ended 31 December 2001-2006 ............................9Figure 1-7 Trends in net premium incomes of assistance insurers*: years ended 31 December 2001-2006........................................9Figure 1-8 Trends in premium incomes and benefits paid by short-term insurers: years ended 31 December 1999-2006 .....10Figure 1-9 Trends in collective investment schemes in securities: years ended 31 March 1998-2006....................................................11Figure 1-10 Trends in collective investment schemes in property: years ended 31 March 2000-2006.....................................................11Figure 2-1 Employment distribution according to occupational category................................................................................................................15Figure 3-1 Qualification levels of employees .............................................................................................................................................................................21Figure 3-2 Population group distribution of employees......................................................................................................................................................22Figure 3-3 Age distribution of employees in the sector......................................................................................................................................................23Figure 3-4 Senior Certificate passes: 2005..................................................................................................................................................................................25Figure 3-5 Senior Certificate passes in mathematics: 1999 - 2005...............................................................................................................................25Figure 3-6 Actual and projected entry-level qualifications in business, commerce and management sciences from thepublic HET sector..............................................................................................................................................................................................................28ANNEXURESANNEXURE A PROFESSIONAL BODIES INTERVIEWED AS PART OF THE SSP UPDATE PROCESS IN 2007.........................45ANNEXURE B FINANCIAL SERVICE SECTOR CHARTER TARGETS SET FOR THE INSURANCE INDUSTRY.........................46ANNEXURE C METHODOLOGY USED TO ESTIMATE THE NUMBER OF BLACK MANAGERS NEEDED BYTHE INSURANCE SECTOR.............................................................................................................................................................................48ANNEXURE D CURRENT LEARNERSHIPS (MARCH 2007)........................................................................................................................................50ANNEXURE E SCARCE SKILLS IN THE INSURANCE SECTOR - 2007................................................................................................................51ANNEXURE F CRITICAL SKILLS NEEDED IN THE INSURANCE SECTOR.......................................................................................................57ANNEXURE G INSETA BUSINESS PLAN...................................................................................................................................................................................61INSETA Sector Skills Plan

ACRONYMS AND ABBREVIATIONSABET Adult Basic Education and TrainingADiIM Advanced Diploma in Insurance ManagementATR Annual Training ReportBBBEE Broad Based Black Economic EmpowermentBEE Black Economic EmpowermentBoD Board of DirectorsCA Chartered AccountantCEO Chief Executive OfficerCoP Certificate of ProficiencyCPD Continuous Professional DevelopmentCRM Customer Relationship ManagementDoE Department of EducationDoL Department of LabourELDP Executive Leadership Development ProgrammeETQA Education and Training Qualifications AuthorityFAIS Financial Advisory and Intermediary ServicesFET Further Education and TrainingFPI Financial Planning InstituteFSB Financial Services BoardFSC Financial Sector CharterFSP Financial Service ProviderGDP Gross Domestic ProductGDS Growth and Development SummitGSB Graduate School of BusinessHciI Higher Certificate in InsuranceHET Higher Education and TrainingIFRS International Financial Reporting StandardsIISA Insurance Institute of South AfricaINSETA Insurance Sector Education and Training AuthorityINSQA Insurance Sector Quality AssurorIciBS Intermediate Certificate in Business StudiesLAP Leadership Advancement ProgrammeLFS Labour Force SurveyLOA Life Offices AssociationLSM Living Standard MeasurementMBA Master of Business AdministrationNSDS National Skills Development StrategyNQF National Qualifications FrameworkNSF National Skills FundOFO Organising Framework for OccupationsRPL Recognition of Prior LearningSA South AfricaSAICA South African Institute of Chartered AccountantsSAQA South African Qualifications AuthoritySARS South African Revenue ServiceSETA Sector Education and Training AuthoritySDF Skills Development FacilitatorSDL Skills Development LevySIC Standard Industrial ClassificationSMME Small, Medium and Micro-enterpriseSSP Sector Skills PlanStats SA Statistics South AfricaWIN Women in InsuranceWSP Workplace Skills PlanINSETA Sector Skills Plan - page i

EXECUTIVE SUMMARYBackground and methodologyThis SSP is a revised and updated document prepared according to the DoL’s guidelines issued to SETAs in July 2005. The updatedOrganising Framework of Occupations (OFO) released by the DoL in July 2007 was used to report on scarce and critical skills. The SSPwill be submitted to the DoL on 31 August 2007.In 2004, the INSETA embarked on an extensive research and broad-based consultative sector skills planning process. The 2005 updatebuilt on the work done in 2004 and comprised the revision and updating of all statistical data, an analysis of the WSPs and ATRs submittedto the INSETA for the period 2004/2005 and another round of interviews with industry bodies in the sector.In October 2005 the INSETA embarked on a sector survey of employment, scarce and critical skills. The information obtained throughthis survey forms the basis for the 2006 update of the SSP. The survey information was augmented by updated information from nationalsources, for example from the latest reports published by the Financial Services Board (FSB), the latest information on the gross domesticproduct (GDP) and the latest Labour Force Survey (LFS) and the WSP and ATR information submitted for the period 2005/2006.In 2007 the SSP was once again updated with data from national sources and from the INSETA’s own data system. The comprehensivesector survey data collected in 2005/2006 was retained as the basis of this SSP update. However, scarce and critical skills information wasobtained from the WSPs submitted for the period 2006/2007. This information was augmented with a telephone survey amongorganisations (mostly small organisations) that had not submitted WSPs. Certain supply-side information was obtained from the ATRssubmitted for the period 2006/2007.Profile of the sectorThe insurance sector forms part of the large and rapidly growing financial and business services sector in South Africa. The sector includesproviders of insurance products (i.e. long-term and short-term insurers and reinsurers) as well as the intermediaries or brokers who sellinsurance products to the public. The sector can be divided into the following subsectors: long-term insurers, short-term insurers, reinsurers,pension funds, collective investment managers, medical schemes and intermediaries or brokers. At this stage approximately 4 000organisations pay the skills development levy to the INSETA. Most of these organisations are very small businesses. Most of the organisationsin the sector are based in Gauteng, the Western Cape and in KwaZulu-Natal.Based on the Survey of employment, Scarce and Critical Skills employment in the levy-paying component of the sector was estimated atapproximately 102 000 in 2005. This could have grown to approximately 106 000 in 2007.Drivers of change in the sectorThe South African insurance sector is integrated in the global insurance environment and is therefore affected by changes in the globalindustry. In recent years the global industry has experienced an increase in regulatory requirements and pressures to comply with theserequirements.Globally, the role of the insurance broker has been changing over the past few years. The influx of direct distribution channels has resultedin independent brokers or intermediaries being bypassed. However, internationally there is an increase in the demand for specialisedbrokers and a change in the roles of brokers. Brokers are more and more required to fulfil the role of financial advisors and to possessprofessional skills. Worldwide brokerage firms are consolidating.One of the main drivers of change in the South African insurance industry is policy and legislation – more specifically the Financial Advisoryand Intermediary Services Act (FAIS Act) which sets minimum qualification and competency requirements for financial advisors. Althoughthis legislation is expected to support the professionalisation process in the sector and to help to restore consumer confidence, it may alsostifle and even reduce employment – especially among brokers or intermediaries.Black economic empowerment legislation and the Financial Sector Charter drive the transformation of the sector and increase the demandfor skilled black employees in all the main occupational categories, but especially in professional positions and as intermediaries or brokers.Proposed changes to the structure of commission paid to intermediaries may put this component of the sector under more pressure andmay lead to a further decrease in the number of brokers.INSETA Sector Skills Plan - page ii

However, the sector competes with the rest of the economy for high-level financial skills. Other participants in the financial services sectorare also bound by the Financial Sector Charter and will therefore also be competing for skilled blacks. The flow of skills into the labourmarket is also somewhat inhibited by the low numbers of learners who matriculate with mathematics as a subject and new entrants’ lackof numeracy and English language skills.From the data presented in this SSP it is clear that employers in the sector are actively involved in the provision of in-service training to alllevels of staff. They have also developed sophisticated training infrastructures, which provide sufficient capacity for training. Furthermore,professional bodies play a key role in the provision and stimulation of continuing professional education (CPE) and in the upgrading of theskills of the workforce.Scarce and critical skillsChapter four of this SSP deals with scarce and critical skills in the sector. “Scarce skills” or “skills shortages” refer to specific occupationsthat lack sufficient people trained to fill positions available in the labour market. The occupational categories that are mostly affected byskills shortages are the senior and middle management and professional categories. These occupational categories are specifically affectedby a shortage of qualified and experienced black managers and professionals.The concepts “critical skills” or “skills gap” refer to the qualitative deficiencies that may occur in the skills of people who are already employedin the sector. These deficiencies are normally very specific to a particular job and occur as a result of changes in the work environment,for example changes in technology used by a certain employer, changes in legislation (e.g. the FAIS Act) and so on.The most important critical skills for the insurance sector are management skills, advanced financial skills (including all aspects of theinsurance business), advanced computer skills, customer relation skills and knowledge of the legislative and regulatory requirements and theskills to ensure compliance with these requirements.Small business and entrepreneurial opportunities and other NSDS prioritiesThis last chapter outlines some of the specific areas on which the INSETA will be focusing in the planning period, apart from skillsdevelopment to alleviate scarcity of skills in certain areas and to close the skills gaps that exist in the sector.The National Skills Development Strategy (NSDS) for 2005 to 2010 places strong emphasis on small business development and thecultivation of skills necessary to start and maintain new businesses. SETAs are specifically required to develop skills development strategiesin support of new small businesses and therefore this SSP contains an analysis of the possible small business opportunities that may existin the sector.The small business opportunities identified for this sector include:• Franchises of insurance services (branch offices of life offices are franchised and operated as separate businesses)• Outsourcing of specialised underwriting in short-term and reinsurance industry• Intermediaries and brokers to serve the emerging market• Administration services with specialised back office staff with relevant industry experience (“in”-sourcing of specialised administration services)• Administration services to manage compliance• Outsourcing of specialised actuarial services• Outsourcing of specialised legal services• Outsourcing of fraud investigation and prevention services• Boutique type of asset management company can cooperate with existing registered unit trust management company to form new unittrust management company• Range of services to support intermediaries who serve the lower-end and emerging consumer markets• Training for trustees of pension funds and medical schemes• Broad range of procurement opportunities for black-owned SMMEs for example in the short-term insurance market replacementproviders, panel beaters, glass fit shops, builders, office furniture and equipment suppliers).Although these business opportunities may exist, the insurance industry is highly regulated and very complex and therefore in most of theareas entrepreneurs would need not only the required technical qualifications as well as industry-related practical skills.Another NSDS priority is the assistance of existing small businesses with skills development. The INSETA has developed variousinterventions to assist small businesses, including a voucher system through which small businesses can finance their training, regional skillsadvisors who assist small businesses with grant applications and various other skills development needs and regional forums wherebusinesses’ needs and problems are discussed.INSETA Sector Skills Plan - page iv

How the INSETA addressed Scarce and Critical Skills in 2007/20008.Based on comprehensive research, INSETA determines the criteria for the design and the implementation of Projects with the aim toaddress the skills shortage in the sector. All projects are linked to a particular National Skills Development Strategy (NSDS) indicator.• Skills Development Facilitator (SDF) TrainingThis project is aimed at training the registered SDFs in the Insurance sector to improve the quality of service provided in the sector.• ABETThis project is aimed at employees who need this training, especially those who sell funeral policies, to provide them with the requisiteknowledge, skills and competence, which will enhance their ability to be successful in obtaining their NQF level 2 credits for FAIS Fit andProper.• FAIS Fit and ProperINSETA has set up a dedicated FAIS unit to enable Brokers and Financial Advisors employed in the Insurance Industry in 2007 to obtainthe credits they require to become licensed.• Better Business Toolkit for SMME BrokeragesThis project will provide SMMEs with support, to become feasible and sustainable business entities. Since SMMEs are central to theGovernment’s economic transformation agenda, this project will have direct transformation impact.• Insurance Leadership Programme for Black GraduatesThis project will contribute to the transformation agenda to stem the exit of black graduates from, and attract other graduates to, theInsurance industry.• Career GuidanceThis project aims to promote Insurance as a career among matriculants and to ensure a pipeline of new entrants into careers in theindustry, particularly in the areas of scarce skills.• Capacity Building of Black Training ProvidersThis project was designed to address insufficient numbers of black Education and Training Providers who are in position to successfully tenderfor education and training projects, or who can effectively and efficiently provide education and training to the industry, the INSETA• New Venture Creation for Black BrokersThe project aims to assist designated groups, including new entrants, to participate in accredited work-integrated learning and work-basedprogrammes to acquire critical skills to enter self-employment.INSETA Sector Skills Plan - page v

BACKGROUND TO THIS SSPThe Insurance Sector Education and Training Authority (INSETA) was established in terms of the Skills Development Act (No. 97 of 1998).Section 10(1)(a) of this Act requires all sector education and training authorities (SETAs) to prepare sector skills plans (SSPs) for theirrespective sectors. In 2004, the Department of Labour (DoL) required the SETAs to prepare SSPs for the five-year period 2005 to 2009.In 2005, the DoL announced that SETAs would be required to revise and update their SSPs on an annual basis. This SSP is a revised andupdated document prepared according to the DoL’s guidelines issued to SETAs in July 2005. The updated Organising Framework ofOccupations (OFO) released by the DoL in July 2007 was used to report on scarce and critical skills. The SSP will be submitted to theDoL on 31 August 2007.PROCESS AND METHODOLOGYIn 2004, the INSETA embarked on an extensive research and broad-based consultative sector skills planning process. The 2005 updatebuilt on the work done in 2004 and comprised the revision and updating of all statistical data, an analysis of the WSPs and ATRs submittedto the INSETA for the period 2004/2005 and another round of interviews with industry bodies in the sector.In October 2005 the INSETA embarked on a sector survey of employment, scarce and critical skills. The information obtained throughthis survey forms the basis for the 2006 update of the SSP. The survey information was augmented by updated information from nationalsources, for example from the latest reports published by the Financial Services Board (FSB), the latest information on the gross domesticproduct (GDP) and the latest Labour Force Survey (LFS) and the WSP and ATR information submitted for the period 2005/2006.In 2007 the SSP was once again updated with data from national sources and from the INSETA’s own data system. The comprehensivesector survey data collected in 2005/2007 were retained as the basis of this SSP update. However, scarce and critical skills information wasobtained from the WSPs submitted for the period 2006/2007. This information was augmented with a telephone survey amongorganisations (mostly small organisations) that had not submitted WSPs. Certain supply-side information was obtained from the ATRssubmitted for the period 2006/2007.SECTOR CONSULTATIONIn 2004, the INSETA embarked on an extensive research and broad-based consultative process in order to elicit information for this SSPfrom the sector. This process included interviews with CEOs of companies and with industry bodies.In 2005 a series of consultative interviews was conducted with industry and professional bodies in the sector.In 2006 the findings of the survey of employment, scarce and critical skills and other statistical information used in the update of the SSPwas presented to a wide spectrum of stakeholders in the sector at four regional forums 1 hosted by the INSETA. Stakeholders had theopportunity to comment on the information and to provide qualitative inputs into the SSP. The discussions at the regional forums focussedmainly on solutions to the skills problems experienced in the sector and the role that the INSETA could play in solving these problems.In 2007 sector consultation again took the form of interviews with industry and professional bodies. The list of institutions and peopleinterviewed can be seen in Annexure A. The interviews focused on recent developments in the sector, scarce and critical skills and growthprospects of the sector.1 The regional forums were held in Durban, Port Elizabeth, Cape Town and Johannesburg in the period 22 to 25 May 2006.INSETA Sector Skills Plan - page vi

1 PROFILE OF THE SECTORThe insurance sector forms part of the large and rapidly growing financial and business services sector in South Africa. In 2006, financialand business services contributed 21.6 % to the national GDP, and in the period 1996 to 2006 they increased their contribution to GDPby more than 3.8%. 2 In March 2006, this sector provided 9.6% of the employment opportunities in the country. 3Insurance plays a major role in the South African economy. In 2006, the net premium income of long-term insurers amounted toapproximately R223 billion 4 and that of short-term insurers to R38.5 billion. 51.1 Industrial coverageThe sector served by the INSETA includes providers of insurance products (i.e. long-term and short-term insurers and reinsurers) as wellas the intermediaries or brokers who sell insurance products to the public. The Standard Industrial Classification (SIC) codes that areincluded in the sector can be seen in Table 1-1.Table 1.1 Insurance industry SIC codesSIC code descriptionSIC codeUnit Trusts (or collective investments) 81901Risk Management 81902Insurance and Pension Funding, except compulsory social security 82100Life Insurance 82110Pension Funding 82120Healthcare Benefits Administration 82131Short-term Insurance 82191Funeral Insurance 82192Reinsurance 82193Activities Auxiliary to Insurance and Pension Funding (including brokers/intermediaries) 833001.2 Profile of employers in the sector1.2.1 Total number of employersThe South African insurance industry functions in a highly regulated environment, and most of the organisations that operate in this sectorare subject to legislative requirements for registration with a regulatory body. All insurers, reinsurers, pension funds and collective investmentmanagers have to register with the Financial Services Board (FSB) and since the introduction of the FAIS Act, all intermediaries also haveto register with the FSB. Table 1-2 shows the number of organisations that belong to the insurance sector and that were registered withthe FSB at the end of the 2005/2006 financial year. At that time, 73 long-term and 98 short-term insurers and 12 reinsurers were registeredwith the FSB. A total of 220 pension fund administrators were also registered. At the end of March 2006 12 610 financial service providerswere registered. 6Table 1.2 Organisations registered with the FSB 31 March 2005Type of organisationNLong-term insurers 73Short-term insurers 98Reinsurers 12Pension fund administrators* 220Collective investment managers 33Financial services providers (category 1) (Intermediaries) 12 601Source: Financial Services Board, Annual Report, 2006*Financial Services Board, Annual Report, 2005.All healthcare funders have to register with the Council for Medical Schemes. At the end of the 2005/2006 financial year there were 131medical schemes registered with the Council. However, most of these schemes were administered by medical scheme administrators. Theadministrator market is dominated by five large administrators, who, together, hold 66% of the market. 7A total of 3 800 organisations had paid skills development levies (SDLs) to the INSETA in respect of the 2005/2006 financial year. Themajority of these were intermediaries or brokers.2 Statistics South Africa, Statistical Release PO441, 21 May 2007.3 Statistics South Africa, Labour Force Survey, March 2006.4 Financial Services Board, Special Report on the Results of the Long-term Insurance Industry for the period ended March 2007.5 Financial Services Board, Special Report on the Results of the Short-term Insurance Industry for the period ended March 2007.6 FSB Annual Report, 2006.7 Council for Medical Schemes, Annual Report 2005/2006.INSETA Sector Skills Plan - page 1

1.2.2 Employers by subsectorA sector-wide survey of employment, scarce and critical skills which was published in 2006 provided the INSETA with the opportunity toglean insight into the subsectoral composition of the sector. In the survey organisations were classified into subsectors on the basis of theirown descriptions of their main economic activities. However, this subsector demarcation is not “pure”, as many organisations were involvedin different aspects of insurance. The following subsectors are distinguished:• Collective investments• Life insurance• Pension funding• Healthcare benefits• Short-term insurance• Funeral insurance• Reinsurance• Brokers/Agents• Activities auxiliary to insurance, which include services rendered to the insurance industry such as human resource services, accountingand other financial services, legal and actuarial services, and training and development.• Non-insurance related activities. This refers to activities performed by organisations assigned to the INSETA by SARS or the Departmentof Labour (DoL) and that chose not to move to other SETAs. Such organisations found in the survey include debt-collecting firms,micro-lenders and even enterprises such as pawn shops.Table 1-3 shows the distribution of organisations and employees across the ten subsectors. Most (84.5%) of the organisations, werebrokerages or agents who sold insurance products while 9.0% were classified in the category “activities auxiliary to insurance”. Life insuranceand short-term insurance companies constituted only 0.6% and 1.2% respectively of the organisations in the sector. Life insurers were,however, the largest employers in the sector and accounted for 36.5% of all employees; short-term insurers employed 14.5% of the totalworkforce. Brokerages or agencies employed 21.9% of the workers in the sector.Table 1.3 Distribution of organisations and employees according to subsectorSubsectorOrganisationsEmployeesN % N %Collective investments 14 0.4 60 0.1Life insurance 25 0.6 37 442 36.5Pension funding 18 0.5 6 217 6.1Healthcare benefits 57 1.5 6 750 6.6Short-term insurance 45 1.2 14 846 14.5Funeral insurance 27 0.7 3 106 3.0Reinsurance 10 0.3 456 0.4Brokers/Agents 3 278 84.5 22 431 21.9Activities auxiliary to insurance 350 9.0 10 882 10.6Non-insurance related activities 57 1.5 267 0.3Total 3 881 100.0 102 458 100.0Source: Inseta, Survey of Employment, Scarce and Critical Skills in the Insurance Industry, May 2006Table 1-4 shows the extent to which organisations were involved in the different components of insurance at the time of the survey. Noneof the organisations that classified themselves in the collective investments subsector were involved in any other activities. However, 27.4%of the life insurers were also involved in collective investments, 36.2% were involved in the administration of pension funds, 22.2% wereinvolved in the administration of healthcare benefits, 15.4% offered short-term insurance, 51.5% offered funeral insurance and 4.9% indicatedthat they were involved in reinsurance. Similarly, many of the organisations that placed themselves in the healthcare benefits and the shortterminsurance subsectors were involved in other activities as well.INSETA Sector Skills Plan - page 2

