Faculty of Commerce, Law and Management

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    Life settlements in South Africa: an assessment of the potential for a strong market to develop
    (2013-10-22) Switala, Ryan
    Life settlement, a transaction whereby the policyholder of a life insurance policy sells the future proceeds of the policy to a third party investor, has established itself as a legitimate alternative asset class in the US over the last decade. This research uses the key supply and demand side forces that fundamentally shaped and continue to underpin the US market, as a framework to assess the possibility of a South African life settlement market developing. Insurance product design, market intermediation, regulation, tax legislation, investment markets, investor rationale and more are explored through in-depth interviews with a range of industry experts. Results suggest that, in principle, there is no definitive reason why a South African life settlement market cannot exist. Across some dimensions the South African primary market may be even more conducive to life settlement transactions than the US. However, in aggregate, these are overshadowed by other forces such as greater investment risk, subtle market nuances and some market size inhibitors that combine to significantly dampen the overall likelihood of the development of a strong market.
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    Factors Affecting Kenyan Farmers` Decision to Purchase Micro-Insurance
    (2012-10-02) Forichi, Lovemore
    The objective of this research was to establish factors that affect the decision by farmers in the purchase micro-insurance, with the ultimate goal of making agricultural micro-insurance providers increase their product uptake among farmers. The research was performed in the Narok District of Kenya, which is the bread basket of Kenyan agriculture. Literature review identified 13 key attributes that then formed the composition of the proposition. The focus group method was chosen as the most appropriate research instrument. Focus Group discussions were held and key outcomes were in line with the literature review findings, but with different weights attached to the attributes. The key recommendations are in the majority external influence factors that include: the need for agricultural micro-insurance providers to build trust among their target segment; the need to engage the government institutions as they are the trusted source by the target segment; and the need to tailor make the insurance product and make the price affordable. The individual influences include: the need for enhancement of product knowledge among the target segment; the need to build familiarity with insurance products in general and the need to simplify product offering. The key message is that the farmers in Kenya would like to have an agricultural micro-insurance product that they understand, is reasonably priced, is easily accessible and is distributed by trusted sources.
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    CRITICAL SUCCESS FACTORS FOR INSURANCE COMPANIES IN THE SOUTH AFRICAN SME MARKETS
    (2011-07-14) Muigai, Andrew Kamau
    This study was carried out to determine critical success factors for insurance companies targeting the SME market, for business insurance products. This is expected to benefit both sectors as SMEs require insurance services, especially because of their inherently risky nature. In turn, insurance companies have the potential of increasing their profitability and reducing risk exposure by targeting this growing market, hence creating a virtuous cycle for both industries. The conclusions of this study are drawn from a sample survey of both insurance company managers as well as SMEs operators. The perspectives given by the participants were then contrasted with the emerging literature in this area before drawing very specific conclusions. The research established critical success factors for insurance companies in targeting SMEs as service quality, trust, cost of insurance, effective communication, necessary cover, referral business, the availability of technology and effective sales promotion. In order to build on these critical success factors, insurance companies have to focus on customer satisfaction, relationship marketing, operational excellence, developing well trained employees, leveraging the efficient use of technology, building trust with customers and providing necessary
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    Modelling competitiveness of
    (2011-05-30) Murray, Lizet
    Financial services integration, where a financial services organisation starts to offer products from another financial services sector, has proliferated since the 1980’s and this development is expected to continue into the foreseeable future. Some financial services integrations are considered to be very successful whereas others were less successful or considered to be failures. This study developed a model of enhanced profitability and competitive advantage of financial services organisations when implementing financial services integration. A draft model was developed based on a literature review making use of Fuzzy Cognitive Mapping (FCM). In-depth, semi-structured interviews with 22 respondents were used to obtain the views of financial services analysts, consultants, auditors, executives and senior managers to update the FCM. The FCM was finalised following validation by the research respondents. The key drivers of enhanced competitiveness when integrating a product from another financial services sector are identified as organisational fit, compatible corporate culture, target market alignment, sourcing of appropriate skills when integrating complex or specialist products, operating scale, a strong brand and integrating complementary products.
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    Factors influencing foreign direct investment of South African financial services firms in Sub-Saharan Africa
    (2011-03-28) Charalambous, Harris
    This research investigates the key elements that South African financial services firms consider before making foreign direct investments (FDI) in Sub-Saharan African (SSA) markets. Specifically it aims to establish the order of importance of the key factors influencing FDI as well as understanding the motivation behind these investments and what methods of entry are preferred when these firms decide to enter a new market. The research performed was largely qualitative and used a questionnaire-based descriptive survey method to solicit opinions from key South African financial services firms across all spectra of the industry. Based on responses it appears that South African financial services firms are most strongly influenced by the political and economic stability of the country in question as well as the profitability and long-term sustainability of its specific markets. The degree of available infrastructure in terms of IT and telecommunications as well as the existence of credible financial systems were also viewed as highly important considerations before investing in SSA. Other factors deemed important, but not necessarily critical, included local labour and cultural considerations as well as the volatility of local exchange rates. Factors such as the degree of economic agglomeration, presence of trade incentives, barriers and agreements as well as geographic proximity of the new market did not appear to be a major influence on South African firms expanding into new markets. Given the uncertainty and ambiguity of most SSA markets many South African financial services firms prefer to enter existing markets via a majority stakeholder joint venture with a local partner, or via a new investment if the market does not currently exist. The nature of the financial services firm also seems to influence the iii entry method and once in a new country most firms seem to prefer a full service presence. Additionally, the key motives cited for expansion northward were to broaden revenue bases and improve profit margins as well as to stay close to local customers. With local South African markets becoming cramped many South African financial services firms are looking to SSA for future growth. Given the risks and complexities of conducting business in Africa the findings of this research should be borne in mind by these firms before making critical investment decisions in this regard.