Table 1.4 Other activities of organisations in the sectorMain subsector Collective Life Pensioninvestments insurance fundingHealthcarebenefitsSource: Inseta, Survey of Employment, Scarce and Critical Skills in the Insurance Industry, May 2006Short terminsuranceFuneralinsuranceReinsurance Activitiesauxiliary toinsuranceNon-insurancerelated activitiesPercentage of organisations involved in other subsectorsCollective investmentsLife insurance 27.4 36.2 22.2 15.4 51.5 4.9 12.0Pension funding 28.0 5.7Healthcare benefits 30.5 66.2 24.3 66.2 30.5Short-term insurance 11.6 2.8 2.8 2.8 5.7 8.3Funeral insurance 4.8ReinsuranceActivities auxiliary toinsurance 8.8 8.0 11.8 12.6 31.0 2.7 2.6Non-insurance relatedactivities 33.3Figure 1-1 shows the activities of the brokerages or agencies in the sector. Less than half (43.5%) of the brokerages were dedicated toone kind of product. The remaining 56.5% sold products on behalf of organisations in a variety of subsectors. Most (70.7%) of theorganisations sold short-term insurance while 49.9% sold life insurance and 24.9% sold collective investment products.Figure 1-1 Products sold by brokerages or agencies in the sectorSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 20061.2.3 Employers by sizeFigure 1-2 illustrates the distribution of organisations and employees according to organisation size. The sector comprises a large numberof very small organisations and a small number of very large ones. The survey revealed that as many as 96.0% of the organisations hadfewer than 50 employees. In fact, two-thirds (66.0%) were micro-organisations that employed five or fewer people while 83.4% employedten or fewer people. The large organisations ranged between 150 and 14 000 employees and employed 73.1% of the workforce. Thesmall organisations (1 to 49 employees) employed 19.1% of the people in the sector.INSETA Sector Skills Plan - page 3

Figure 1-2 Distribution of organisations and employees according to organisation sizeSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 20061.3 Employment in the sector1.3.1 Total number of employeesBased on the survey 8 results, total employment in the sector at the end of 2005 was estimated at 102 000. The employment distributionacross subsectors can be seen in Figure 1-3. Life insurance was by far the largest employer with 36.5% of employees employed in thissubsector. Brokerages or agents employed 21.9% of the workers in the sector and the short-term insurance subsector 14.5% of theworkers.Figure 1-3 Employment distribution according to subsectorSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006Estimates of the number of very small and independent intermediaries vary widely. For example, 2006 survey results 9 showed thatapproximately 35 695 financial advisors were working in the insurance sector of whom 9 551 worked for large organisations. The remaining26 144 advisors were classified as external advisors, that is independent intermediaries, or they worked for formal insuranceintermediary/broker companies.Then again, research conducted in 2003 found that more or less 75 000 financial advisors would be affected by the FAIS Act. Of these,23 000 were employees of large organisations and 52 000 were external advisors. 10 In another study undertaken byPriceWaterhouseCoopers in 2004, short-term companies that participated reported that they had 24 280 intermediaries/brokers sellingtheir products while long-term companies reported 26 598. 118 Inseta, Survey of Employment, Scarce and Critical Skills in the Insurances Sector, May 2006.9 Inseta, Survey of Employment, Scarce and Critical Skills in the Insurances Sector, May 200610 Grant Thornton & Prodigy Business Services, Information on Financial Advisors in the South African Insurance Industry. Report presented to the INSETA in November 2003.INSETA Sector Skills Plan - page 4

A major problem in estimating the number of brokers is that brokers sell the products of more than one insurer and are therefore doublecounted in the statistics provided by insurance companies. However, participants in the SSP development process said that independentbrokers did not number more than 23 000. 12 This figure is more in line with the number of license applications received by the FSB fromfinancial service providers.1.3.2 Geographical distribution of employeesFigure 1-4 Geographical distribution of employeesSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006More than half (52.7%) of the workers in the sector lived in Gauteng at the time of the survey 13 , 22.8% lived in the Western Cape and9.2% lived in KwaZulu-Natal. The other provinces accommodated only small components of the sector – mostly brokerages (Figure 1-4).1.3.3 Population group, gender and disabilityAlmost half (49.5%) of the workforce was white, 28.0% was African, 15.1% was coloured and 7.5% was Indian. More than half (59.4%) ofthe employees in the sector were women.In the Survey of Employment, Scarce and Critical Skills employers reported that 0.5% of their employees were disabled.The population group and gender distribution of employees is discussed in more detail in Chapter 3 of this SSP.1.4 Drivers of change in the sectorThis section deals with the factors that drive change in the Insurance Sector in South Africa. It starts with international trends, but thencontinues with the local issues that impact on the growth of the sector, employment and the demand for skills. The most important factorsthat are currently affecting and that are expected to continue to influence the sector over the next few years are the FAIS legislation, blackeconomic empowerment and the sector’s commitments in terms of the Financial Services Charter and the imminent changes in commissionstructure of intermediaries.1.4.1 Changes in the international insurance industryThe South African insurance industry is integrated into the global economy, and therefore global trends will resonate through the SouthAfrican market. During 2004, numerous allegations of misconduct by major insurance companies in the United States (for example thecivil suit brought by New York attorney general Eliot Spitzer against Marsh Inc. insurance brokerage) 14 generated a flurry of negative publicityand undermined the confidence of investors and customers. The ensuing investigations into allegations of improper conduct, coupled withmore stringent regulatory requirements around the world, have pushed compliance and risk management to the top of the industry’sagenda. 15 The International Association of Insurance Supervisors is currently engaged in setting international standards for compliance, andthe FSB (a member of this organisation) will extend these measures to the organisations that it regulates. Similarly, international financialreporting standards (IFRS) for the insurance industry have been introduced to enable global comparison and standardisation of accountingreports for insurers. 16 Companies that operate internationally will have to contend with multiple new legislative requirements. For example,in Europe, insurance companies are likely to face new regulatory demands modelled on Basel II, while insurers in the United States mayhave to comply with tougher corporate governance standards inspired by Sarbanes-Oxley.11 PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2004. 12 Interview with the FPI, 2005.13 Inseta, Survey of Employment, Scarce and Critical Skills in the Insurances Sector, May 2006.14 Spitzer filed a civil suit against Marsh in which he alleged that Marsh brokers cheated clients by rigging bids for insurance contracts and steering business to insurers that paidMarsh millions of dollars in so-called contingent-fee commissions, which Spitzer likened to kickbacks. Solomon, D. and McDonald, I. Spitzer decries lax regulation over insurance,http://www.injurylawattys.com/medical-insurance.htm.15 Deloitte & Touche, The 10 most important issues for the Insurance Industry in 2005, http://www.deloitte.com/dtt/research.16 Interview, FSB, Long-term Insurance Division.INSETA Sector Skills Plan - page 5

Globally, the role of the insurance broker has been changing over the past few years. The introduction of direct distribution channels(particularly for the short-term insurance industry) has resulted in the bypassing of broker services. In Australia and New Zealand, insurerssell most personal lines business directly to customers. Furthermore, throughout the world, banks are playing an increasingly dominant rolein insurance distribution. In the United States, banks own 10% of the country’s broker market. 17Despite the increased use of direct distribution channels, the role of the broker is actually becoming more important as internationally thedemand is growing for specialised brokers. The role of the broker has changed from one of “matchmaker” to that of service provider tothe client as well as the insurance company. In addition, broker remuneration is becoming increasingly based on service fees as opposedto commissions. 18Insurance companies are now focusing more on providing advice than on providing products, and therefore they need more sophisticated,highly skilled professionals. Recruiting and training the people needed by the insurance industry will call for more innovative approachesthan ever before. 19In order to achieve economies of scale and increase geographical reach, many independent, small and medium-sized broker firms areamalgamating and consolidating. Many smaller brokers are willing to sell their businesses because of eroding margins (as a direct result ofthe increased costs of complying with the regulatory requirements) and their inability to meet the increasing expectations of clients.In the longer term, brokers will most probably• focus on improving underwriting quality;• provide additional risk management services for their clients – it is anticipated that the risk landscape will become increasingly complex;• expand into emerging insurance markets in order to grow their businesses;• expand globally as clients demand global services;• improve their analytical skills as clients become better informed.Globally, the insurance sector is becoming more sophisticated technologically, and this is impacting on the need for skills development ofexisting employees.Environmentally, the insurance sector believes that climatic changes in the future will lead to more natural catastrophes resulting in increasingdemand for insurance cover to reduce exposure and in increasing claims emanating from such catastrophes.1.4.2 Drivers of change in South Africa’s insurance sectora) Policy and legislationMore than 140 Acts of Parliament directly and indirectly relate to and impact on the insurance sector. The sector believes that theindustry is overregulated and that this is “smothering” business initiative and limiting entrepreneurial flair. The regulatory complexityis also seen as a barrier to compliance. 20 The overregulation is also increasing operating costs and hence product pricing, which in turnis limiting accessibility to insurance products, especially for the lower income groups. Conversely, the positive effect of all the legislationis heightened consumer trust 21 and ensured that South Africa escaped the fate of countries such as the US, UK and Japan who hadto deal with the ailing health of some life insurers and are faced with the challenge of protecting consumers when companies fail. 22Currently, three aspects of policy and legislation are overshadowing all others in terms of their impact on the sector: the FinancialAdvisory and Intermediary Services Act, black economic empowerment (BEE) legislation and its corollary the sector charters andproposed changes to the life insurance industry, including the payment of commission to brokers.Financial Advisory and Intermediary Services ActThe Financial Advisory and Intermediary Services Act (No. 37 of 2002) (FAIS Act), which is aimed at professionalising the insurancesector, has had, and will continue to have, a profound impact on the sector. The Act requires all financial services providers to belicensed as such. In order to be licensed, a financial services provider has to comply with the Requirements for Fit and Proper FinancialServices Providers. These requirements are formulated in respect of• the applicant’s personal character qualities of honesty and integrity;• the competence and operational ability of the applicant to fulfil the responsibilities imposed by the Act;• the applicant’s financial soundness.The Act also imposes various other requirements on financial services providers such as accounting and auditing requirements. Largeinsurance companies in general believe that they have, or are implementing, adequate systems to satisfy the FAIS legislation. However,in many cases, companies have diverted their FAIS responsibility to the independent insurance intermediary or broker who, in general,does not have the in-house systems or ability to meet the FAIS Fit and Proper requirements. During the research and consultationprocess conducted for this SSP update, 23 it emerged that both the FSB and brokers/intermediaries and their representative bodiescontinue to be grappling with the implications of the FAIS legislation. Some of the issues raised are:17 Grant Thornton & Prodigy Business Services, Information on Financial Advisors in the South African Insurance Industry. Report presented to INSETA in November 200318 Grant Thornton & Prodigy Business Services, Information on Financial Advisors in the South African Insurance Industry. Report presented to INSETA in November 200319 Deloitte & Touche, op. cit.20 PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2006.21 Opinions expressed by industry stakeholders during the preparation of the SSP in 2004. 22 Life Offices Association, Annual Report, 200623 Company interviews conducted by Grant Thornton in 2004, and interviews conducted by EE Research Focus with industry bodies in 2005.INSETA Sector Skills Plan - page 6

• The fact that the industry has experienced job losses over the last few years due to the inability of existing brokers to comply withthe FAIS Fit and Proper requirements;• Brokers/intermediaries are reassessing their roles in the sector. More brokers are expected to leave the sector as they realise thatthey will not be able, or will not be willing, to comply with the legislative requirements. However, many brokers will also most likelyrededicate themselves to the sector;• Increased costs – the high cost of compliance will force brokerages to merge or close down;• The sector is considered a high-risk sector in which to operate – for example, there is significant risk to the broker if he/she offersbad advice or service.Another important issue is the fact that financial service providers struggle to understand the Fit and Proper requirements and toaccess the correct training that will enable them to become licensed. At the same time the FSB is concerned that the currentrequirements, that are based on formal qualification and credits towards qualification are not really developing the competencies thatare needed to ensure the expected level of service. They therefore instituted a forum of representative bodies to reconsider theway in which competence and operational ability can be tested for licensing purposes. 24Despite all the concerns mentioned above, the general view is that in the long term the FAIS Act will enhance the professionalismof the sector and will compel organisations and individuals to invest in the development of skills.Black economic empowermentSince 1994, a number of Acts pertaining to social transformation, the eradication of the effects of previous discriminatory legislationand practices, black economic empowerment and employment equity have been promulgated. They include the Employment EquityAct (No. 55 of 1998), the Preferential Procurement Framework Act (No. 5 of 2000) and the Broad-Based Black EconomicEmpowerment (BBBEE) Act (No. 53 of 2003). The BBBEE Act was followed by the development and adoption of a series of sectorcharters. Organisations in the sector are directly affected by the Financial Sector Charter, which was implemented in 2004, and thedraft Health Care Charter, which is currently still under discussion.The Financial Sector Charter (FSC) commits organisations in the sector to certain levels of black 25 and black female representationat all management levels in the insurance sector by 2008, which is over and above specific targets for board representation, ownership,procurement, servicing of the needs of the lower LSM groupings, and so on. The FSC also calls for minimum expenditure on trainingand skills development and sets industry-specific learnership targets. A summary of the FSC targets has been attached as AnnexureB to this report.Medical schemes will be significantly affected by the Health Care Charter once it is adopted by the sector. At the moment, however,this charter is still in draft form and no specific targets have been agreed upon.All the developments cited above were followed by the development and publication in 2006 of the Codes of Good Practice. TheCodes provide a standard framework for the measurement of broad-based BEE across all sectors of the economy 26 .Proposed changes to life insurance industry and the structure of commission paid to intermediariesIn June 2005, the Life Offices Association (LOA), which represents the majority of long-term insurers in South Africa, tabled a discussiondocument with the National Treasury, the Financial Services Board and various other industry organisations in which the LOA proposedfundamental changes to the current regulations regarding upfront commissions on long-term insurance policies, including endowmentsand retirement annuities. This discussion document followed on various developments and events that compelled the subsector toreconsider the total cost structure of long-term policies. These developments and events include:• determinations by the Pension Funds Adjudicator on retirement annuities that challenged the basis on which long-term insurerscalculate early termination values (and to a lesser extent also maturity values),• concerns expressed by the National Treasury and the Financial Services Board about the cost structure of long-term policies andthe fact that such a large portion of the costs is incurred at inception,• an increase in the number of policyholder complaints and extensive negative publicity on early termination policy values. 27In essence, the proposals include the replacement of the current regulated upfront commission with an ongoing commission consistingof two components, namely a sales commission and a service commission. Other proposals are that clients should be free to negotiateall commissions and should have full control over service commissions.The proposals put forward by the LOA were followed in March 2006 by the publication by the National Treasury of a discussion paperon contractual savings in the life insurance industry. This discussion paper covers a wider range of issues pertaining to the life insurancesector, including24 Personal interview with Ms Wendy Hattingh and Charene Nortier, Financial Services Board, 12 July 2007.25 “Black” refers to the African, coloured and Indian population groups.26 Department of Trade and Industry, Broad-Based Black Economic Empowerment Act – Interpretative Guide to The Codes of Good Practice, Pretoria, 2007.27 Life Offices Association, LOA Discussion Paper on Costs and Commission Structures for Long-Term Insurance Savings Policies. http:// www:.loa.co.za, June 2005.INSETA Sector Skills Plan - page 7

• insurer costs and equity concerns• competition (or the lack thereof) in the long-term insurance market• disclosure standards• the need for simplified products• the need for consumer education• governance arrangements for retirement annuity funds• intermediary relationships with insurers and with consumers• regulation of commission and advisory fees and• minimum early termination values of policies. 28At the time of writing this SSP, the issues relating to the life insurance industry were still being debated and no decisions had beentaken. However, professional bodies as well as individual brokers who participated in the SSP discussions were of the opinion thatthe proposed changes to the structure of the commission payable to intermediaries would result in the already beleagueredintermediary component of the sector becoming under even more pressure. A movement away from the upfront commissionstructure will specifically affect the cash flows of intermediaries, and, given the increased cost and stringent liquidity requirements laiddown in the FAIS Act, this may be the factor that finally drives some (especially smaller) brokers out of business. It may also lead toconsolidation, joint ventures , alliances or acquisition of smaller companies by larger ones. 29b) Economic factorsEconomic trends and circumstances and factors influencing economic growth or decline differ for the respective subsectors. For thisreason, the main subsectors are discussed separately.Long-term insuranceFigure 1-5 Trends in net premium incomes of life insurers*: years ended 31 December 2001-2006*Includes typical insurers, niche insurers and cell captive insurers.** 2000 values calculated by using the CPISources: Financial Services Board, Special report on the results of the long-term insurance Industry for the periods ended December 2004, (15 February 2005), December2005 (15 February 2006) December 2006 (15 February 2007).Various indicators of the general health of the long-term insurance sector are available. The movement in one of these indicators,net premium income, is illustrated in Figures 1-5 to 1-7. Figure 1-5 shows a decline of 11% in nominal and 24% in real terms for lifeinsurers over the period 2001 to 2004. In 2005 premium income increased again, but the real income of this part of the sectorremained 16% below the 2001 income level. On 2006 the real net premium income increased further and regained its 2001 level.A similar negative trend is observed between 2001 and 2004 in the real net premium income of link investment insurers. Althoughpremium incomes increased somewhat in 2005, it remained 22% below the 2001 level. In 2006 the upward trend continued andexceeded the 2001 level (Figure 1-6).The only component of the long-term subsector that experienced growth in net premium income over the period 2001 to 2005 isthe assistance insurers (mainly funeral policies) which experienced growth of 148% in nominal terms and 102% in real terms.However in 2006 nominal premium income declined by 8% and real premium income by 13% (Figure 1-7)28 National Treasury, Contractual Savings in the Life Insurance Industry, Pretoria, March 2006.29 PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2006.INSETA Sector Skills Plan - page 8

Figure 1-6 Trends in net premium incomes of link investment insurers*: years ended 31 December 2001-2006*Link investment insurers are those insurers who underwrite policies whereby the value of the policy is directly linked to the value of the assets invested in, and no guaranteesoffered.** 2000 values calculated by using the CPISources: Financial Services Board, Special report on the results of the long-term insurance Industry for the periods ended December 2004, (15 February 2005), December2005 (15 February 2006) December 2006 (15 February 2007).Figure 1-7 Trends in net premium incomes of assistance insurers*: years ended 31 December 2001-2006*Assistance insurers are those insurers who offer life policies where the sum assured does not exceed R10 000 (mainly funeral policies).** 2000 values calculated by using the CPISources: Financial Services Board, Special report on the results of the long-term insurance Industry for the periods ended December 2004, (15 February 2005), December2005 (15 February 2006) December 2006 (15 February 2007).The negative growth in premium income over the period 2001 to 2004 can be attributed to various factors:• Increasing competition from banks and other forms of investment (offshore companies, property investments, etc.).• Increasing competition for the consumer’s disposable income.• Poor investment returns.• The negative publicity and loss of consumer confidence.• The recovery of the sector in 2005 and 2006 could, at least in part be ascribed to recent improvements in equity markets thatrekindled support for the long-term subsector.Short-term insuranceThe short-term subsector experienced a decline in real premium income between 1999 and 2001. However, from 2002 to 2006,the subsector experienced a turnaround with growth in premiums and improved underwriting results (Figure 1.8). Despite thisimprovement, the subsector is still hampered by• poor investment returns – although this has recently improved owing to growth in the equity market;INSETA Sector Skills Plan - page 9

• increasing reinsurance rates;• increasing competition between brokers and direct distribution channels;• legislation that is causing higher direct compliance costs.Figure 1-8 Trends in premium incomes and benefits paid by short-term insurers: years ended 31 December 1999-2006** 2000 values calculated by using the CPI.Sources: Financial Services Board, Special report on the results of the long-term insurance Industry for the periods ended December 2004, (15 February 2005), December2005 (15 February 2006) December 2006 (15 February 2007).ReinsuranceReinsurers are generally international companies that tend to consider reinsurance issues globally. The reinsurance industry grew priorto 2003 and stabilised between 2003 and 2004. Growth before 2003 can be ascribed to growth in the insurance industry. Since 2003,the insurance companies have reassessed the manner in which they employ capital. A move is discernible towards greater capitalretention rather than passing capital on to reinsurers. The companies have moved from proportional reinsurance to non-proportionalreinsurance to retain more premium and to absorb more of the initial risks and losses themselves. Further growth in the reinsurancesector is expected in the life subsector, but the non-life subsector will probably remain static. The size of the portfolios will likelyincrease in the life subsector, but this will not necessarily mean that more employees will be needed. The larger portfolios will bemanaged with current staff numbers and greater use of technology. 30Collective investmentsThe collective investments subsector is a high-growth area in the insurance industry. The number of investment schemes in securitiesincreased from 156 in 1998 to 718 in 2006, and the assets under management increased from R78 billion in 1998 to R459 billion in2006 (Figure 1.9). Growth in investment schemes in property was equally impressive (Figure 1.10). The total market capitalisationof these funds increased from R 4.2 billion in 2000 to R 17.0 billion in 2006.30 Opinion expressed by SAROA in a personal interview.INSETA Sector Skills Plan - page 10

Figure 1-9 Trends in collective investment schemes in securities: years ended 31 March 1998-2006Source: Financial Services Board, Annual Report 2005 and 2006.The growth of this subsector can be ascribed to greater investor confidence in unit trusts, the cost- effectiveness of unit trustscompared to long-term insurance products, greater transparency in cost structures and the fact that unit trusts provide easy accessto equity and investment markets.The growth of this subsector is expected to continue. However, the growth will translate into only moderate growth in employmentin the subsector itself. Investment managers can handle an increase in funds and in investment volumes without an equivalent increasein personnel. However, growth may well occur at the level of intermediaries who sell the products to the public. 31Figure 1-10 Trends in collective investment schemes in property: years ended 31 March 2000-2006Sources: Financial Services Board, Annual Report 2005 and 2006.31 Interview with Association of Collective Investments, 2005.INSETA Sector Skills Plan - page 11

Healthcare fundersThe number of lives covered by medical schemes has remained stagnant over the past five years. The number of medical schemes,however, has declined due to consolidation and mergers, which, in turn, are the result of the quest for greater efficiency and betterrisk management. A factor that has impacted significantly on medical schemes is the outflow of skilled personnel (e.g. medicalpractitioners and nurses) from the medical provider subsector. The shrinkage of the private medical health sector has consequentlyrestricted the growth of healthcare funders. The overall growth of this subsector is also severely limited because of the unaffordabilityof medical cover to the majority of the population. A factor that may bring some new impetus to the subsector is the proposed newmedical scheme for government employees. This scheme is expected to bring uninsured employees into the system. 32Pension fundsThe pension fund system in South Africa is occupation-based, and therefore the growth of the pension fund subsector is closelylinked to the growth of formal employment in the country. As very little growth has occurred in formal employment over the pastdecade, pension fund membership has also grown slowly. In 1999, the FSB reported that the total membership of pension funds was9.1 million. The corresponding figure for 2004 was 9.9 million. However, the number of pension funds declined from almost 16 000funds in 1999 to 13 603 by the end of 2004. 33 The lack of growth in membership of pension funds will obviously inhibit growth inemployment in the fund administrators.IntermediariesNo statistical information is available on the economic performance of intermediaries. However, the professional bodies thatcontributed to the development of this SSP agreed that over the past few years a reduction had occurred in the business volume ofintermediaries in the short-term and the long-term subsectors. Various factors contributed to this situation:• The traditional (white) market has reached saturation point, and the white population group is not growing. The emerging (mainlyblack) market has not yet taken off.• Disintermediation – insurance companies (particularly in the short-term subsector) are bypassing the traditional broker networkand selling directly to the consumer. “Bankassurance” and retailers selling insurance and financial products directly to the consumerare also contributing to the bypassing of traditional brokers.The decline in the role of intermediaries is expected to continue in the foreseeable future. 34c) New and emerging marketsThe traditional market for insurance products (i.e. the high-income mainly white population) is saturated and the growth potentialof the market is therefore limited. Expansion of the industry is possible only through the exploration of the non-traditional lowincome (mainly black) market, which to date remains relatively untapped.Various reasons have been cited for the slow penetration and development of the emerging markets:• Insurance products that are not appropriate for the emerging markets (however, several participants in the SSP developmentprocess commented that the insurance companies are currently looking at the development of products that are more suitable forthe uninsured market).• Lack of consumer appreciation of the value and importance of insurance products.• Lack of consumer knowledge about financial planning and financial services.• Cultural and language barriers between potential clients and intermediaries.• Distribution channels for insurance products that are not relevant and affordable to the emerging markets.• The economic realities of a large proportion of the population, which compel people to spend their income on products otherthan insurance.The provision of insurance services to the lower income market is not only business imperative for the insurance sector, it is also partof the economic and social upliftment objectives to which the sector committed itself in the FSC. In response to the FSC requirementsthe long term and short term insurance subsectors each developed a set of minimum standards which guide the development ofspecific products for low income earners. The Zimele product standards, which were developed by the Life Offices Association(LOA) guarantee fair charges, easy access and decent terms for long term insurance policies. 35 The South African Insurance Association(SAIA) has developed a similar set of standards for short term insurance – the Mzanzi standards. 36d) Technological changeThe insurance industry is technologically advanced and uses sophisticated information systems. The past decade has seen technologicaladvances in most of the industry’s processes, for example product distribution and selling (e-selling and selling through call centres),client service and information, claims handling and administration.The technology used by the sector tends to stifle growth in employment as increasing volumes of work can be handled without32 BHF and Alexander Forbes Health Care Consultants, Key Performance Indicators from the 2004 Survey of Medical Schemes in Southern Africa and interview with representativesof the Board of Healthcare Funders.33 Membership includes active members, pensioners, deferred pensioners and dependants. People who belong to more than one pension fund are double counted in thestatistics. Sources: FSB, Annual Reports of the Registrar of Pension Funds, 2000 to 2005.34 PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2004.35 Interview with the CEO of the LOA, 2 August 2007.36 SAIA, Annual Review, 2007.INSETA Sector Skills Plan - page 12

additional staff. The technology also tends to limit the skills required of many (especially lower level) employees. Because many ofthe processes used in the industry have become systems-driven, over time this has led to skills deficiencies in the sector. New entrantsinto the industry learn to deal with the systems without understanding the underlying principles and processes. Skills developmenthas also become focused and narrow, leaving the industry without people with a broad, basic and thorough understanding of principleissues, practices and products. The lack of broad-based industry skills causes specific problems at junior and middle management level.e) Social factorsInequality and exclusion from financial servicesSouth African society is still marked by inequality and poverty with 67% of the adult population falling in the lower income categories– living standard measurement (LSM) 1-5. The majority of poor people are excluded from financial services in general and frominsurance products in particular. A study conducted in 2004 found that of the people falling in LSM 1-5, only 11% have a formal lifeinsurance policy, 15% have a funeral policy and 20% (6 mil.) use burial societies. 37 In the Financial Sector Charter, the insurance sectorhas committed itself to specific targets with regard to access to insurance and investment products. The achievement of these targetsdepends not only on the development of suitable and affordable products for this market, but also on effective delivery to the market.This includes overcoming the barriers referred to in Section (c) above.FraudFraud is an issue the industry has to deal with on an ongoing basis. According to recent research on the long-term and short-terminsurance components of the sector, fraud occurs among policyholders, internal staff and intermediaries. The short-term subsector(and presumably also the healthcare funders subsector) also has to deal with fraud among service providers. Some organisationsmaintain that staff and other fraud syndicates have penetrated the whole value chain. 38High levels of crime in South AfricaHigh crime levels in South Africa lead to increased insurance claims with consequent increases in premiums to cover costs. Overall,this has a negative impact on the insurance sector.High unemployment in South AfricaHigh unemployment means numerous people with no disposable income to spend on insurance products and a limited market inwhich to sell products. Limited growth in formal employment is matched by limited growth in the pension/provident fund investmentmarket. High retrenchments lead to an increase in pension and insurance payouts, which in turn has a negative impact on the sector’sinvestment base.Increase in life expectancyIncreased life expectancy impacts on the life insurance industry and the need to reinsure life portfolios, resulting in heightened demandfor higher level analytical, actuarial and financial skills in the reinsurance industry.HIV/AIDSHIV/Aids impacts negatively on the life and medical insurance sectors because of increased payouts, and it thus increases the overallcost of insurance and puts the products further out of the reach of the average South African. However, the sector believes that theimpact of HIV/AIDS has been largely mitigated through the adaptation of products. 39 The redesign of life insurance products toprovide for HIV/AIDS has affected reinsurance needs and has increased the need for higher level analytical, actuarial and financial skillsin the reinsurance subsector. 40At this stage, the effect of HIV/AIDs on the sector’s workforce is not a serious concern. Although no statistical information is availableon infection rates in this sector, the sector employs highly educated workers who are known to have lower infection rates and whowould probably have access to antiretroviral medication in the event of infection.1.5 ConclusionsThe insurance sector plays a key role in the South African economy as it provides and administers the main vehicles for savings. The sectorconsists on the one hand of a small number of relatively large insurance companies (which also administer a large portion of the pensionfunds in the country), collective investment managers and medical schemes and, on the other hand, numerous small intermediaries orbrokerages. The sector also includes a small number of self-administered pension funds (the rest of the funds use employees who areemployed by the fund members’ employers, and therefore the funds are not employers themselves).After a decline over the period 2002 to 2004 the long term insurance subsector regained momentum and is expected to continue to growsteadily over the next few years. The short term insurance and collective investment sectors are also expected to continue on a steadygrowth path. However, it is unlikely that employment will grow at the same pace. In the larger organisations productivity is increased through37 Napier, Mark, Provision of Financial Services in South Africa. Case study presented at the Services Experts Meeting, 3-4 February 2005. www//:finmark.org.za.38 PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2004.39 Comments of participants in the SSP development process, 2004.40 Views of some of the professional bodies that participated in SSP development process.INSETA Sector Skills Plan - page 13

technological developments while the number of intermediaries in the market may further decline as a result of the FAIS requirementsand the changes to the commission structure. 41Insurance is a highly regulated environment. Worldwide, insurance activities have been subject to increased regulatory controls that, in turn,have had a direct impact on the skills requirements of people in the sector. In South Africa, the changes in competency requirements broughtabout by the FAIS Act have had, and will continue to have, a profound effect on employment and on skills needs. Overall, a trend isdiscernible towards greater professionalism of the sector and the employment of people with higher levels of skills.Transformation of the sector is imminent. Transformation is driven by the FSC and the recently introduced Codes of Good Practice andwill pertain not only to the racial and gender profile of employees, but also to products and the structure of distribution channels in orderto extend access to insurance products to lower income groups. This translates into a need for black skilled employees in all the mainoccupational categories, but especially in managerial and professional positions and as intermediaries or brokers.41 Comments made by representatives of industry bodies interviewed during the 2007 SSP update process.INSETA Sector Skills Plan - page 14

2 THE DEMAND FOR SKILLS IN THE SECTOR2.1 IntroductionThis chapter deals with the demand for skills in the insurance sector. First of all, the discussion of current employment provides informationon the types of skills utilised and the occupational categories in which people are employed in the sector.The chapter also deals with employment trends including changes in total employment, changes in the occupational structure of the sectorand changes in the skills required in the sector.The last part of the chapter focuses on future employment. In order to obtain a sense of the number of new employees that will be requiredover the planning period, a simple demand projection model was developed. Projections of future demand take into consideration growthin employment as well as replacement demand caused by retirement, mortality and people leaving the sector.2.2 Current employmentEmployment in the formal levy-paying component of the sector at the end of 2005 was estimated at 102 400. If the sector grew by 1.9%per year, employment in 2007 would be approximately 106 000. The occupational distribution of the sector is illustrated in Figure 2-1. Theoccupational category clerical and administrative workers is by far the largest with 40.6% of all employees falling in the category. Thiscategory is followed in size by professionals (26.9%), managers (13.2%) and sales workers 11.1%. 42Figure 2-1 Employment distribution according to occupational categorySource: Inseta, Survey of Employment, Scarce and Critical Skills, May 20062.21 ManagersTable 2-1 indicates the main managerial categories in the sector. The relatively high percentage (10.2%) of managing directors and ownerscan be ascribed to the large number of small firms in the sector. The insurance sector provides employment to various specialist managersincluding general insurance managers, sales and marketing managers and financial managers.Table 2.1 Occupational distribution of managers in the sectorOCCUPATIONSPercentage of all managersManagers: unspecified 14.8Managing directors and owners 10.2Specialist managers: sales and marketing 9.4Specialist managers: insurance general 8.4Specialist managers: finance 6.7Regional, district, area and provincial managers 5.3Specialist managers: human resources 4.142 The occupational distribution presented here differs markedly from that given in the 2005 version of the SSP mainly because the new occupational classification system (theorganising framework for organisations – OFO) was used which places employees in different main categories compared to the standard occupational classification (SOC)used in the previous SSP.INSETA Sector Skills Plan - page 15

OCCUPATIONSPercentage of all managersSpecialist managers: corporate services and administration 4.0Specialist managers: claims 3.9Specialist managers: technical and operations 3.6Specialist managers: customer service and care 3.4Specialist managers: case 3.4Branch managers 2.9Specialist managers: brokers 2.7Specialist managers: information technology 2.6Specialist managers: contracts and projects 2.1Specialist managers: portfolio 1.7Specialist managers: risk and underwriting 1.6Total 90.8Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 20062.2.2 ProfessionalsThe main professions found in the Survey of employment, Scarce and Critical Skills are listed in Table 2-2. The largest professional categorieswere insurance brokers and financial and investment advisors. Although a distinction may exist between these two categories in terms ofthe FAIS legislation, employers were not consistent in their use of the two occupational descriptors and in the distinctions that they madebetween the two. Consequently, the two occupational categories should actually be viewed together. Other professionals who wereemployed in fairly large numbers were claims assessors, accountants, business analysts and consultants, and underwriters.Table 2.2 Occupational distribution of professionals in the sectorOCCUPATIONSPercentage of all professionalsInsurance brokers 22.9Financial and investment advisors 19.2Claims assessors 11.0Accountants 7.8Business analysts and consultants 5.6Underwriters 3.7Client relations specialists and consultants 2.7Marketing specialists 2.5Attorneys, lawyers and legal advisors 1.7Financial investment managers and fund administrators 1.7Software and applications programmers 1.6Systems analysts 1.5Actuaries 1.3Training and development professionals 1.2Internal auditors 1.1Nurse practitioners 1.1Financial economists and analysts 1.1Human resources advisors 1.0Computer network and systems engineers 0.9Quality assurance advisers and specialists 0.8Total 90.4Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 20062.2.3 Clerical and administrative workersClerical and administrative and sales and service workers form the bulk of the workforce in the insurance industry. The largest proportion(27.9%) of clerical and administrative workers can be classified as general clerks and administrators. Other occupations found in the sectorinclude client service administrators, insurance administrators, insurance clerks, general secretaries and claims clerks.2.2.4 Sales workersSales workers in the insurance sector consist mainly of insurance sales consultants, sales representatives, sales assistants and telemarketers.INSETA Sector Skills Plan - page 16

2.3 Employment trends2.3.1 Changes in total employmentIn the survey of employment, critical and scarce skills, organisations had to indicate changes (percentage increases or decreases) in theirestablishments since 2003. It duly emerged that 13% of the organisations in the sector had grown in terms of the number of employeessince 2003, 70% had stayed the same and 11% had become smaller (6% did not respond to the question).The percentage changes indicated by the individual organisations were then used in combination with their current employment figures todetermine employment growth in the sector from 2003 to 2005. The results of these calculations indicate that the total number of peopleemployed in the insurance sector increased by approximately 1.9% a year from 98 600 employees in 2003 to 102 400 employees in 2005.Growth in business and an increase in product and service ranges were the main contributors to growth in employment. Internalorganisational restructuring to achieve greater efficiency, business problems and external restructuring through, for example, mergers oracquisitions were the main reasons why some organisations experienced decreases in employment over the two-year period.2.3.2 Changes in the occupational structure of the industryThere is no historical information available on the occupational structure of the insurance sector that would allow the analysis of changesin this structure over time. In Chapter 1 various factors that could impact on the occupational structure have been mentioned. If specificoccupations in the industry are considered, occupational changes are generally following international trends in the insurance sector. Asinsurance companies begin to offer more information and services on the internet, some occupations, such as insurance sales agents,experience slower employment growth. The use of underwriting software that automatically analyses and rates insurance applicationslimits the employment growth of underwriters. Also, computers linked directly to the databases of insurance carriers and other organisationshave made communications easier among sales agents, adjusters, and insurance carriers, so that all have become much more productive.Efforts to contain costs have also led to an increasing reliance on customer service representatives to deal with the day-to-day processingof policies and claims. In addition, the internet has made insurance investigators more productive by drastically reducing the amount of timeit takes to perform background checks, allowing investigators to handle an increasing number of cases, but limiting their employmentgrowth. 43The utilisation of call centres for marketing and selling of insurance products as well as the provision of information services and claimshandling has increased substantially over the last number of years. Call centre operators may be viewed as a relatively new and growingoccupational group. Within this group there are “specialisations” i.e. call centre operators are not only trained in call centre operations, butalso in the functioning of the component of the industry, as well as in the products, systems and policies of the companies for which theywork.Survey results show that only 23% of employers thought that some occupations in their organisations would increase or decrease morethan other occupations in terms of the number of people employed. Most employment changes would take place in the professional andadministrative occupational categories. Among professionals, employers expected that more insurance brokers and underwriters wouldbe appointed in future mainly because of expected growth in business. Growth in the number of general and industry-specific clerks andinsurance administrators was foreseen for the same reason.Apart from employment growth in specific occupations, employers had to indicate if occupations that had not existed in the organisationpreviously were growing because of, for example, technological changes. Only 5% of the organisations in the sector reported newoccupations in their occupational structure. However, none of these occupations was really new to the sector – they merely representedexpansions of the organisations themselves and the incorporation of new functions that already existed in the sector.2.3.3 Changes in skills levels requiredThe insurance sector is looking increasingly towards higher qualified and skilled employees. The concept of continuous professional education(CPE) for key employees is seen as a business imperative because of the continually changing operating environment and the need to keepabreast of local and global developments.The reinsurance and asset management subsectors indicated that in future they would be looking at recruiting only graduates for themajority of occupational categories in their organisations. In fact, in some companies, existing employees without at least an NQF 7qualification are encouraged to obtain a relevant qualification within a specified timeframe. The minimum requirement is a degree inaddition to the in-house training provided to employees. 44The educational levels of intermediaries are now determined by the FAIS regulations. Currently, they are required to obtain only a minimumof 60 credits at NQF level 5. In future, this may well be increased to a full qualification at level 5. 45Overall, the industry has been undergoing a professionalisation process that is increasing the demand for higher levels of skills. This need43 USA Bureau for Labor Statistics, http://www.bls.gov/oco/cg/cgs028.htm.44 Information provided during the 2004 interviews with the CEOs.45 Opinion expressed by professional bodies who participated in the SSP development process in 2005.INSETA Sector Skills Plan - page 17

for higher skills levels may, in the long term, affect the occupational structure of the industry – an increase in the number of professionalsand managers relative to other categories of staff.2.4 Expectations of employment growthThe Survey of Employment, Scarce and Critical Skills gauged employers’ expectations of employment growth over the next five years.Most (60.5%) organisations did not foresee changes in the number of people that they employed at the time of the survey. However, 34.1%expected an increase in total employment up to 2010 while 2.7% anticipated a decrease (2% did not respond to the question).Subsector differences are indicated in Table 2-3. While the majority of organisations in pension funding and reinsurance expected totalemployment to remain constant until 2010, more than half of the employers in life insurance, healthcare benefits, short-term and funeralinsurance anticipated increases in employment numbers. In contrast, 55.5% of the organisations in collective investments anticipateddecreases over the next five years in the number of people in their employ.Table 2.3 Employment growth expectations (2005-2010) by subsectorIncrease Same Decrease TotalSubsectorPercentage of organisationsCollective investments 44.5 55.5 100.0Life insurance 77.7 13.2 9.2 100.0Pension funding 5.7 94.3 100.0Healthcare benefits 65.2 30.5 4.4 100.0Short-term insurance 60.5 36.7 2.8 100.0Funeral insurance 52.6 47.4 100.0Reinsurance 87.0 13.0 100.0Brokers/Agents 33.3 61.7 2.0 100.0Activities auxiliary to insurance 35.9 55.1 6.8 100.0Total 34.1 60.5 2.7 100.0Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 20062.5 Projections of future employmentIn order to obtain a sense of the number of positions that will have to be filled over the next five years, a simple labour demand modelwas developed. This model replaces the one presented in the SSP submitted to the DoL on 31 October 2005. In the absence of historical(time series) data the model was based on the cross-sectional data obtained in the Survey of Employment, Scarce and Critical Skills.Furthermore, the best estimates and assumptions regarding the factors that are likely to influence employment numbers in the sectorwere used throughout. The assumptions used are outlined below while the results of the model can be seen in Table 2-4.2.5.1 Estimates and assumptions madea) Current employmentThe model used the end of 2005 as base year. Employment at that time was estimated at 102 000. Estimates of employment ineach occupational category were based on the occupational distribution of employees reflected in the Survey of Employment, Scarceand Critical Skills. The main occupational categories of the OFO were used.b) New employmentThe industry organisations and companies that participated in the SSP development processes in 2004 and in 2005 agreed that itwas unlikely that employment in the sector will grow substantially over the next few years. As indicated in Section 2.4 above thissentiment was shared by most of the organisations that participated in the sector-wide survey conducted in 2005/2006.The relatively negative employment outlook is also based on the fact that the traditional market for insurance products is saturatedand that the population that falls in this market is not growing. The only possible expansion is into the low-income market. In theFSC, the industry has committed itself to servicing this market and to improving low-income earners’ access to insurance products.However, the successful expansion into this market depends not only on the development of suitable products but also on thedevelopment of suitable distribution channels. This includes the availability of black brokers who understand the needs, problems andpreferences of the non-traditional market and who comply with FAIS requirements.INSETA Sector Skills Plan - page 18

Competition from other financial service providers – specifically the banking sector – is also likely to inhibit substantial growth.Employment growth may furthermore be inhibited by technological developments that enable organisations to handle larger volumesof work with fewer employees.Overall, the number of intermediaries (who constitute a substantial component of the sector) is expected to decline as a result of acombination of factors including direct selling by insurance companies, FAIS requirements and new commission structures.c) Replacement demandReplacement demand arises from people retiring, people leaving the sector and mortality. Estimates of retirement were based onthe age distribution of people employed in the insurance sector observed in the Survey of Employment, Scarce and Critical Skills.The age distributions of people in each of the occupational categories were used to calculate the number of people in each categorythat would retire in the next five years. It was assumed that people would retire at the age of 60.In the Survey of Employment, Scarce and Critical Skills employers reported a very low mortality rate for 2004/2005 (approximately0.26% of total employment). In 2002, just more than 1% of the South African population of working age died. Although mortalitywill probably be lower in this sector because of lower HIV infection rates and the fact that the work is not of a dangerous nature,the 0.26% per year reported by employers was considered as too low. 46 Mortality was consequently estimated at 4% over the fiveyearperiod.It was estimated that only 5% of managers would leave the sector in the five-year period. This estimate was based on anecdotalevidence obtained during the SSP development process of low attrition rates in this occupational group. It was estimated that thisfigure could be as high as 15% for professionals and for technicians and trade workers. For the rest of staff, it was estimated to be10% over the period resulting in a total of 11 015 people leaving the sector.d) Total demandGiven the negative outlook on employment growth described in Section b) above, two demand scenarios need to be considered.The first scenario is a relative negative one in which there is no employment growth and the positions that need to be filled in thesector originate only from the need to replace employees who leave the sector. In this scenario the insurance sector would have tofill 20 400 positions over a five-year period or approximately 4 000 positions per year. (See column E of Table 2-4)The second scenario allows for a 1.9% growth per year (the level of employment growth observed in the Survey of Employment,Scarce and Critical Skills in the period 2003 to 2005). In this scenario the sector would have to fill just more than 6 000 positionsper year. (See column G of Table 2-4).Table 2.4 Projections of the demand for labour in the insurance sector for the five-year period 2005 to 2010A B C D E F G(B+C+D)(E+F)Current Retirement Mortality Leaving the Total replacement New Total PositionsOccupational groupemploymentsector demand employment to fillManagers 13 520 1 300 540 680 2 510 1 330 3 840Professionals 27 580 1 710 1 100 4 140 6 950 2 720 9 670Technicians and trade workers 1 340 30 50 200 290 130 420Community and personalservice workers 30 0 0 0 0 0 0Clerical and administrative workers 41 580 1 680 1 660 4 160 7 500 4 100 11 600Sales workers 11 400 290 460 1 140 1 880 1 130 3 010Machinery operators and drivers 1 190 40 50 120 210 120 330Other 5 810 340 230 590 1 160 580 1 740Total 102 450 5 390 4 090 11 030 20 500 10 110 30 610Thus, on average, the sector would need to train between 4 000 and 6 000 new employees each year. 47It must be noted that these demand projections are limited to the larger and more formal component of the sector. It does not includeemployment creation that may occur in the micro enterprises and self-employment of individuals. As indicated in Chapter 1 thereis a need for intermediaries who can access emerging markets. Similarly, the exit of brokers who do not comply with the FAISrequirements may also create space for new brokers to come into the market and to set up new businesses. Other business andentrepreneurial opportunities are discussed in Chapter 5.46 Some participants in the SSP development workshops also commented that mortality should be higher than 0.026%.47 These employees will not necessarily be new entrants into the labour market. They may also be sourced from other components of the financial services sector or fromelsewhere in the economy.INSETA Sector Skills Plan - page 19

In this SSP update the demand model was further developed and expanded to provide for the projection of the need for Blackmanagers to comply with the FSC targets set for the Financial Services Sector. The methodology used and the findings of thisextension of the model can be seen in Annexure C.An initial analysis of industry performance against FSC targets indicate that the sector is very close to the targets set for 2008. If thesector does not grow and if the assumptions with regard to replacement demand are held the same for all managers, then the sectorwould need 365 senior managers and 405 middle and junior managers per year over the five-year period from 2005 to 2010. If therace and gender profile reflected in the WSPs submitted to the INSETA for the period 2006/2007 is to be maintained (scenario 1in Table 2.5) , the sector would need to train (or recruit) approximately 60 Black men and 60 Black women as senior managers eachyear. However, if the sector would attempt to increase the proportion of Black men in senior management positions to 20% andthat of Black women to 15% then the sector would have to train approximately 140 of each each year. If transformation were to bedriven at this pace, the attrition of white managers will have to be more that the figures provided for in the model.Table 2.5 Projections of the demand for managers in the insurance sector for the five year period 2005 to 2010Scenario 1 Distribution (%) Scenario 2 Distribution (%)Black Black WhiteBlack Black WhiteMale FemaleMale FemaleSenior management 15 10 75 20 15 65Middle to junior management 24 21 55 30 30 40Senior managementBlackMaleBlackFemaleWhite Total BlackMaleBlackFemaleNew employees 132 178 323 633 484 530 -381 633Replacement 179 119 893 1 191 238 179 774 1 191Total needed 2005 to 2010 310 297 1 216 1 823 722 709 393 1 823Total needed per year 62 59 243 365 144 142 79 365Middle to junior managementBlack Black White Total Black Black White TotalMale FemaleMale FemaleNew employees 269 197 237 702 738 900 -936 702Replacement 317 277 727 1 321 396 396 529 1 321Total needed 2005 to 2010 586 474 963 2 023 1 134 1 296 -407 2 023Total needed per year 117 95 193 405 227 25 -81 405WhiteTotal2.6 ConclusionsAt this stage evidence suggests that the demand for labour in the insurance sector is not anticipated to increase substantially over the nextfive years, and replacement demand is expected to be higher than new demand. It is estimated that the sector will need to train between4 000 and 6 000 new employees to meet employment needs. Not all these employees will be new entrants into the labour market.However, most of those in the managerial and professional categories will have to be Black in order to meet the sector’s transformationobjectives.The demand projections presented in this chapter should be seen as very conservative, because it is uses a base employment figure thatexcludes micro enterprises and self-employed individuals. In fact, micro enterprises may contribute substantially to employment growth –especially if the sector can produce enough brokers (who comply with the FAIS requirements) to access and service new and emergingmarkets.Overall, the sector is in a process of professionalisation, and higher skills levels are required in all occupational categories. The need for higherlevels of skills is specifically created by the regulatory requirements that affect all aspects of the sector.The initial transformation targets of the sector are set out in the FSC. In this chapter two scenarios have been developed regarding theneed for Black male and Black female managers in order to meet or exceed the minimum targets set in the FSC.INSETA Sector Skills Plan - page 20

3 THE SUPPLY OF SKILLS TO THE SECTOR3.1 IntroductionThe supply of skills to the sector is viewed from three perspectives: the stock of skills that is currently available in the labour market, theflow of new skills onto the market and the education and training interventions aimed at developing the skills of the existing labour force.The extent to which the supply of skills responds to the needs of the market is also assessed in this chapter.3.2 The stock of skills3.2.1 Current employmenta) QualificationsThe qualification profile of employees in the sector shows that the majority of employees obtained at least a qualification on NQFlevel 4. (Figure 3.1) While, managers and professionals would typically need qualifications at NQF Level 6 or higher, only 37% ofmanagers and 24.8% of professionals in the sector had obtained educational qualifications at this level. It should however be notedthat occupations on associated professional level are included in the professional category on the OFO. These occupations usuallyrequire qualifications on lower levels.Figure 3-1 Qualification levels of employeesSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006The minimum qualifications required of personnel who are directly involved in the provision of financial services to the public are nowprescribed in the Fit and Proper Requirements for Financial Services Providers (FSPs). These requirements depend on the level oflicensing for which an individual applies and range from NQF level 2 to NQF level 6. All FSPs were required to apply for licensing bySeptember 2004 and had to comply with a first (or interim) set of minimum requirements by that time. They were, however, giventhree years after the first registration to obtain further minimum qualifications. A number of FSPs currently still do not have therequired qualifications. They are either in the process of upgrading their skills or they will deregister in 2009 48 . Between 10% and15% of the existing service providers will probably exit the industry in two to three years’ time because they cannot or do not wantto obtain the required qualifications. 49Clerical and administrative staff typically enter the sector with matric (or even lower) qualifications. They are mainly trained in-housein the systems and procedures of their employers.3.2.2 Population group and gender of employeesThe population group and gender distributions of employees in the sector are important indicators of the transformation of the sector.At the time of the Survey of Employment, Scarce and Critical Skills, almost half (49.5%) of the workforce was white, 28.0% was African,15.1% was coloured and 7.5% was Indian (Figure 3-2).48 The initial deadline of 2007 has been extended by the FSB to 31 December 2009. ftp://ftp.fsb.co.za/public/Faisdep/BoardNotice91of2006.pdf49 Estimate made by FPI in a personal interview.INSETA Sector Skills Plan - page 21

Figure 3-2 Population group distribution of employeesSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006Table 3-1 indicates the pace at which organisations in the different subsectors are changing their employee profiles. Only 16.4% of theemployees in the collective investments subsector were black 50 while, in the life insurance subsector, 59.0% of the employees were black.The comparative figures for the other subsectors are given below.• Pension funding – 55.3%• Healthcare benefits – 50.9%• Short-term insurance – 44.0%• Funeral insurance – 83.4%• Reinsurance – 48.8%• Brokerages or agents – 34.1%• Activities auxiliary to insurance – 49.3% and• Non-insurance related activities – 45.0%.Table 3.1 Population group distribution of employees according to subsectorSubsectorPopulation groupAfrican Coloured Indian White TotalCollective investments 16.4 83.6 100.0Life insurance 34.4 20.9 4.6 40.2 100.0Pension funding 23.1 13.8 18.5 44.7 100.0Healthcare benefits 24.8 20.7 5.4 49.1 100.0Short-term insurance 19.3 15.9 8.8 56.0 100.0Funeral insurance 70.1 9.9 3.4 16.6 100.0Reinsurance 29.0 8.6 11.2 51.2 100.0Brokers/Agents 20.9 6.3 7.0 65.9 100.0Activities auxiliary to insurance 25.7 11.1 12.5 50.7 100.0Non-insurance related activities 13.9 8.9 22.1 55.0 100.0Total 28.0 15.1 7.5 49.5 100.0Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006The transformation achieved in the different occupational categories is reflected in Table 3-2. Of all the managers in the sector, only 27.4%were Black. The occupational categories professionals and technicians and trade workers were also lagging behind in terms of theemployment of blacks. Only 39.5% and 39.7% of the positions in these two categories respectively were filled by blacks. In the otheroccupational groups, blacks formed the majority.50 Black refers to Africans, coloureds and Indians.INSETA Sector Skills Plan - page 22

Table 3.2 Population group distribution of employees according to occupational groupOccupational groupPopulation groupAfrican Coloured Indian White TotalManagers 13.2 7.2 6.9 72.6 100.0Professionals 20.0 12.0 7.4 60.5 100.0Technicians and trade workers 11.9 18.9 8.9 60.3 100.0Community and personal service workers 43.1 31.2 25.7 100.0Clerical and administrative workers 26.8 19.6 9.2 44.4 100.0Sales workers 59.2 13.0 4.0 23.8 100.0Machinery operators and drivers 89.6 1.2 9.1 100.0Labourers 84.7 11.3 1.1 2.9 100.0Learners/trainees/students 47.2 30.4 2.9 19.4 100.0Contractors/ temporary workers 34.2 27.9 3.5 34.4 100.0Total 28.0 15.1 7.5 49.5 100.0Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006More than half (59.4%) of the employees in the sector were women with African women constituting 15.1% of the workforce (Table 3-3).Table 3.3 Population group and gender distribution of employeesPopulation groupFemale Male TotalN % N % N %African 15 499 15.1 13 165 12.8 28 665 28.0Coloured 9 814 9.6 5 606 5.5 15 420 15.1Indian 4 338 4.2 3 337 3.3 7 675 7.5White 31 228 30.5 19 470 19.0 50 698 49.5Total 60 878 59.4 41 579 40.6 102 458 100.0Source: Inseta, Survey of Employment, Scarce and Critical Skills, May 20063.2.3 AgeThe age distribution of workers in the insurance sector can be seen in Figure 3-3. The average age was 37 years, and the majority of workerswere in the age groups 21 to 30 (27.9%) and 31 to 40 (35.8%).Figure 3-3 Age distribution of employees in the sectorSource: Inseta, Survey of Employment, Scarce and Critical Skills, May 2006INSETA Sector Skills Plan - page 23

3.2.4 UnemploymentThe Labour Force Surveys (LFSs) conducted biannually by Statistics South Africa give some indication of the untapped resources in thelabour market, that is unemployed people with qualifications or experience that might be appropriate for the insurance sector. Accordingto the February 2006 survey, there were approximately 2,2 million economically active 51 people in South Africa with post-matricqualifications. Of these, 535 600 (24%) had qualifications in the field of business, commerce and management studies. More than two thirds(67%) of the people qualified in this field of study had post-matric diplomas or certificates; 23% had degrees and 10% had postgraduatedegrees.Of the 535 600 potential workers in this field, 88 500 (17%) were unemployed at the time of the survey. The unemployment rate differsmarkedly for people at different qualification levels. For those with only a post-matric diploma or certificate, the unemployment rate was22%. However, the unemployment rate dropped to 1% for those with postgraduate qualifications. (Table 3-4)Table 3.4 The economically active workforce with post-Grade 12 qualifications in business, commerce and management studiesHighest qualificationPopulation groupEmployed Unemployed TotalN % N % NAfrican 139 542 65 74 155 35 213 698Coloured 9 696 82 2 119 18 11 816Diploma/Certificate with Grade 12/Std 10Indian 23 906 99 270 1 24 176White 108 003 99 1 563 1 109 565Total 281 147 78 78 108 22 359 25African 47 487 87 6 908 13 54 395Coloured 6 523 100 0 0 6 523Degree/Degree and diplomaIndian 10 914 91 1 075 9 11 989White 48 105 97 1 710 3 49 815Total 113 028 92 9 693 8 122 722African 11 342 94 739 6 12 081Coloured 52 1 764 100 0 0 1 764Postgraduate degreeIndian 980 100 0 0 980White 38 869 100 0 0 38 869Total 52 955 99 739 1 53 694Source: Calculated from the September 2006 Labour Force Survey.This analysis shows that there are unemployed people available who may be trained for the sector. However, it can also be assumed thatmost of the people who do have qualifications in business, commerce and management don’t have training and experience specificallyrelevant to the insurance industry.3.3 The flow of skills onto the labour market3.3.1 Flow of skills from the schooling systemMost of the high-level financial skills in this sector require candidates with a sound mathematical foundation. Thus, the number of learnerswho matriculate with mathematics as a subject has a direct impact on the flow of learners into the higher education study programmesrelevant to this sector.In 2005, a total of 508 363 learners sat the Senior Certificate examination. Of the full-time candidates with six or more subjects, 68.3%passed the examination – 17.0% with matriculation exemption and 51.3% without exemption (Figure 3.4)51 The expanded definition of unemployment was used to determine the economically active population. This means that work seekers who had not actively looked foremployment shortly before the survey, but who were available for work (generally known as discouraged work seekers), were regarded as economically active. In the strictor official definition of unemployment, these workers would have been regarded as not economically active.52 The LFS provides the best and most recent labour market data. However, due to the size of the sample, large variances can occur if data are analysed at a very detailed level.This is the reason for the absence of coloureds with a postgraduate degree or diploma.INSETA Sector Skills Plan - page 24

Figure 3-4 Senior Certificate passes: 2005Source: Department of Education, Education Statistics in South Africa at a Glance in 2005Of all the candidates who wrote the examination, 303 152 wrote mathematics with 55.7% passing the subject. Only 8.7% of all the learnerspassed mathematics at the higher grade and a further 37.0% passed the subject at the standard grade. This situation had not changed since2004, when 276 094 learners wrote mathematics. Of those only 24 143 (8.7%) passed mathematics on higher grade. The low number ofmathematics passes severely limits the pool of candidates for study in the specialised insurance fields. Figure 3.5 shows that the percentageof learners that passed mathematics on higher grade did not change much since 1999.Figure 3-5 Senior Certificate passes in mathematics: 1999 - 2005Source: Department of Education, Education Statistics in South Africa at a Glance in 2000, 2001, 2002, 2003, 2004, 20053.3.2 Higher education and traininga) Qualifications and providersIn the past, not many higher education qualifications were specifically designed for the insurance industry. The industry tended toemploy people with general financial services skills and also looked for applicants with general degrees in commerce and in accounting.These qualifications are offered at most of the tertiary institutions in the country.Over the past few years, tertiary institutions have started to design curricula specifically aimed at insurance and financial planning. Thesedevelopments were largely the result of the initiatives of the professional bodies in the sector, with the Financial Planning Institute (FPI)playing a leading role in this regard.The FPI is a professional, standard-setting body that is authorised to issue Certified Financial Planner licences to its professionallyqualified members. The University of the Free State, through its Centre for Financial Planning Law, and in partnership with the FPI,offers two levels of qualifications, namely the Postgraduate Diploma in Financial Planning and the Advanced Postgraduate Diploma inFinancial Planning.INSETA Sector Skills Plan - page 25

The FPI has been actively involved in the development of industry-specific qualifications that are now offered at various tertiaryinstitutions. The qualifications and the higher education institutions that offer industry-specific qualifications can be seen in Table 3-5.Table 3.5 Public higher education institutions that offer industry-specific qualificationsUniversity Qualification NQF levelUniversity of Stellenbosch Business School Advanced Diploma in Financial Planning* 5Damelin National Certificate in Wealth Management 5Certificate in Financial Planning 6Intec National Certificate in Wealth Management 5University of Stellenbosch BCom in Financial Planning* 6BCom Honours in Financial Planning 7University of Nelson Mandela Metropole BCom Financial Planning* 6University of the Free State BCom Financial Planning* 6BJuris Financial Planning 6Postgraduate Diploma in Financial Planning* 7Advanced Postgraduate Diploma in Financial Planning* 7University of Johannesburg BCom in Investments 6University of KwaZulu-Natal BCom in Financial Planning* 6University of Pretoria BCom in Financial Planning* 6University of the Witwatersrand BCom in Business Science 6Sources: FPI and INSETA.The College of Insurance (CoI) was born out of the Insurance Institute of South Africa (IISA), a professional body that used to provideindustry-specific training. Early in 2005, the IISA separated its education and training activities and transferred them to the newlyestablished CoI, which offered one course at the HET level. The rest of its training was at FET level. In 2006 this College was closeddown and the training provision of the qualifications traditionally offered by the College was taken over by various private trainingproviders who continue to offer training towards insurance related qualifications 53 .b) Graduation trendsThe number of graduates who qualified from the public higher education system in commerce, finance and management sciences hasincreased steadily in recent years. Table 3-6 shows that between 1999 and 2004, the total number of qualifications awarded by publicuniversities increased by 11% a year. The increase in postgraduate diplomas and Honours degrees was higher than that in first degrees,which indicates that people are tending to stay longer in the HET system and that the number of people with postgraduatequalifications is increasing.Table 3.6 Qualifications awarded by universities in business, commerce and management sciences according to qualification level:1999-2004Qualifications 1999 2000 2001 2002 2003 2004 Average annual growthrate (%)*First degrees 5 783 6 589 7 106 8 359 8 649 9 560 11Postgraduate diplomas/Honours degrees 2 878 4 173 4 392 5 214 5 322 5 465 14Master’s degrees 1 159 1 215 1 333 1 592 1 538 1 660 7Doctoral degrees 12 25 23 42 63 63 39Total 9 831 12 001 12 853 15 207 15 572 16 748 11*Unweighted average.Source: Calculated from DoE, HEMIS Table 2.13, 1999 to 2004.Table 3-7 shows the specific fields of study and the increase in the number of qualifications awarded in each of them. The numberof learners 54 who qualified in insurance and risk management is still small, but it increased by 24% a year from 1999 to 2003. The2004 results show a substantial drop in the qualifications awarded in this field of study, which could be because the results of theUniversity of South Africa (UNISA) are only provisional and should still be finalised.Table 3-8 provides an overview of the qualifications in business, commerce and management sciences awarded by universities oftechnology (previously technikons). In the period 1999 to 2004 technikon output increased on average by 9% a year. Most of thequalifications awarded were at the national diploma level. BTech degrees increased by 15% a year.53 Information provided in a personal interview with the acting CEO of the IIA, July 200754 The numbers indicated in the specific fields of study do not necessarily represent the number of individuals who obtained qualifications in that field. In the HEMIS data, a fieldof study is assigned to each major subject the learner passed. If a learner qualified with a major in insurance and risk management and one in accounting, only 0.5 of the learnerwould be counted in each field. The totals in the table, however, more or less add up to the total number of individuals who qualified in the broad field of business commerceand management sciences.INSETA Sector Skills Plan - page 26

Table 3.7 Qualifications awarded by universities in business, commerce and management sciences according to field of study: 1999-2004Field of study 1999 2000 2001 2002 2003 2004 Average annualgrowth rate(%)*Accounting 5 164 6 748 6 321 7 905 8 123 8 301 10Administrative and Office Services 38 9 12 0 4 1 -52Banking and Finance 271 414 482 461 614 849 26Business Data Systems 164 173 323 204 182 75 -14Entrepreneurship 1 175 1 101 966 684 881 925 -5Information Communications 319 449 478 521 523 284 -2Insurance and Risk Management 44 74 88 108 105 51 3International Business 0 2 4 45 50 63Management 977 1 098 1 916 3 252 3 338 3 856 32Marketing 201 262 364 412 427 667 27Personnel Management and Administration 188 295 395 345 296 359 14Quantitative Methods 46 49 105 50 51 36 -5Real Estate 5 2 4 0 0 7 7Other Business, Commerce and Management Sciences 1 240 1 324 1 395 1 220 977 1274 1Total 9 832 12 000 12 853 15 207 15 571 16 748 11*Unweighted average.Source: Calculated from DoE, HEMIS Table 2.13, 1999 to 2004.Table 3.8 Qualifications awarded by technikons in business, commerce and management sciences according to qualification level: 1999-2004Field of study 1999 2000 2001 2002 2003 2004 Average annualgrowth rate(%)*National certificates and higher certificates 98 193 347 292 339 495 38National diplomas 5 910 5 862 7 718 7 823 7 846 8 210 7National higher diplomas 77 39 52 29 6 37 -14BTech degrees 1 085 1 205 1 629 1 786 1 875 2 184 15Master’s degrees and diplomas 20 41 42 71 64 67 27Doctoral degrees 0 1 5 5 3 5Total 7 190 7 342 9 793 10 006 10 133 10 998 9*Unweighted average.Source: Calculated from DoE, HEMIS Table 2.13, 1999 to 2004The universities of technology do not offer courses specific to the insurance industry. The fields of study that attract the largestnumber of learners are accounting and management. (Table 3-9).Table 3.9 Qualifications awarded by universities of technology in business, commerce and management sciences according to field of study:1999-2004Field of study 1999 2000 2001 2002 2003 2004 Average annualgrowth rate(%)*Accounting 1 846 1 922 3 407 3 381 3 647 3 756 15Administrative and Office Services 493 560 617 870 822 1 402 23Banking and Finance 54 116 43 49 47 75 7Business Data Systems 127 45 50 16 18 0 -100Entrepreneurship 90 69 221 163 197 97 2Information Communications 76 136 155 215 143 71 -1Insurance and Risk Management 0 0 0 0 0 0International Business 24 0 0 0 0 0 -100Management 1 752 1 888 2 804 2 684 2 880 3 265 13Marketing 678 683 731 878 791 928 6Personnel Management and Administration 868 941 953 1 024 895 841 -1Quantitative Methods 81 47 24 55 29 53 -8Real Estate 44 48 34 36 15 36 -4Other Business, Commerce and Management Sciences 057 887 779 637 652 475 -15Total 7 190 7 342 9 818 10 008 10 136 10 999 9*Unweighted average.Source: Calculated from DoE, HEMIS Table 2.13, 1999 to 2004.INSETA Sector Skills Plan - page 27

In respect of the population group and gender composition of new graduates, a marked change has occurred in recent years. In 1992,only 18% of all learners who qualified in business, commerce and management sciences were black. By 2004, 60% of the learnerswere black. Similarly, women’s share in qualifications in this field increased from 39% in 1992 to 53% in 2004. 55The situation with regard to the specific professional qualifications that are relevant to this sector looks somewhat different. Actuarialqualifications are important to the insurance sector (although they are not used exclusively in this sector). Actuaries currently qualifyat a rate of approximately 60 a year, and there are at present some 770 qualified actuaries in South Africa. According to the ActuarialSociety of South Africa, South Africa should have sufficient actuaries (where supply equals demand) in the next five to ten years.However, qualified actuaries are predominantly white men. 56The FPI has some 3 000 certified financial planners as members who have completed the Postgraduate Diploma in Financial Planning(NQF level 7) and some 1 200 members who are currently studying towards this qualification. The FPI also has 4 400 members whohave achieved qualifications at NQF levels 5 and 6. Most of these professionals are white.Chartered accountants also play a key role in this sector. At the end of April 2006, approximately 24 737 chartered accountants wereregistered with the South African Institute for Chartered Accountants (SAICA). In the period April 2002 to April 2006, the totalnumber of chartered accountants increased by 5% a year. This profession also consists mainly of whites and the profile is changingvery slowly. In June 2002, only 7% of all chartered accountants were black. By 2006, blacks’ share in the profession had increased to11%. Of the 9 751 learners on CA learnerships at the end of April 2006, 39% were black. 57c) Projection of new entrants from the public HET sectorThe number of Bachelor’s degrees, BTech degrees and national diplomas provides a measure of the number of new entrants to thelabour market from the public HET sector. 58 Figure 3.6 shows the number of new graduates who qualified between 1999 and 2004,and the number that will qualify per annum if the average annual growth rate is sustained. The HET sector could produce as manyas 132 700 new graduates in the five-year period 2005 to 2009. This, however, depends on a number of factors, including the capacityof the HET sector to sustain this level of growth (especially in the context of the restructuring of HET institutions that is currentlytaking place) and the DoE’s subsidisation of the HET sector.Figure 3-6 Actual and projected entry-level qualifications in business, commerce and management sciences from the public HETsector*Figures projected, using the average annual growth rate observed for the period 1999 to 2004Sources: Calculated from DoE, HEMIS Table 2.13, 1999 to 2004 and own projections from 2005 to 2010.55 SAQA, Trends in Public Higher Education in South Africa:1992 to 2001. Pretoria, October 2004 and 1995 to 2004, June 2007.56 Information obtained from the Actuarial Society of South Africa during the SSP update process in 2007.57 Calculated from information published by SAICA,http://www:saica.co.za.58 No figures are currently available on the output from the private HET institutions.INSETA Sector Skills Plan - page 28

3.3.3 Further education and trainingAt the time of this SSP update the INSETA was responsible for the quality assurance of eleven qualifications at FET level (excludingqualifications that had expired and that were in a training-out period). It had also accredited private as well as public FET colleges acrossthe country to provide these qualifications. As these are relatively new developments, no information is yet available on the learners whohave qualified.The College of Insurance (CoI), previously the IISA, was an established provider of FET level qualifications. It provided education culminatingin the following qualifications.• Certificate of Proficiency (CoP)• Intermediate Certificate in Business Studies (ICiBS)• Higher Certificate in Insurance (HCiI)• Advanced Diploma in Insurance Management (ADiIM)Entry requirements for the basic (CoP) qualification were not stringent.The following table shows the number of people who obtained IISA qualifications for the period March 2003 to March 2006 before theCollege was closed down.Table 3.10 IISA qualifiers – March 2003 to September 2006QualificationNumber of QualifiersMarch 2003 Sept 2003 March 2004 Sept 2004 March 2005 June 2005 Sept 2005 March 2006 Average annualgrowth rate (%)*CoP 1 346 1 245 1 290 2365 477 351 697 195 -47ICIBS 99 152 93 430 509 102 454 294 44HCII 43 39 13 63 141 107 88 27DII 10 13 3 7 28 30 27 39ADIIM 2 2 6 7 17 11 4 26Total 1 500 1 451 1 405 2872 1172 453 1299 608 -26Source:College of Insurance.3.3.4 LearnershipsIn February 2006, the INSETA had registered 23 learnerships with the Department of Labour. The learnerships range from NQF level 2to level 7 with the majority of learnerships at level 4. (Annexure D). Fourteen learnerships, most of them on NQF level 4, had expired in2004 and 2005. The INSETA granted two years from the expiry date to learners on these learnerships to complete their programmes.The number of learnership contracts registered with the INSETA for the period 2002 to 2006 can be seen in Table 3-11. Most of thelearners are from the previously disadvantaged groups.Table 3.11 Learnership contracts registered by the INSETA by end 2005YearAfrican Coloured Indian/Asian White Unknown TotalN % N % N % N % N % N %2002 51 61.4 14 16.9 3 3.6 2 2.4 13 15.7 83 1002003 146 54.3 45 16.7 18 6.7 59 21.9 1 0.4 269 1002004 1360 71.2 259 13.6 108 5.7 164 8.6 18 0.9 1909 1002005 220 53.9 73 17.9 26 6.4 85 20.8 4 1.0 408 100Total 1777 66.6 391 14.6 155 5.8 310 11.6 36 1.3 2669 100*Calendar yearSource: INSETA electronic information system as at 30 May 2006The uptake of learnerships in the insurance industry is not very high, despite the learnership grants paid by the INSETA and the added taxbenefits. Results from the Survey of employment, Scarce and Critical Skills show that organisations, especially brokerages and businesseswith a small number of employees experience problems with the implementation of learnerships. Some of the challenges faced byorganisations are:• Increased workloads of the people responsible for the training of learners• Lack of capacity, infrastructure and time to train and mentor learners• Lack of knowledge on mentoring• The excessive amount of red tape involved with learnerships• Learnership implementation costs are higher than what is provided for by learnership grants• Premature discontinuation of learnerships by participants.INSETA Sector Skills Plan - page 29

The survey and the SSP development process also uncovered areas in which the INSETA itself could improve its service delivery in orderto facilitate the implementation of learnerships. These issues will receive attention in the future planning of SETA activities.3.4 Development of the existing labour force3.4.1 Continuing professional education (CPE)Continuing professional education is central to the further development of managerial, professional and technical staff in the industry. Manyof the professional bodies offer CPE themselves, accredit training providers to offer such training and assign CPE points to specific traininginterventions. In many instances, members retain memberships (and the use of professional designations) only if they accumulate sufficientCPE points over a specified period of time.3.4.2 In-service trainingEmployers in the sector play a key role in upgrading the skills of the current workforce. Most large employers provide extensive in-housetraining for employees, and some have established in-house corporate universities, centres of training excellence or training institutes. Someof these interventions are cascaded to intermediaries, but the majority are tailored to the needs of the organisations’ own employees.Independent intermediaries and brokers in the sector tend to rely on training services provided by large companies, especially in terms ofproduct knowledge. However, because of the FAIS legislation, intermediaries/brokers also seek external providers to assist them in meetingFAIS minimum requirements.The skills development priorities that employers set, and the number of people that they train at each NQF level, provide some insightinto the areas considered important and the efforts that go into the upgrading of employee skills. Companies that submitted WSPs for2006/2007 planned to train their employees in a wide array of skills areas. Most of the skills training would take place at NQF levels 4 and5 and in the areas technical and financial skills (Table 3-12).Table 3.12 Number of people to be trained according to skills development priorities of employers in the sectorSkills PriorityNQF Level1 2 3 4 5 6 7 8ABETAdministrative skills 17 96 249 496 103 8 1 0Client Services 0 0 0 30 0 0 0 0Coaching 0 0 0 0 0 1 0 0Communication skills 11 86 245 3 383 574 98 11 3Company Specific Procedures 0 0 0 4 0 0 0 0Computer skills 76 443 841 1 219 263 59 9 0Customer Care skills 104 57 295 1 922 273 22 5 0Diversity/Transformational skills 3 7 248 1 315 122 27 11 1FAIS Credit Bearing Training 0 0 0 62 5 0 0 0Financial skills 8 9 49 9 395 3 221 220 28 4Human Resource Development 42 8 32 340 82 48 41 4Leadership Development 0 0 0 0 0 0 2 0Legislative Compliance skills 13 41 264 4 754 2 806 165 22 1Life skills/Personal Mastery skills 73 28 764 1 282 699 86 35 3Management & Leadership skills 82 17 170 2 596 2 127 655 147 21Product Knowledge 0 0 50 100 0 0 0 0Professional Qualifications 0 0 0 0 8 0 29 3Sales/Marketing Skills 0 5 3 20 9 0 0 0Systems training 0 0 300 0 0 0 0 0Technical skills 283 48 1 398 20 268 7 530 334 77 36Source: WSPs submitted for year 2006/2007Table 3-13 shows the number and percentage of people in each occupational group who would receive training in 2006/2007. Employersplanned to train as many as 67% of their employees. More than 80% of the middle and junior managers would receive training.INSETA Sector Skills Plan - page 30

Table 3.13 People to be trained in 2006/2007 according to occupational category 59Occupational Group Total employed Earmarked for Training % to be trainedLegislators, senior officials and managers 3 750 2 004 53Middle to Junior Management 4 161 3 350 81Professionals 6 649 3 902 59Technicians and associate professionals 24 732 16 640 67Clerks (Clerical & Administrative workers) 23 650 16 248 69Service and sales workers 21 219 15 119 71Skilled/Craft & Related Trade Workers 1 251 317 25Labourer / Elementary occupations 1 335 554 41Total 86 747 58 134 67* Employment figures refer only to the people employed in the organisations that submitted WSPs in respect of 2006/2007 to the INSETA. For this reason, the total figuresdiffer from the total employment estimates cited in Chapters 1 and 2.Source:WSPs 2006/2007.3.5 Abet trainingThere is only a small number of workers in this sector who have qualifications below NQF level 1 and who would benefit from adult basiceducation and training (ABET). In 2004/2005 employers who submitted ATRs trained 285 people (0.4% of their total workforce) onABET programmes – most of them African men and women who worked in clerical or administrative positions (Table 3-14).Table 3.14 People trained on ABET programmes in 2004/2005Occupational Group Male Female TotalClerical/Administrative Workers 72 128 200Service and Sales Workers 12 11 23Skilled/Craft & Related Trade Workers 4 2 6Labourers/Elementary Workers 24 32 56Total 112 173 285Source: ATRs 2004/2005In the 2006/2007 year INSETA supported the training of 547 learners on ABET programmes through its bursary voucher sytem.3.6 Special Inseta initiativesThe INSETA initiated three programmes to support and assist the insurance industry to develop its management cadre:• ELDP – The INSETA/GSB Executive Leadership Development Programme (ELDP) has been created to provide the South AfricanInsurance industry with skilled and confident leaders. In line with the SA Financial Sector Charter, the ELDP aims to fast track senior andemerging executives, especially previously disadvantaged individuals, for leadership positions in the insurance industry. From 2003 to2005 25 people have attended ELDP each year.• Vulindlela – This is a Leadership and Management Programme that started in 2006 to replace the ELDP, run by INSETA/GSB and isparticularly aimed at developing leadership and management skills in Black leaders in the Insurance Sector.• LAP - The Leadership Advancement Programme (LAP) is intended to fast track the development of middle and emerging managers inthe insurance industry. Attendance of this programme was as follows:• 2003 – 50,• 2004 - 52 and• 2005 – 39.• WIN – The Women in Insurance (WIN) Programme is a Management Development Programme, aimed at women in the financialservices sector and comprises of academic, behavioural, personal development and coaching and mentoring components which willequip learners to function in leadership positions within their organisations. The programme consists of academic as well as insurance –specific input. In 2004 30 women attended the programme and in 2005 27 attended.In 2007 all three programmes were discontinued and the INSETA introduced a bursary programme to provide financial support toemployers to send learners on training programmes of their own choice. The number of learners who benefited from this programme in2006/2007 can be seen in Table 3.15.59 At the time of writing this SSP update the ATR figures for the 2005/2006 financial year were not yet available.INSETA Sector Skills Plan - page 31

Table 3.15 Number of beneficiaries trained on INSETA bursary voucher scheme 2006/2007Type of training programmeNumber of learnersSkills Programme (FAIS) 1 201Skills Programme (General) 132SDF Training programme 2ABET 4 Support 546Selling and Marketing Skills 105Legislative Compliance Skills 407Leadership and Management 109Financial Management 4Total 2 506Source: INSETA data system3.7 Provision of skills per occupational categoryThe earlier part of this chapter described the provision of skills to the sector in broad terms. However, for the purposes of the SSP,mapping of the provision of skills to the specific occupational categories employed in the sector is also necessary.The mapping is done only in terms of the four broad occupational categories that constitute the bulk of employment in the sector. (Table3-15) The analysis of supply in terms of specific occupational categories is also qualitative and tentative for the following two reasons.• There is no specific or unique supply of skills to this particular sector. With the exception of a small number of sector-specific qualifications(most of which have been developed in the last few years), the insurance sector shares in the total supply of financial, administrative andother skills.• Qualifications are seldom narrowly aimed at a particular occupation. Conversely, many positions in this sector could be filled with peoplefrom very different educational backgrounds. Therefore, for most occupations a discrete supply of candidates cannot be quantified. 60Table 3.16 Mapping of the provision of skills to specific occupational categoriesOccupational category Main source of skills Comments on supplySenior Officials and ManagersProfessionalsClerical/AdministrativeWorkersHET/FET trainingIndustry experienceManagement courses (from MBAs to short courses)HET sectorProfessional learnershipsCPE – professional bodies and private providersSchool systemIndustry-specific FET trainingLearnershipsIn-service training by employersFew senior black managers with sufficient industry experienceShortage of skilled black managersHigh turnover among black managersSufficient general output from HET sector, but the sectorcompetes with the rest of the financial services sector and therest of the economyInsufficient industry-qualified professionalsGrowth and transformation in high-level professions is slowLong lead-time before new industry-specific qualifications startto make an impactSufficient numbers of people in the marketLack of numeracy and language skillsService and Sales Workers HET and FET institutions Intermediaries have to comply with FAIS requirementsMany are still struggling with compliance.3.8 ConclusionsMany factors have a positive impact on the supply of skills to the sector:• Various new sector-specific qualifications have been registered, and existing qualifications (such as BCom degrees) now includespecialisations specifically for the insurance industry. The qualifications available to the sector span the whole spectrum from NQF level2 to NQF level 7. Great interest has been shown in the provision of industry-specific qualifications from public and private trainingproviders.• The HET sector output in the field of business, commerce and management sciences has been growing rapidly over the past decade andshould provide the numbers of skilled graduates needed by the sector. However, sector-specific courses are still new and will start tohave an impact only in three to four years’ time.60 The wide range of qualifications that are accepted within the FAIS Fit and Proper regulations testifies to this fact.INSETA Sector Skills Plan - page 32

• The racial profile of graduates in business, commerce and management sciences is also changing rapidly. Thus, the number of new blackgraduates who are potentially available to the sector is increasing.• Employers in the sector seem to be actively involved in the provision of in-service training to all levels of staff. They have also developedsophisticated training infrastructures, which provide sufficient capacity for training.• Professional bodies play a key role in the provision of CPE and the upgrading of the skills of the workforce.Despite these positive developments, the sector also faces tough challenges:• The sector competes with the rest of the economy for high-level financial skills. Other participants in the financial services sector arealso bound by the Financial Sector Charter and will therefore also be competing for skilled blacks. A major challenge is to attract enoughof the black graduates, to provide them with industry-specific knowledge and skills and to retain them.• Some spare capacity (in the form of unemployed people with qualifications and experience in the financial services field) exists in thelabour market. However, it is unlikely that there are many unemployed people with knowledge and skills that make them readilyemployable in the sector.• The flow of skills onto the labour market is somewhat inhibited by the low numbers of learners who matriculate with mathematics as asubject and new entrants’ lack of numeracy and English language skills.INSETA Sector Skills Plan - page 33

4 SCARCE AND CRITICAL SKILLS IDENTIFICATION4.1 Scarce skills (Skills Shortages)“Scarce skills” or “skills shortages” refer to specific occupations that lack sufficient people trained to fill positions available in the labour market.In larger organisations, these shortages often manifest in vacancies that employers cannot fill (“hard-to-fill” positions). However, on occasion,employers may well fill the vacancies, but not with the people that they would ideally like to place in the vacancies.The information on scarce skills presented in this section was derived from a study on scarce skills 61 as well as from interviews withprofessional bodies and associations in the insurance sector.Data on scarce skills needs of the sector were collected by means of two processes. First, the section on scarce skills needs in the WSPsthat were submitted in Year 7 by employers of large organisations (employing more than 50 people) was analysed. Second, a telephonicsurvey was conducted with a sample of employers in the sector that employed fewer than 50 people. The aim of this survey was tocollect information on scarce skills similar to the information that was supplied by organisations that submitted WSPs in Year 7. Employerswere first of all asked about vacancies that they could not fill for a period of three months. They had to list the specific occupations in whichthese hard-to-fill vacancies existed, report on the reasons for the difficulties to fill the positions, indicate the severity of the needs andprovide the number of positions that they tried to fill.Results from the study revealed that 16.6% of the organisations in the sector found it difficult to recruit suitable candidates for vacantpositions. A total of 3 354 posts (3.0% of sector employment) across various occupational categories were listed (Table 4-1). The majority(2 209 or 69.5%) of these posts were for professional occupations. This constitutes 8.0% of the total number of professionals employedin the sector.Nearly a quarter of the positions required trained clerical and administrative workers or sales workers. However, these vacancies constitutedonly 0.9% and 3.2% of employment in the respective occupational groups.Representatives of professional associations in the sector had different opinions on the existence of skills shortages in the sector. Somewere of the opinion that sufficient people with adequate skills are available in the market but they are not interested to work in theinsurance sector because of better opportunities elsewhere. Other representatives felt that shortages were mainly restricted to largeorganisations in the sector that have to submit employment equity plans. New legislation prescribes qualification levels for certainoccupations in a sector where specialists often have extensive experience and expertise but not formal qualifications. The main challengeregarding skill shortages is how to effectively fast track (especially black) skills into management.Table 4.1 Number of posts that organisations struggled to fill in 2007Occupational groupPositionsN % of posts % of employment in sectorManagers 229 6.8 1.7Professionals 1 967 58.6 7.1Clerical and administrative workers 694 20.7 1.7Sales workers 464 13.8 4.1Total 3 354 100.0 3.34.1.1 Scarce skills: managersEmployers reported a total of 229 unfilled managerial positions due to a scarcity of the required skills. This constitutes 1.7% of totalemployment in this occupational group. For many of these vacancies a combination of experience and technical competence in the insuranceenvironment and formal qualifications are needed. The specific types of managers that organisations were looking for can be seen in Table4-2. These managers included general insurance managers, sales and marketing managers and technical managers. Because organisationsreported different on skill shortages in the WSPs, the insurance manager category in Table 4-2 could include technical and other insurancespecificmanagers e.g. portfolio-, fund- and claims managers.Table 4.2 Scarce skills: managerial occupationsOccupationPosts difficult to fillSpecialist managers: insurance 53Specialist managers: sales and marketing 32Managing director 1861 Inseta, Study of scarce skills in the Insurance Sector, July 2007.INSETA Sector Skills Plan - page 34

OccupationPosts difficult to fillSpecialist managers: insurance 53Specialist managers: sales and marketing 32Managing director 18Specialist managers: technical 18Specialist managers: claims 14Specialist managers: customer service, relations, care 11Specialist managers: finance 9Specialist managers: policy & planning 9Specialist managers: auditing or forensic auditing 9Specialist managers: health related 9Specialist managers: corporate services 7Specialist managers: human resources 7Specialist managers: portfolio 7ICT managers: chief information officer 6Call or contact centre manager 5Project/contract manager 3ICT managers: projects 2Specialist managers: risk or underwriting 2Specialist managers: property 2Specialist managers: schemes or funds 2ICT managers: general 1Specialist managers: actuarial services 1According to the professional associations who participated in the study, a need for managerial staff with experience and qualifications exist.The sector experiences problems in replacing experienced junior and senior management skills. Although skills shortages on lower levelscould be addressed by the increased use of technology, the industry cannot prosper without the technical expertise, experience andstrategic leadership of skilled managers.4.1.2 Scarce skills: professionalsA total of 1 967 professional positions in the sector were identified as hard-to-fill positions. Among these positions, 43.3% (851) werepositions for insurance brokers and another 388 were for financial investment advisors. Other scarce skills that were identified weremarketing specialists (202) and underwriters (135). A need for information technology professionals (96) such as developer programmersand software engineers was also identified as well as skills from other disciplines such as medicine and law for niche markets in insurance.Table 4.3 Scarce skills: professional occupationsOccupation*Posts difficult to fill*Insurance broker 851Financial investment advisor 388Marketing specialist 202Underwriter 135Claims assessor 66Business analyst 48Software engineer 42Developer programmer 33Actuary 32Internal auditor 26Financial analyst or researcher 26Accountant 18Nurse 15Compliance officer or consultant 14Forensic auditor 9Pharmacist 9Software & applications programmer 9Risk analyst adviser or controller 7INSETA Sector Skills Plan - page 35

Occupation*Posts difficult to fill*Training and development professional 6Systems analyst 6Legal advisor 6ICT trainer 5Medical practitioner 5ICT support engineer 4Client relations or customer services specialist 3Database administrator 1Systems administrator 1The professional associations indicated that a need for well-equipped black professionals who can deal with clients professionally existedin the sector. A need for black brokers who understand the needs of new markets such as the “black diamonds” and who are familiar withthe culture and lifestyle of clients in these markets, was also expressed. The new FAIS regulations raised the entry requirements and madeit more difficult for newcomers to enter the sector.In the loss-adjusting subsector, organisations find it difficult to take new learners in because of limited scope for practical experience. Dueto cost factors, large organisations make less use of the services of loss adjusters by not contracting out cases where smaller amounts areinvolved.A lack of underwriting skills and the skills needed to develop custom made products for new markets was also indicated.4.1.3 Scarce skills: clerks and administrative workersClerical and administrative workers (back room staff) fulfil a supportive role and handle typical administrative work relating to client services,sales, claims and payouts. The survey revealed a need for administrative staff specifically dealing with prospective or existing clients such ascall centre operators and client services or relations administrators (Table 4-4).Table 4.4 Scarce skills: clerical and administrative occupationsOccupation*Posts difficult to fillCall/contact centre operator 219Client services or relations administrator 180Claims clerk 92Insurance clerk 54General clerks or administrator 41Receptionist 38Insurance administrator 30Personal assistant 12Bookkeeper 6Insurance loss adjustor 6Word processing operator 5Insurance investigator 4Financial clerk 3Legal executive 2Debt collector 1Human resources clerk 1TOTAL 694Representatives from professional associations indicated a lack of sufficiently skilled backroom (administrative) staff in the sector, especially in small brokerages.In many instances they are not broadly enough skilled to decrease the workload of the owner/broker.4.1.4 Scarce skills: sales workersA new trend in insurance is that insurance products are marketed and sold through call centres without direct personal contact withcustomers. Besides technical knowledge these call centre agents or marketers need to communicate effectively with clients. Table 4-6shows the need for insurance agents and telemarketers in the industry. A fifth (20.4%) of all positions in the industry that organisationshad difficulty in filling could be related to product selling either through insurance agents, call centres or telemarketing.INSETA Sector Skills Plan - page 36

Table 4.5 Scarce skills: sales occupationsOccupation*Posts difficult to fillInsurance agent or sales consultant 432Telemarketer 32Total 4644.1.5 Reasons for difficultiesOnly organisations that participated in the telephonic survey reported on the reasons why they had difficulties in finding suitable candidates.These organisations employed 50 or less people.In the managerial category the main problem identified was to find people with appropriate experience and the required qualifications. Inthe past, expertise in the insurance industry was usually gained by moving through the ranks and learning on-the-job. However, newlegislation such as FAIS subscribes formal qualifications to certain functions in the industry, while employment equity legislation necessitatesthe fast tracking of black managerial skills to address race and gender imbalances in employment. New entrants may have the necessaryqualifications but not the experience, while experienced people may not have formal qualifications.Similar to managers, employers found it difficult to recruit professionals for hard-to-fill positions because of a lack of appropriate experienceand required qualifications among candidates. Employers also identified an overall shortage of underwriting skills in the market.In the clerical and administrative worker category difficulties in filling vacancies were mainly related to a lack of experience, qualificationsand unrealistic salary demands, while the main problems given in the sales worker category were a lack of experience and too few blackcandidates.Representatives of professional organisations related skill shortages in the sector to:• Ageing of expertise and the lack of interest of younger skills to remain in the sector and gain experience• Over-regulated environment - new legislation makes the risks for brokers to loose income too high. Established brokerages remain withold clientele and newcomers to the sector are few• Lack of training by the sector – organisations tend to poach rather than train their own staff• Lack of marketing of the sector as a career destination - insurance is not a sector of choice and the available skilled staff opt for othercareer opportunities• Growth in business among previously disadvantaged segments of populationThere is a general lack of black professionals with industry experience and those skills that are available are usually unaffordable for mostorganisations.4.2 Skills gaps/Critical skillsDuring this SSP update professional associations were probed for possible skills gaps among people who are currently employed but notsufficiently skilled for their jobs. The concept skills gap or critical skill need refers to the qualitative shortcomings (gaps) in the skills ofemployees. These shortcomings are normally specifically related to a particular job and occur because of, among other things, insufficienttraining, changes in the work environment, for example technology upgrades, legislative changes and promotion. A lack of critical skills amongemployees could also result from skills shortages in the market, with employers’ unsuccessful attempts to employ suitably qualified peoplein scarce skills positions leading to the employment of people without the required skills apparatus. Skills gaps can generally be remediedthrough additional training, for example on-the-job training and short courses as well as through mentoring.First, respondents were of the opinion that a broadening of skills on all levels in the sector is needed to deal with clients professionally amidan increase in the complexity of products, increased client awareness and clients’ needs for comprehensive financial planning. In addition,the owners of small businesses in the sector (specifically small brokerages) need business-, strategic leadership- and IT skills. Althoughbrokers may have the skills and experience to sell products, many have not considered the impact of legislation on, among things, cash flowand risk management. Also, backroom brokerage staff often need multi-skilling to provide effective support to brokers.Second, skills gaps in the sector were linked to a lack of training, the impact of a “commission driven” environment and the absence of aformal education system for short term insurance in the past. According to respondents, organisations in insurance have a company ratherthan a sector outlook in terms of training. They train for their specific needs and usually do not want to expose staff to other areas ofexpertise for fear of loosing skills to other companies. Product providers push for product selling and brokers have to keep their contractswith them. The focus is therefore short term and on targets rather than on the development of skills.INSETA Sector Skills Plan - page 37

Third, respondents felt that the sector should address skills gaps by focusing skills development on the needs of the industry rather thanon company-specific needs. Incentives should be given to encourage the transfer of knowledge in smaller organisations. Finally they wereof the opinion that new legislation is positively impacting on the level of professionalism in the industry and the removal of skills gapsThe critical skills needs of specific occupational groups were identified during the Survey of Employment, Scarce and Critical Skills (2006).4.2.1 Critical skills: managersCritical skills gaps were identified mainly in managerial positions that require a combination of management skills and specialist knowledgein particular fields such as information technology, specific aspects of insurance and human resources.The identified skills gaps related to general managerial abilities, for example leadership and general management as well as to specialistknowledge such as insurance product knowledge and industry-specific knowledge. Managers also lacked skills in areas such as• sales and marketing;• information technology (advanced computer skills);• legislation pertaining to the industry;• communication.4.2.2 Critical skills: professionalsInsufficient product knowledge and a lack of knowledge of the insurance sector were regarded as major deficiencies in the skills makeupof professionals employed in the sector. Many professionals also lacked sales and marketing skills and were not adequately informed aboutinsurance-related legislation. Other skills gaps pertained to• communication;• information technology;• finance.4.2.3 Critical skills: techniciansTechnical skills play a key role in the technology-driven work environment of the 21 st century. Technicians are responsible for the smoothrunning of technology-based information and management systems in organisations. They not only have to deal with the technical side ofsystems but also with the users of the systems. Technical workers accordingly often need a combination of technical skills, industry knowledgeand people skills.4.2.4 Critical skills: clerks and administrative workersAs support staff, clerical workers are responsible for product administration and the processing of sales and claims. In addition, they oftenact as mediators between industry professionals and clients and require a mixture of technical and people skills for optimal performance.Similar to professionals, most of the employers who answered the question on the critical skills needed by clerks and administrative workersidentified insufficient knowledge of the products offered by the industry as an area in which these workers needed training. Many employersalso reported that administrative workers lacked advanced computer skills . In addition, these workers needed to improve their• industry knowledge;• communication skills;• knowledge of industry-related legislation;• financial skills.4.2.5 Critical skills: sales workersSales workers are the drivers of business growth in the sector. A thorough understanding of insurance and its products and services isneeded to be competitive and to provide clients with sound product information. Insurance employers stated that more than 7 000 agentsand representatives in the industry needed further training in critical skills areas. Employees who support and assist the sales workers alsoneeded to upgrade their skills. Employers indicated that sales workers needed more in-depth knowledge of the products and servicesoffered by the industry and a better understanding of how the industry operates. Sales staff needed more training in sales and marketingmethods to improve their performance in the market. Sales workers’ knowledge of legislation and finance also needed improvement.4.3 Scarce and critical skills listThe Department of Labour requires SETAs to combine the information on critical and scarce skills according to specific occupations in theirsectors. This information needs to be provided in a template that prescribes the occupational categories according to an occupationalclassification system known as the Organising Framework for Occupations (OFO). The template also prescribes the information that isrequired for each occupational category in which scarce or critical skills are identified. The ultimate aim of the DoL is to combine theinformation received from all SETAs into a national list of scarce and critical skills.INSETA Sector Skills Plan - page 38

The scarce skills identified in the Study of Scarce Skills in the Insurance sector in 2007 have been filled into the DoL template and is attachedas Annexure E to this SSP. Scarce skills have been identified at the most detailed occupational level. It must, however, be noted that inmatching the occupational titles generally used in the insurance sector with the occupations specified in the OFO the OFO was found lackingin many respects. Version 6 of the OFO was used to identify the scarce skills in Annexure E. While this version of the OFO made betterprovision for occupational titles generally used in the insurance sector than earlier versions, it is still difficult to identify scarce skills at themost detailed occupational level. For example, underwriters were classified as Insurance agents/sales consultants (611201), while the sectordistinguishes between the two occupations in reporting on scarce skills.Critical skills have been identified for broader occupational groups and are attached as Annexure F.4.4 ConclusionsThe research on scarce skills presented in this chapter indicates that the industry has experienced shortages of professionals and managerswith insurance experience and the appropriate qualifications. These shortages are, however, not general shortages in the market but aredirectly related to the impact of new legislation to change the racial profile and increase educational standards in the sector. Because largeorganisations’ (50 or more employees) employment equity are monitored they are more affected by the scarcity of black skills than smallorganisations (with less than 50 employees).As mentioned in Chapter 3, output from the tertiary institutions in the general field of business, commerce and management sciences hasgrown substantially over the last five years and the racial profile of graduates from this sector is changing rapidly. However, the insurancesector competes for skills with the rest of the financial services sector and with business and commerce in general. The insurance sectoris not the sector of choice for many graduates due to a lack of knowledge about the sector and the over-regulation of the sector which,among other things, makes it too risky to start new brokerages.The critical skills or skills gaps in the current workforce can be seen in management and leadership, sales and marketing, basic and advancedcomputer work, industry and product knowledge, communication, knowledge of legislation and basic financial skills.INSETA Sector Skills Plan - page 39

5 SMALL BUSINESS AND ENTREPRENEURIAL OPPORTUNITIES AND OTHERNSDS PRIORITIES5.1 IntroductionThis chapter deals with a number of focal areas of the National Skills Development Strategy (NSDS) to which the SETAs will be attendingin the period covered by this SSP. These areas include small business and entrepreneurial opportunities, support to small levy paying andnon-levy paying firms, adult basic education and training, the promotion of national standards of good practice and stakeholder capacitybuilding.5.2 Small business and entrepreneurial opportunitiesThe NSDS for 2005 to 2010 places strong emphasis on small business development and the cultivation of skills necessary to start andmaintain new businesses. SETAs are specifically required to develop skills development strategies in support of new small businesses andtherefore this SSP contains an analysis of the possible small business opportunities that may exist in the sector.Small business opportunities were identified by the professional and industry bodies that participated in the SSP development process in2005 and 2007. Table 5-1 below summarises small business opportunities in specific subsectors and the relevant occupations, as well asthe skills, training and other requirements needed in order to benefit from these opportunities. Because the insurance industry is complexand highly regulated, the respondents 62 believed that entrepreneurs intending to start SMMEs in the sector will require advanced technicalqualifications and industry-related practical skills to succeed in new business ventures. In certain of the subsectors, such as reinsurance andcollective investments, considerable capital is needed to enter the market. 63 The area that is most suitable for the training and developmentof new entrants to the labour market (i.e. unemployed young people) is the intermediary subsector.Table 5.1 Summary of small business development opportunities in the insurance industrySmall business opportunity Subsector Skills and training needs Other requirementsFranchises of insuranceservices (branch offices oflife offices are franchisedand operated as separatebusinesses)Long term • Business and financial management skills• Technical insurance industry knowledge and practical experience (notmerely textbook knowledge)• People management skills• Marketing and selling skills• Customer service skills• IT and computer skills• Start-up capital• Office infrastructure• Business systems• Skilled human resourcesOutsourcing of specialisedunderwriting in short-termand reinsurance industryIntermediaries and brokersto serve the emergingmarketAdministration serviceswith specialised back officestaff with relevant industryexperience (“in”-sourcingof specialisedadministration services)Short termReinsuranceShort termLong termMedicalinsuranceShort termLong termIntermediariesCollectiveinvestmentsMedicalinsurance• Technical insurance industry knowledge and practical experience• Specialised risk assessment skills in relation to the activity or entity tobe insured• Risk management skills• Business and financial management skills• People management skills• IT and computer skills• Business and financial management skills• Technical insurance industry knowledge and practical experience• Entrepreneurial skills• People management skills• Marketing, selling and customer service skills• Language and communication skills to service emerging market• Understanding of needs of emerging market and cultural barriers toinsurance products• General office and practice management skills• Relevant technical insurance industry knowledge and practicalexperience (not merely textbook knowledge)• Customer management skills• Accounting, bookkeeping and financial record-keeping skills• Knowledge of tax laws• Knowledge of relevant legislation and industry practice codes• Entrepreneurial skills• Business and financial management skills• IT and computer skills• Start-up capital• Office infrastructure• Business systems• Skilled human resources• Start-up capital• Office infrastructure• Business systems• Skilled human resources• Start-up capital• Business systems• Skilled human resources62 Professional and industry bodies who participated in the 2005 update process.63 According to the South African Reinsurance Offices Association, a new reinsurer will require at least R80 million in start-up capital, and the Association of Collective Investmentsestimates that a potential new unit trust manager will require at least R50 million in start-up investment funds.INSETA Sector Skills Plan - page 40

Small business opportunity Subsector Skills and training needs Other requirementsAdministration services tomanage complianceOutsourcing of specialisedactuarial servicesOutsourcing of specialisedlegal servicesOutsourcing of fraudinvestigation andprevention servicesBoutique type of assetmanagement company cancooperate with existingregistered unit trustmanagement company toform new unit trustmanagement companyRange of services tosupport intermediarieswho serve the lower-endand emerging consumermarketsTraining for trustees ofpension funds and medicalschemesBroad range ofprocurement opportunitiesfor black-owned SMMEsShort termLong termIntermediariesMedicalinsuranceLong termShort termLong termShort termLong termCollectiveinvestmentsShort termLong termIntermediariesCollectiveinvestmentsMedicalinsuranceLong termMedicalinsuranceEntireinsuranceindustry, butespecially inshort-termsector• Relevant technical insurance industry knowledge and practicalexperience (not merely textbook knowledge).• Knowledge of statutory and regulatory requirements• General office and practice management skills• Client management skills• Accounting, bookkeeping and financial record-keeping skills• Entrepreneurial skills• Business and financial management skills• IT and computer skills• Qualification as actuary• High-level financial and analytical skills• Qualification as lawyer• High-level financial and analytical skills• Technical insurance industry knowledge and practical experience• Forensic and investigative skills• Risk management skills• Analytical skills• Technical insurance industry knowledge and practical experience• Business management and financial skills• People skills• IT and computer skills• High-level financial, analytical and numeracy skills• High-level economic skills• In-depth knowledge of investment markets• Relevant technical skills• Risk management skills• Business management and financial skills• IT and computer skills• People management skills• Marketing and selling skills• Customer service skills• Technical insurance industry knowledge and practical experience• Knowledge of statutory and regulatory requirements• Knowledge of insurance and financial products• General office and practice management skills• Mentoring and guidance skills to assist intermediaries• Client management skills• Accounting, bookkeeping and financial record-keeping skills• Entrepreneurial skills• Business and financial management skills• IT and computer skills• Sound knowledge of legal and statutory framework for retirement andmedical schemes• Relevant technical insurance industry knowledge and practicalexperience• Training and development skills• People skills• Business and financial management skills.• Marketing and selling skills• Client service skills• Specialised goods and services relevant for industry (e.g. insurancereplacement providers, panelbeaters, loss adjustors, glass fit shops,builders, office furniture and equipment, etc.)• Entrepreneurial skills• Business and financial management skills• Marketing and selling skills• Client service skills• Supply chain management skills• Start-up capital• Office infrastructure• Business systems• Skilled human resources• Office infrastructure• Business systems• Highly skilled humanresources• Office infrastructure• Business systems• Highly skilled humanresources• Start-up capital• Office infrastructure• Business systems• Access to externaldatabases• Specialised humanresources• Start-up capital• R50 million or more ininvestors’ funds to start offand to grow assets toR100 million in 12 months• Office infrastructure• Business systems• Access to externaldatabases• Specialised humanresources• Start-up capital• Office infrastructure• Business systems withelectronic solutions tosupport practices ofindividual brokers• Specialised humanresources skills• Access to distributionchannels, esp. in emergingmarkets• Start-up capital• Office infrastructure• Accreditation withinindustry and in NQF totrain according tostandards and outcomes• Specialised and specifictraining material• Start-up capital• Office infrastructure• Specialised humanresourcesINSETA Sector Skills Plan - page 41

5.3 Support to small levy paying and non-levy paying firmsThe NSDS specifically requires SETAs to provide skills development support to small levy paying and non-levy paying organisations (NSDSindicator 2.2). For this purpose the INSETA has developed a voucher system whereby small businesses can access skills developmentfunding. The voucher system allows organisations to obtain vouchers from the SETA and to exchange it for training that will enable themto improve the viability of their businesses.The INSETA also have various regional initiatives that are aimed at assisting the small organisations in the sector. These initiatives include:• The appointment of regional advisors who assist small organisations with the claiming of grants and with any other SETA-related matters• Regular regional forums where the INSETA interacts with its constituent organisations and where a wide array of skills development issuesare discussed• The institution of regional assessor forums where matters relating to the qualify assurance function of the SETA can be discussed anddealt with and• The training of skills development facilitators.During the SSP development process various other needs were identified. These include the need for information on the current skillsdevelopment terrain, the need for small employers to organise themselves in order to interact with training providers in a co-ordinatedmanner and the need for support with the implementation of learnerships.FAIS compliance and black economic empowerment remain burning issues in the sector – especially for the small brokerages. The INSETAwill continue to support these businesses to become compliant and to increase the number of black brokers and financial advisors in thesector.5.4 Adult basic education and trainingThe NSDS aims at increasing the educational levels of the workforce and to substantially increase the number of workers who haveachieved at least ABET level 4 (NQF level 1).In previous chapters of this SSP it was indicated that the majority of workers in the formal levy paying component of this sector are highlyeducated. Only a small number of workers in elementary occupations are possibly potential candidates for ABET. However, it is suspectedthat a large number of informal sector workers, specifically people who sell assistance (funeral) policies could be candidates for ABET.(These people are also referred to as “runners”). According to the FAIS Fit and Proper requirements these workers, if they don’t have aNQF level 2 qualification, have to be competent in an appropriate NQF level 2 skills programme. For those who don’t have a NQF level1 qualification, ABET becomes a very important vehicle to obtain access to such a skills programme.The INSETA is currently in a process of determining the ABET needs in the sector. A major challenge is to identify the runners and toobtain their commitment and participation in ABET.5.5 National standard of good practiceOne of the ways in which the NSDS wants to promote and accelerate the quality of training in the workplace is by promoting theachievement of a national standard of good practice in skills development. The Survey of employment, Scarce and Critical Skills establishedthat only a very small percentage of companies in the sector are certified to a standard of good practice – 2.5% are certified to the ISO9001 standard and 2.5% to Investors in People. The majority of organisations were either not familiar with the concept of standards ofgood practice or did not have the resources to implement such standards.5.6 Stakeholder capacity buildingThe NSDS aims to improve stakeholder capacity to deliver on and commitment to the NSDS. The SETAs are responsible for capacitybuilding and the promotion of commitment within their own sectors.The INSETA has started with the training and development of members of the INSETA Board in respect of their roles and obligations asBoard members, good corporate governance in the SETA environment and the NSDS targets and objectives. It has also instituted a SDFtraining programme. Furthermore, the regional advisors and regional forums play an important role in building the capacity of stakeholders.INSETA Sector Skills Plan - page 42

5.7 ConclusionsThis last chapter outlines some of the specific areas on which the INSETA will be focusing in the planning period, apart from skillsdevelopment to alleviate scarcity of skills in certain areas and to close the skills gaps that exist in the sector. The training of people forentrepreneurship and the development of new small businesses is an important area. Although participants in the SSP developmentprocess were able to identify several small business opportunities, most of them require high levels of industry knowledge and skills overand above entrepreneurial skills. This makes new ventures in the insurance industry relatively inaccessible to new entrants to the labourmarket. However, the INSETA will endeavour to assist young people with skills development needed for small business development inthis sector. The INSETA will also assist existing small businesses with skills development through a voucher system and through its regionalforums and initiatives.ABET interventions will be specifically aimed at intermediaries or brokers who sell funeral policies. ABET will support them to gain accessto the skills programme required in terms of the FAIS Fit and Proper requirements. The SETA will furthermore retain in its research agendathe identification of organisations who can be assisted to achieve a national standard of good practice and stakeholder capacity buildingneeds.INSETA Sector Skills Plan - page 43

REFERENCESBHF and Alexander Forbes Health Care Consultants, Key Performance Indicators from the 2004 Survey of Medical Schemes in Southern Africaand Interview with representatives of the Board of Healthcare Funders.Council for Medical Schemes, Annual Report, 2004/2003.Deloitte & Touche, The 10 most important issues for the Insurance Industry in 2005, http://www.deloitte.com/dtt/researchDepartment of Education, The Development of Education – Country Report of South Africa.47 th International Conference on Education,September 2004.FSB Annual Report, 2004.FSB, Annual Report of the Registrar of Pension Funds, 2000.FSB, Annual Report, 2005.FSB, Fifth Annual Report of the Registrar of Long Term Insurance, 2002.FSB, Fifth Annual Report of the Registrar of Short Term Insurance, 2002.FSB, Forty-fifth Annual Report of the Registrar of Pension Funds, 2003.FSB, Forty-fourth Annual Report of the Registrar of Pension Funds, 2002.FSB, Forty-third Annual Report of the Registrar of Pension Funds, 2001.FSB, Fourth Annual Report of the Registrar of Long Term Insurance, 2001.FSB, Fourth Annual Report of the Registrar of Short Term Insurance, 2001.FSB, Sixth Annual Report of the Registrar of Long Term Insurance, 2003.FSB, Sixth Annual Report of the Registrar of Short Term Insurance, 2003.FSB, Special Report on the Results of the Long-term Insurance Industry for the period ended December 2005.FSB, Special Report on the Results of the Short-term Insurance Industry for the period ended December 2005.FSB, Third Annual Report of the Registrar of Short Term Insurance, 2000.Grant Thornton & Prodigy Business Services, Information on Financial Advisors in the South African Insurance Industry. Report presented toINSETA, November 2003.Lawless, A. Numbers and Needs. Addressing the imbalance in the civil engineering profession. SACI: Halfway House, 2005.Life Offices Association, LOA Discussion Paper on Costs and Commission Structures for Long-Term Insurance Savings Policies, http://www.loa.co.za,June 2005.Inseta, Survey of Employment, Scarce and Critical Skills in the Insurances Sector, May 2006.Napier, Mark, Provision of Financial Services in South Africa. Case study presented at the Services Experts Meeting, 3-4 February 2005.http://www.finmark.org.zaNational Treasury, Contractual Savings in the Life Insurance Industry, Pretoria, March 2006.PriceWaterhouseCoopers, Emerging Trends and Strategic Issues in South African Insurance, 2004.Solomon, D. and McDonald, I. Spitzer decries lax regulation over insurance, http://www.injurylawattys.com/medical-insurance.htm.South Africa, Financial Advisory and Intermediary Services Act, No. 37 of 2002. Government Printers, Pretoria, 2002.South African Qualifications Authority, Trends in Public Higher Education in South Africa:1992 to 2001.Pretoria, October 2004.Statistics South Africa, Labour Force Survey, September 2004.Statistics South Africa, Labour Force Survey, September 2005.Statistics South Africa, Statistical Release PO441, 31 May 2005.Statistics South Africa, Statistical Release PO441, 31 May 2006.USA Bureau for Labor Statistics, http://www.bls.gov/oco/cg/cgs028.htm.INSETA Sector Skills Plan - page 44

ANNEXURE APROFESSIONAL BODIES INTERVIEWED AS PART OF THE SSP UPDATE PROCESSIN 2007Organisation Acronym Person interviewed Position Date of interviewActuarial Society of South Africa ASSA Mr Adrian Baskir Chairperson 23/07/2007Assoc of Marine Underwriters of SA AMUSA Mr Frank Ponnen Director 18/07/2007Association of Professional Financial Planners LUASA Mr Raymond Byrne Executive Director 10/07/2007Black Brokers Forum BBF Mr Isaac Mohlaping Executive Director 18/07/2007Black Indep Professionals of SA BIPSA Mr Ben Raseroka President 11/07/2007Financial Planning Insitute FPI Mr Carl Anschuts General Manager FPI Learning 10/07/2007Ms Wendy Hattingh Head: ComplianceFinancial Services BoardFSBCharene Nortier FAIS Supervision Department12/07/2007Institute of Loss Adjusters ILA Mr Peter Veal Director 12/07/2007Institute of Retirement Funds IRF Mr Gregory Morris President No responseMr Joe Kotze National Manager: Compliance 03/07/2007Insurance Brokers CouncilIBCMr Johan Swartz Chairperson - Protea Branch 05/07/2007Insurance Institute of South Africa IISA Mr Theo Vels Acting CEO 10/07/2007Life Offices Association LOA Mr Gerhard Joubert CEO 02/08/2007SA Financial Services Intermediaries Assoc SAFSIA Mr Ben Rossouw Managing Director 12/07/2007SA Insurance Association SAIA Mr Barry Scott CEO 27/06/2007INSETA Sector Skills Plan - page 45

ANNEXURE BFINANCIAL SERVICE SECTOR CHARTER TARGETS SET FOR THE INSURANCEINDUSTRYCore component of BEE Indicators Target 2008 Target 2014Section 1: Human resources development1.1 Employment Equity1.1.1 Senior management black people as a % of senior managementblack women as a % of senior management1.1.2 Middle management black people as a % of middle managementblack women as a % of middle management1.1.3 Junior management black people as a % of junior managementblack women as a % of junior management1.2 Skills development1.2.1 Skills spend% of payroll spent p.a. on skills development of blackemployeesMin 20%-25%Min 4%Min 30%Min 10%Min 40%-45%Min 15%1.5%1.2.2 Learnership program learnerships as % of total staff 4.5%Section 2: Procurement and enterprise developmentProcurementProcurement from black influenced companies, &companies rated “D” in terms of a charterProcurement from companies rated “C” in terms of acharterProcurement from black empowered companies, &companies rated “B” in terms of a charterProcurement from black SMEs, black companies, blackwomen-empowered enterprises & companies rated“A” in terms of a charterEnterprise DevelopmentEnterprise development: black influenced companiesTargeted procurement from those companies as apercentage of total procurement - Scored at 50% ofRand spendTargeted procurement from those companies as apercentage of total procurement - Scored at 75% ofRand spendTargeted procurement from those companies as apercentage of total procurement - Scored at 100%of Rand spendTargeted procurement from those companies as apercentage of total procurement - Scored at 125%of Rand spendRand spend - Scored at 50% of Rand spendEnterprise development: black empowered companies Rand spend - Scored at 100% of Rand spendEnterprise development: black SMEs, black companies& black women-empowered enterprisesSection 3 Access to Financial ServicesRand spend - Scored at 125% of Rand spend3.1 Transactions savings products and services Effective access for LSM 1-5 (%) 80%3.2 Bank savings products and services Effective access for LSM 1-5 (%) 80%3.3 Life assurance products and services Effective access for LSM 1-5 (%), & compulsory60%mortgage cover plan3.4 Collective investments products and services Effective access for LSM 1-5 (%) 1%, plus 250, 0003.5 Short term risk insurance products Effective access for LSM 1-5 (%) 6%3.6 Origination Origination of home loans (R)Origination of agriculture loans (R)Origination of black SME loans (R)3.7 Consumer education % of post tax operating profits spend p.a. Min 0.2%tbftbftbf33%of black target33%of black target33%of black targetSection 4: Empowerment Financing4.1 Targeted Investments Institution’s target for Targeted Investment (R)Institution’s annual investment in transformationalinfrastructure (R)Institution’s annual investment in low-income housing (R)Institution’s annual investment in agriculturaldevelopment (R)Institution’s annual investment in black SMEs4.2 BEE transaction financing including JV’s, debt Institution’s target for BEE transaction financing (R)financing, equity investments in BEE companies thatare not black SMEsTbfTbfINSETA Sector Skills Plan - page 46

Core component of BEE Indicators Target 2008 Target 2014Section 5 Ownership & Control5.1 Ownership5.1.1 Direct ownershipMax of 4 Bonus points scored: 0.5 when directownership at 13.75%, 0.5 at 17.5%, 1.5 at 21.25% and1.5 at 25%Source: Financial Sector Charter ScorecardListed companies: standard valuation as % of marketcapitalisationNon-listed companies: standard valuation5.1.2 Direct or indirect ownership in excess of 10% Listed companies: standard valuation as % of marketcapitalisationNon-listed companies: standard valuation5.2 Control5.2.1 Board Black people as a % of board of directorsBlack women as a % of board of directors5.2.2 ExecutiveExecutive managementSection: Corporate Social InvestmentBlack people as a % of executive managementBlack women as a % of executive managementMin 10% by 2010 -15% by 2010 -33%Min of 11%Corporate Social Investment % of post tax operating profit directed p.a. to CSI 0.5%Min 25%Min 4% 33%INSETA Sector Skills Plan - page 47

ANNEXURE CMETHODOLOGY USED TO ESTIMATE THE NUMBER OF BLACK MANAGERSNEEDED BY THE INSURANCE SECTORThe following steps were followed to arrive at estimates of Black managers needed by the insurance sector over the period 2005 to 2010.It is important to note that it was assumed that the attrition rates for Black managers would be the same as that of white managers.Although the turnover of black managers in companies may be high, it is not certain that they leave the sector altogether. Also, blackmanagers may be younger than their white counterparts and therefore a smaller proportion may retire over the five-year period.a) First, current employment of managers was obtained from the Survey of Employment, Scarce and Critical skills conducted in 2005. Thedistribution of managers across the two levels, senior and executive managers and middle and junior managers was obtained from theWSPs submitted to the INSETA for the year 2006/2007. The WSPs represented more than 80% if the employees in the sector andtherefore it can be regarded as fairly representative of the sector as a whole. The distinction between these two levels of managementwas made by the employers themselves and may differ between organisations.b) The current employment distribution was also obtained from the WSPs as explained in a) above.c) The target distribution for 2010 was obtained by:Scenario 1 – keeping the distributions more or less as they were in the Year 2006/2007 WSPs andScenario 2 – arbitrarily increasing the black male and black female components beyond the minimum targets set in the FSC.d) The target employment for 2010 was obtained by applying the target distributions for 2010 to the target employment figure of 14 856.This is the number of managers that the industry would employ in 2010 if employment would grow by 1.9% per year. In Scenario 1the black male, female and white distributions were held at the level at which they currently are (as reflected in the WSPs submittedin June 2007) and in Scenario 2 they were increased as explained above.Total Managers NeededThe total number of managers needed over the five-year period at the different levels and in the different population and gender groupswas calculated by providing for the growth in employment as explained in d) above and the replacement demand calculated by the modeldeveloped for the SSP (See Chapter 2). Thus, all the assumptions made for the model also apply to this extension of the model. The numberof managers needed annually was calculated by dividing the number needed over the five-year period by five. The results shown in thetable below indicate that if the targets for black managers were raised to the levels indicated in Scenario 2, the attrition of white managerswould have to be faster than that allowed for in the model – approximately 80 white managers need to leave in addition to the ones thatwould naturally leave the sector. Alternatively, employment growth in the sector would have to be faster in order to create more spacefor the transformation of the management cadres.a) Current employmentBlackMaleBlackFemaleWhiteTotalSenior and executive management 925 526 4 959 6 410Middle to junior management 1 607 1 444 4 061 7 112Total 2 531 1 971 9 020 13 522b) Current employment distributionBlackMaleBlackFemaleWhiteTotalSenior and executive management 14.43 8.21 77.36 100Middle to junior management 22.59 20.31 57.10 100Total 18.72 14.57 66.70 100c) Target distribution for 2010BlackMaleBlackFemaleScenario 1 Scenario 2White Total BlackMaleBlackFemaleSenior and executive management 15 10 75 100 20 15 65 100Middle to junior management 24 21 55 100 30 30 40 100d)Target employment for 2010BlackMaleBlackFemaleWhite Total BlackMaleBlackFemaleSenior and executive management 1 056 704 5 282 7 042 1 408 1 056 4 577 7 042Middle to junior management 1 875 1 641 4 298 7 814 2 344 2 344 3 126 7 814Total 2 932 2 345 9 579 14 856 3 753 3 401 7 703 14 856WhiteWhiteTotalTotalINSETA Sector Skills Plan - page 48

Senior managementBlackMaleTOTAL MANAGERS NEEDEDBlackFemaleWhite Total BlackMaleBlackFemaleNew employees 132 178 323 633 484 530 -381 633Replacement 179 119 893 1 191 238 179 774 1 191Total needed 2005 to 2010 310 297 1 216 1 823 722 709 393 1 823Total needed per year 62 59 243 365 144 142 79 365Middle to junior managementBlackMaleBlackFemaleWhite Total BlackMaleBlackFemaleNew employees 269 197 237 702 738 900 -936 702Replacement 317 277 727 1 321 396 396 529 1 321Total needed 2005 to 2010 586 474 963 2 023 1 134 1 296 -407 2 023Total needed per year 117 95 193 405 227 259 -81 405WhiteWhiteTotalTotalINSETA Sector Skills Plan - page 49

ANNEXURE DCURRENT LEARNERSHIPS (MARCH 2007)Learnership Title Registration No Qualification Qualification ID Expiry DateInsurance and Investment Administrator 13Q130031761202 National Certificate: Financial Services 48783 11-Aug-07Level 2 13Q130031761202Intermediary: Assistance Policies 13Q130035811202 National Certificate: Financial Services 48783 11-Aug-07Level 2 13Q130035811202Financial Services AdministratorLevel 3 13Q13003399120313Q130033991203 National Certificate: Financial Services 49089 02-Dec-07Insurance and Investment Team Leader /SupervisorLevel 3 13Q130030731303Medical Claims AssessingLevel 4Long Term InsuranceLevel 4Long Term Risk AssessmentLevel 4Short Term InsuranceLevel 4Retail InsuranceLevel 4Long Term Risk Assessment CertificateLevel 5Long Term Risk Assessment DiplomaLevel 5Certified Financial PlannerLevel 7 13Q130034001607Wealth ManagementLevel 513Q13003073130313Q13003668150413Q13003899140413Q13003979150413Q130043991504National Certificate: Financial ServicesManagementFurther Education and Training Certificate:Medical Claims AssessingFurther Education and Training Certificate: LongTerm InsuranceFurther Education and Training Certificate: LongTerm Insurance Risk AssessmentFurther Education and Training Certificate:Short Term Insurance48494 11-Feb-0749356 13-Apr-0849649 17-Aug-0849529 12-Oct-0849929 09-Feb-09Further Education and Training Certificate: Retail 49835 12-Oct-0813Q130037941404Insurance13Q130040231205 National Certificate: Long Term Risk Assessment 49834 12-Oct-0813Q130041402455 National Diploma: Long Term Risk Assessment 49860 12-Oct-0813Q130034001607Postgraduate Diploma: Financial Planning4886630-June-0613Q130044781205 National Certificate: Wealth Management 57608 16-Nov-09INSETA Sector Skills Plan - page 50

ANNEXURE ESCARCE SKILLS IN THE INSURANCE SECTOR - 2007NQF AlignedOCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF LevelsNEED 2007 CommentsY N1 MANAGERS11 Chief Executives, General Managers and Legislators111 Chief Executives, General Managers, Legislators and Senior Government Officials1111 Chief Executives and Managing Directors (Enterprises/Organisations13 Specialist Managers111101 Chief Executive Officer / Managing Director (Enterprise /Organisation)1 √ Ed 6-7 √ 18 Not enoughpeople withindustryexperience.131 Advertising Marketing and Sales Managers1311 Advertising, Marketing and Sales Managers131102 Sales and Marketing Manager 1 √ Ed 5-7 √ 32132 Business Administration Managers1321 Corporate (Administration & Business) Services Managers132101 Corporate Services Manager 1 √ Ed 6-7 √ 71322 Finance Managers132201 Finance Manager 1 √ Ed 6-7 √ 91323 Human Resource Managers132301 Personnel / Human Resource Manager 1 √ Ed 5-7 √ 81324 Policy and Planning Managers132401 Policy and Planning Manager 1 √ Ed 6-7 √ 9135 Information and Communication Technology (ICT Managers)1351 Information and Communication Technology (ICT) Managers135101 Chief Information Officer √ Ed 6-7 √ 6135102 ICT Project Manager √ Ed 6-7 √ 3136 Small Business, Office, Programme and Project Managers1361 Contract, Programme and Project Managers136102 Programme or Project Manager 1 √ Ed, CPD 6-7 √ 313600 Spec manager Insurance general √ Ed, CPD 5-7 √ 53136301 Office or Unit Manager (Quality Assurance, Claims) √ Ed, CPD 5-7 √ 15INSETA Sector Skills Plan - page 51

OCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF Levels14 Hospitality, Retail and Service ManagersNQF AlignedNEED 2007 CommentsY N149 Miscellaneous Hospitality, Retail and Service Managers1492 Call or Contact Centre and Customer Service Managers149201 Spec manager Call or Contact Centre √ Ed, CPD 6 √ 5149202 Spec manager Customer service/relations/ client care √ Ed, CPD 6 √ 1122 Business, Human Resource and Marketing Professionals2 PROFESSIONALS221 Accountants, Auditors and Company Secretaries2211 Accountants221101 Accountant (General) 1 √ Ed, CPD 5-7 √ 182212 Auditors, Company Secretaries and Corporate Treasurers221202 Corporate Treasurer (Manager risk/underwriting) √ Ed, CPD 6-7 √ 2221203 External Auditor (Audit/Forensic Manager, Forensic Auditor √ Ed, CPD 5-7 √ 18221204 Internal Auditor/general/consultant √ Ed, CPD 5-7 √ 26222 Financial Brokers and Dealers, and Investment Advisers2221 Financial Brokers222103 Insurance Broker 2 √ Ed, CPD, SP 5-7 √ 851 Not enoughblackprofessionalstrainedNot enoughpeople withindustryexperience andqualifications2223 Financia l Investment Advisers and Managers222301 Financial Investment advisor/consultant/group schemesadvisor1 √ Ed, CPD, SP 5-7 √ 436 Not enoughpeople withindustryexperience andqualificationsUnrealistic salarydemands222302 Financial Investment Manager (Funds, Health, Portfolio,Property, Actuarial services)√ Ed, CPD 6-7 √ 21 Not enoughpeople withindustryexperience andqualificationsINSETA Sector Skills Plan - page 52

OCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF Levels223 Human Resource and Training ProfessionalsNQF AlignedNEED 2007 CommentsY N2232 ICT trainers223201 ICT trainer √ Ed 6 √ 52233 Training and Development Professionals223301 Training and Development Professional √ Ed 5-6 √ 6224 Information and Organisation Professionals2241 Actuaries, Mathematicians and Statisticians224101 Actuary 1 √ Ed, L 6-8 √ 32224102 Mathematician (Operations research analyst) √ Ed 6-7 √ 26 Not enoughpeople withindustryexperience2244 Intelligence and Policy Analysts224402 Policy Analyst ( Risk analyst) 1 √ Ed, CPD 5-7 √ 7 Not enoughpeople withindustryexperience225 Sales, Marketing and Public Relations Professionals2251 Advertising and Marketing Professionals225103 Marketing specialist (Technical/operations/ productsmanager, marketers)1 √ Ed 6 √ 2202253 Public relations professionals225303 Public Relations Client Service Manager (Customerservices/Client relations/Client services Specialist)1 √ Ed 6 √ 325 Health Professionals251 Health Diagnostic and Promotion Professionals2515 Pharmacists251502 Industrial Pharmacist √ Ed 7 √ 9253 Medical Professionals2531 Generalist Medical Practitioners253101 General Medical Practitioner √ Ed 7 √ 5254 Midwifery and Nursing professionals2544 Registered nurses254408 Registered Nurse (Medical) √ Ed 6 √ 1526 ICT Professionals261 Business and Systems Analysts and ProgrammersINSETA Sector Skills Plan - page 53

OCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF Levels2611 ICT Business and Systems AnalystsNQF AlignedNEED 2007 CommentsY N261102 Systems Analyst √ Ed 5-7 √ 62613 Software and Applications Programmers261302 Developer Programmer √ Ed,SCTP5-6 √ 42261303 Software Engineer √ Ed 5-6 42262 Database and Systems Administrators and ICT Security Specialists2621 Database and Systems Administrators and ICT Security Specialists262101 Database Administrator √ Ed,SCTP262103 Systems Administrator √ Ed,SCTP263 ICT Network and Support Professionals2632 ICT Support and Test Engineers263202 ICT Support Engineer √ Ed,SCTP27 Legal, Social and Welfare Professionals271 Legal Professionals2713 Attorneys/Lawyers/Solicitor/legal advisor271302 Associate Legal Professional (Legal Advisor, Complianceofficer)5-6 √ 15-6 √ 15-6 √ 4√ Ed 6-7 √ 2031 Agricultural, Medical and Science Technicians313 ICT and Communications Technicians3131 ICT Support Technicians313102 ICT Customer Support Officer (Client services/relationsconsultant/administrator/customer liaison/help desk3 TECHNICIANS AND TRADE WORKERS√ Ls, Sp 3-5 √ 1805 CLERCAL AND ADMINISTRATIVE WORKERS51 Office managers and program Administrators511 Contract, Program and project Administrators5111 Contract, Program and project Administrators* 511201 Office Administrator (Insurance) √ SP, Ls 4-6 √ 3052 Personal Assistants and Secretaries521 Personal Assistants and Secretaries5211 Personal Assistants521101 Personal Assistant √ WE 4 √ 12INSETA Sector Skills Plan - page 54

OCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF Levels53 General Clerical Workers531 General Clerks5311 General ClerksNQF AlignedNEED 2007 CommentsY N531101 General Clerk 4 √ SP,WE 4 √ 41532 Keyboard Operators5321 Keyboard Operators54 Inquiry Clerks and Receptionists532103 Word Processing Operator 4 √ SP,WE 4 √ 5541 Call or Contact Centre Information Clerks5411 Call or Contact Centre Workers542 Receptionists55 Numerical Clerks541101 Call or Contact Centre Operator 4 √ Ls 3-4 √ 2195421 Receptionists542101 Receptionist (General) √ WE 5 √ 38551 Accounting Clerks and Bookkeepers5512 Bookkeepers551201 Bookkeeper (& Financial clerk) √ WE 4-5 √ 9552 Financial and Insurance Clerks5523 Insurance, Money Market and Statistical Clerks552302 Insurance Consultant (Insurance clerk e.g.broker/assessor/advisor/estate assistant/claims√ SP, Ls,WE 4-6 √ 14659 Other clerical and administrative workers599 Miscellaneous Clerical and administrative workers5991 Conveyancers and Legal Executives599102 Legal Executive √ 5-6 25993 Debt Collector599301 Debt Collector √ 5-6 15994 Human Resources Clerks599401 Human Resources Clerk √ 4 15996 Insurance Investigators, Loss Adjusters and Risk Surveyors599601 Insurance Investigator √ TP, WE 5-6 √ 4599602 Insurance Loss Adjuster(& Claims assessors) √ TP, WE 5-6 √ 72INSETA Sector Skills Plan - page 55

OCCUPATION level ss Specialisation/Job Critical Skills Intervention NQF Levels6 SALES WORKERS61 Sales Representatives and Agents611 Insurance Agents and Sales Representatives6112 Insurance AgentsNQF AlignedNEED 2007 CommentsY N611201 Insurance agent (Underwriter, sales consultant) 3 √ SP, SC 3-7 √ 56763 Sales Support Workers639 Miscellaneous Sales Support Workers6393 Telemarketers639301 Telemarketer 5 √ SP,SC 4-5 √ 32INSETA Sector Skills Plan - page 56

ANNEXURE FCRITICAL SKILLS NEEDED IN THE INSURANCE SECTOROCCUPATION level ss11 Chief Executives, General managers and LegislatorsSpecialisation/Job1 MANAGERS111 Chief executives and managing Directors Leadership skillsManagement skillsProduct knowledgeCritical Skills Intervention NQF LevelsEd, CPD, SC 5-7 √NQF AlignedY N13 Specialist Managers132 Business Administration Managers Leadership skillsManagement skillsProduct knowledgeEd, CPD, SC 5-7 √135 Information and Communication Technology (ICT Managers) Leadership skillsManagement skillsProduct knowledgeEd, CPD, SC 5-7 √139 Miscellaneous Specialist Managers Leadership skillsManagement skillsProduct knowledge14 Hospitality, Retail and Service ManagersEd, CPD, SC 5-7 √149 Miscellaneous Hospitality, Retail and Service Managers Leadership skillsManagement skillsProduct knowledge22 Business, Human Resource and Marketing ProfessionalsPROFESSIONALS221 Accountants, Auditors and Company Secretaries Product knowledgeIndustry knowledgeSales and marketingskillsKnowledge of legislation222 Financial Brokers and Dealers, and Investment Advisers Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislation223 Human Resource and Training Professionals Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislationEd, CPD, SC 5-7 √CPD, SC 5-7 √CPD, SC 5-7 √CPD, SC 5-7 √NEED 2006 CommentsINSETA Sector Skills Plan - page 57

OCCUPATION level ssSpecialisation/Job224 Information and Organisation Professionals Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislation225 Sales, Marketing and Public Relations Professionals Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislationNQF AlignedCritical Skills Intervention NQF LevelsY NCPD, SC 5-7 √CPD, SC 5-7 √26 ICT Professionals261 Business and Systems Analysts and Programmers Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislation27 Legal, Social and Welfare Professionals271 Legal Professionals Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislation31 Engineering, ICT and Science Technicians3 TECHNCIANS313 ICT and Telecommunications Technicians Product knowledgeIndustry knowledgeSales and marketing skillsKnowledge of legislationCPD, SC 5-7 √CPD, SC 5-7 √CPD, SC 5-7 √39 Other Technicians and Trade Workers399 Miscellaneous Technicians and Trades Workers Knowledge of legislationIndustry knowledgeCommunication skillsCPD, SC 5-7 √51 Office managers and program Administrators5 ADMINISTRATIVE WORKERS511 Contract, Program and project Administrators Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationCPD, SC 5-7 √512 Office and Practise Managers Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationCPD, SC 5-7 √NEED 2006 CommentsINSETA Sector Skills Plan - page 58

OCCUPATION level ss52 Personal Assistants and SecretariesSpecialisation/JobCritical Skills Intervention NQF LevelsNQF AlignedY N521 Personal Assistants and Secretaries Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationSC 4-5 √53 General Clerical Workers531 General Clerks Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislation54 Inquiry Clerks and Receptionists541 Call or Contact Centre Information Clerks Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationSC 4-5 √SC 3-5 √542 Receptionists Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislation55 Numerical Clerks551 Accounting Clerks and Bookkeepers Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationSC 4-5 √SC 4-5 √552 Financial and Insurance Clerks Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislation56 Clerical and Office Support WorkersSC 4-5 √561 Clerical and Office Support Workers Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationSC 4-5 √NEED 2006 CommentsINSETA Sector Skills Plan - page 59

OCCUPATION level ss59 Other clerical and administrative workersSpecialisation/JobCritical Skills Intervention NQF LevelsNQF AlignedY N599 Miscellaneous Clerical and administrative workers Product knowledgeAdvanced computerskillsIndustry knowledgeKnowledge of legislationSC 4-5 √61 Sales Representatives and AgentsSALES WORKERS611 Insurance Agents and Sales Representatives Product knowledgeIndustry knowledgeSales and marketing skillsSC 4-5 √62 Sales Assistants and Salespersons621 Sales Assistants and Salespersons Product knowledgeIndustry knowledgeSales and marketing skillsSC 4-5 √63 Sales Support Workers639 Miscellaneous Sales Support Workers Product knowledgeIndustry knowledgeSales and marketing skillsSC 4-5 √71 Machine and Stationary Plant Operators7 MACHINERY OPERATORS AND DRIVERS711 Machine Operators Communication skillsBasic financial skillsSC, Ed 0-1 √73 Road and Rail Drivers732 Delivery Drivers Communication skillsBasic financial skillsSC, Ed 0-1 √85 Food preparation Assistants8 LABOURERS851 Food preparation Assistants Communication skillsProduct knowledgeIndustry knowledgeSC, Ed 0-1 √8513 Kitchenhands89 Other Labourers899 Miscellaneous Labourers Communication skillsProduct knowledgeIndustry knowledgeSC, Ed 0-1 √NEED 2006 CommentsINSETA Sector Skills Plan - page 60

ANNEXURE GINSETA BUSINESS PLANINSETA BUSINESS PLAN - EXECUTIVE SUMMARYMission Statement“Inseta promotes and enables quality skills development through funding education and training in South Africa to meet the nationalskills agenda and contributes to transformation in the Sector.””1. TransformationAs the statutory Education and Training Authority in the Insurance Sector, Inseta will actively promote the development of people in, andthe transformation of the industry as endorsed by the Financial Sector Charter.Internal Transformation• The Council of Inseta comprises 61% Blacks of whom 53% are female.• The staffing of Inseta reflects an 83% Black profile of whom 70% are female.External Transformation• Through its funding of skills development on a basis of 85% Black, 54% Females and 4% disabled learners; Inseta exerts practicalencouragement for the increased engagement and skills development of black learners. The research indicates that the Insurance industryhas not made significant strides in this area. Inseta therefore has an important role in ensuring a pipeline of trained black people for careersin the insurance industry.• Since Inseta’s inception training the majority of Training Providers awarded contracts have been white. This is mainly because currentlymost of the Training Providers in the sector are white. The development of black Training Providers therefore is one way by which Insetacan encourage black participation. In 2006 Inseta started an initiative to train black brokers as Skills Development Facilitators. Thistransformation initiative will continue for 2007/2008 with the aim of producing successful BEE training providers and directing sometargeted projects to them.2. Stakeholder RelationsSince its inception six years ago Inseta has outlaid R33 million to fund 4759 Learnership programmes for young matriculants in the InsuranceIndustry. In addition, R435 million was released into the sector over the same period, to fund Inseta initiated training projects, and toreimburse levy paying entities for the monies they spent on training their staff. These interventions by Inseta have materially benefitedInseta’s stakeholders and the learner population.Inseta has four layers of stakeholders:• Levy (1150) and Non-levy payers (7300) – The Inseta main offerings to this group being payments of mandatory grants and discretionarygrants. Inseta has over the years successfully delivered to this prime constituency according to funds available.• SDFs, Assessors, Moderators and Training Providers – The main offerings this group seeks from Inseta are i) Accreditation with Inseta, ii)Certification of learners and iii) Prompt payment from Inseta. Whilst they agree and accept that each of these is rightly governed byprescribed DoL procedures and strict formalities, Inseta often faces criticism over the bureaucratic requirements with which trainingProviders are required to comply with. The quality of documentation received from this group is often poor even after continual guidanceby Inseta personnel and published procedures. Clearly it is in the interest of all concerned that the ongoing guidance effort continues.There is also inconsistency in the service offered to stakeholders by training providers.• Organised Trade and Professional Bodies – The group have acknowledged Inseta’s right to have direct dealings with its levy payingstakeholders but have requested closer ties and involvement with themselves. This will be an important Inseta focus going forward andwill be underpinned by the following principles:• That Industry Trade and Professional Bodies understand and accept Inseta’s mandate and autonomy;• That all collaborative efforts must maximize reciprocal benefit.INSETA Sector Skills Plan - page 61

Positioning the relationship on this sound basis will mitigate the risk of Inseta being used as the scapegoat for any industry failings in theareas of Fais Fit and Proper regulations and FS Charter target achievement.• Statutory Regulators – DoL, auditor General, Parliamentary Portfolio Committees, and SAQA – Inseta enjoys exceptional relationshipswith these compliance entities. For the first time in its history, Inseta has achieved clean audits in the same year from all four publicregulators.3. Delivery and TargetsThe crux of Inseta’s work centres around the SLA signed with Dol. Council therefore has a strategic obligation to promptly approve suitablymotivated and timeously presented SLA aligned projects and project spend.Upon Council approval of the 2007/8 suite of projects, a concise schedule of the projects will be sent to the key incumbent HumanResources officials in our prime stakeholder base, inviting their uptake and participation in the approved projects. The same schedule willbe posted on the Inseta Website and included in the Inseta Newsletter. The SMMEs will be reached via the Trade and Professional bodies.Moreover, the prescribed national advertisements inviting Training Providers and Stakeholders will further support rollout and uptake ofthe 2007/8 projects.During April to June 2007, management will concentrate on appointing training providers/lead employers, and where relevant, finalise withstakeholders the proportionate allocation of project funds. PwC will provide the CEO with a monthly report that tracks learner registrationsand the progress of the rollout of all projects. The granting of Bursaries and Vouchers will be subordinate to the emphasis on the uptakeof Discretionary Projects.In this manner (involving as it does the generating of awareness and the reaching out to stakeholders), management expects to meet/exceedall the targets that have been agreed with DoL in the 2007/9 Service Level Agreement.The possibility exists that there could be a greater demand for project uptake and participation than funding can support, especially in thearea of Learnerships. Levy paying stakeholders will be encouraged to use their mandatory grants to augment the funding provided byInseta, if this situation arises.4. Operational CompetenceInseta submits quarterly performance reports to DoL and reports annually before both the Parliamentary Portfolio Committee on Labour,and the Parliamentary Portfolio Committee of Provinces. The Inseta Council approves the business plan and reviews the plan againstperformance. The quarterly meetings of Council and its sub committees afford the opportunity to both evaluate whether Inseta operationsare running as expected and to guide management in corrective action.Management will continually monitor the progress of discretionary projects and the payment of mandatory grants, to ensure the achievementof performance targets in these areas. Management also evaluates operational budget projections and the risk plan and takes appropriateremedial action where such is dictated. All these control and improvement measures are in addition to the four different types of auditinterventions that Inseta undergoes annually.The future survival of Inseta as an independent (unmerged) Seta is significantly dependent on its operational compliance profile. In this regard,the ETQA (which is subject to the highest regime of regulations) is central to the performance evaluation of a Seta. Inseta’s ETQA divisionhandles huge volumes of work, much of which contains defective submissions from demanding stakeholders. This impacts on the qualitycontrol and turnaround/output of the division. Inseta has continually educated stakeholders and will continue to do so. This is done by detailedprocedures and examples posted on the Inseta website, regular site visits and forums and guidelines and a CD have also been extensivelydistributed to stakeholders, training providers, moderators and assessors. However the high turnover and /or job rotation at stakeholdercompanies among staff who handle learnerships and other Skills Development functions negatively impacts this.5. Governance and StructuresInseta Council comprises mainly black senior executives from the insurance sector with both a sound appreciation of the strategic issuesthat surround the Seta and strong inclination for corporate governance. Council monitors and controls the strategic decisions ofmanagement and balances this in a way that avoids operational interference or micro-management. Importantly also, Inseta’s Council putsthe interests of Inseta first.INSETA Sector Skills Plan - page 62

The DoL requires all Councils to undergo evaluations and learning experiences so as to strengthen shortcomings and the performance ofSetas. In addition to this emphasis, DoL also requires Councillors to be actively involved in the organised bodies they represent so as toensure feedback to their constituencies. This latter aspect might require close consideration by Council.6. Financial ManagementAs all the published Annual Reports show, Inseta handles hundreds of millions of rands per year. The operational budget alone for 2007/8amounts to R17million. Management initiates, verifies and authorises all payments. Deloitte run the Inseta Accounting Office financial affairsof Inseta. In the past two years, there has not been any incident of fraud nor has there been any “qualification” by the Auditor General ofthe Inseta Annual Statement of Accounts.The Revenue Income of Inseta has progressed steadily:2004/5 R125.4 million2005/6 R135.9 millionThe projection for 2007/8 is R136millionDiscretionary Funds available as at 1 st April 2007 are estimated to be R50.2million of which, Council approved projects for R45million atits meeting in mid April 2007. In terms of its utilisation of Discretionary available funds, Inseta has a four-year average of 61% spend againstsurplus funds allocated. As regards Mandatory Grants to stakeholders, in 2005/6 an amount of R85.6million was paid (which includedmonies in respect of a previous year), and the projected claim for 2007/8 is R73.1 million.Council approved the Administration Operational budget for 2007/8 in November 2007. The approval of this business plan now will requiremanagement to effect minor redistribution within the approved budget and levy projections.As regards the managing of operational risks, mitigation plans are in place for the main risks that have been identified:1) Demand for funds higher than available allocation2) Stakeholder Non-Compliance3) Response & Delivery Shortcomings of ETQA Division4) Non re-accreditation of ETQA5) Lapses in service delivery by Deloitte & PWC mainly IT Support & Project Initiation6) No INSETA representation in five provinces7) Staff turnover8) Pressure to register non SSP priority unit standards9) Objection from Organised Business to INSETA’s 2007/8 Projects10) Lag in monthly reconciliation of invoices/RFP postingsRequest for Council ApprovalHaving discussed the full-length versions of the business plan with, and having received guidance thereon form Council, Management nowrespectfully presents this Executive Summary of the 2007/8 business plan for endorsement and approval by Council.INSETA Sector Skills Plan - page 63

CONTACT US:Ground FloorNorth WingOakhurst11 St. Andrews RoadParktownJohannesburgPO Box 32035Braamfontein2017Tel: +27 11 544 2000Fax: +27 11 484 0862E-mail: insetacallcentre@inseta.org.zaWebsite: www.inseta.org.zaCall Centre: 086 113 0013J3953 Paprika Graphics 0860 7277452