Sector Skills Plan : 2011 UPDATE

Transcription

1 Sector Skills Plan : 2011 UPDATE

2 Purpose Inseta s purpose is to grow the pool and quality of scarce and critical skills in the insurance sector, enhancing the sector and supporting the country s transformation. Values Vision Partner to enable others Form strategic partnerships Be an employer of choice Consult and collaborate with stakeholders Lead with vision Develop contemporary solutions to guide the industry Listen, learn, influence and shape Deliver quality Results for real impact Value for investment Touch lives Make a difference Leave an enduring legacy Inspire trust Transparent Reliable and consistent Accountable VISION: In 2013, INSETA will be: Acknowledged as education and training thought leaders and enablers - the most effective SETA Have a highly esteemed reputation as being integral to the insurance sector s growth Demonstrate how a truly transformed organisation should and does operate Have grown the talent pool to levels where the skills shortage is no longer critical Have a comprehensive research base on international trends and best practices Delivering quality in all 9 provinces

3 Sector Skills Plan : 2011 UPDATE REPUBLIC OF SOUTH AFRICA

4 Table of Contents Acronyms and Abbreviations Acknowledgements Foreword Executive Summary Chapter 1: Introduction: Inseta, Government and the Insurance and Related Services Sector Overview Of Inseta Legislative Framework And Other Mandates Within Which Inseta Functions National Skills Development Strategy Iii The National Policy Agenda Vs Global Forces Overview The Medium-Term Strategic Frameworks strategic Priorities The New Growth Path And Skills Accords Other Related Policy Profile Of The Sector The Insurance Subsectors and Employers in the Sector Employers And Employees In The Sector Organisation And Employee Provincial Spread...24 Chapter 2: Economic Outlook, Performance and Drivers of Change Chapter Overview Introduction Macroeconomic Outlook Swot And Risk Analysis Sustainability: Building A Resilient Short-Term Insurance Industry In South Africa Market Value Forecasts Market Segmentation Insurance As Proportion Of Gdp Subsectors Of The Insurance And Related Services Industry Short-Term Insurance Long-Term Insurance Health Care Benefits Retirement Funds And Pension Funds Investment And Unit Trusts Intermediaries Funeral Insurance Reinsurance And Alternative Risk Transfer Risk Management The 2020 Landscape Megatrends And Challenges Industry Convergence Growing Middle Class Regulation Social Media And Technology Drivers Of Change Towards Non-Sector-Specific Drivers Of Change Sector-Specific Drivers Of Change Legislative Issues Financial Advisory And Intermediary Services Act Financial Intelligence Centre Act Solvency Assessment And Management Consumer Protection Act Treating Customers Fairly National Health Insurance Plan The Pension Funds Act General Skills Implications Of The Unfolding Landscape Concluding Remarks...59 Chapter 3: Skills Supply And Demand, In The Insurance And Related Services Industry Overview Introduction Research Methodology Analytical Approach: Labour Market Analysis The Supply Of Skills Supply Of Skills From Secondary School And Further Education Training Institutions Supply From Tertiary Institutions Occupationally Directed Skills Supply To The Insurance and Related Services Sector Training Interventions For Supply And Skills Demand In The Insurance Sector...67

5 3.6 The Demand For Skills Inseta: Workplace Skills Plan Data Skills In Demand According To Inseta Wsp Data Industry Analysis Supply And Demand Dynamics For Specific Occupational Fields Supply And Demand Dynamics: Risk Management Supply And Demand Dynamics: Financial Advisory Occupation Supply And Demand Dynamics: Actuary Supply And Demand Dynamics: Administration And Sales Supply And Demand Dynamics: Insurance Advisory Supply And Demand Dynamics: Underwriting Supply And Demand Dynamics: Financial Management Concluding Remarks...91 Chapter 4: Scarce And Critical Skills Introduction Scarce Skills In Insurance Scarce Skills List Critical Skills Top Prioritised Critical Skills Critical Skills Emerging From The 2020 Landscape Concluding Remarks...98 Chapter 5: Strategic Framework Introduction Inseta s Strategic Focus Key Assumptions Underlying the Strategic Focus Development of the Strategic Plan Alignment of the INSETA Strategic Plan to the Sector Skills Plan NSDS lll Outcomes Conclusion References Sector Skills Plan

6 List of Figures Figure 1-1: Figure 1-2: Figure 1-3: Summary of industry employers 2011 (levy-paying and non-levy-paying)...22 Employees in the sector, based on workplace skills plans and annual training report submissions...23 Geographical distribution of employees of registered INSETA levy-paying companies in the sector, Figure 3-3: Number of employees per occupational category based on WSP and ATR submissions from INSETAregistered organisations...66 Figure 3-4: Annual training conducted by employers in 2010 according to occupational class (INSETA WSP)...67 Figure 3-5: Skills in demand according to INSETA WSP, Figure 1-4: Racial profile of employees from registered companies with INSETA, Figure 3-6: The greatest skills shortages experienced by the insurance and related services industry, according to PWC...70 Figure 1-5: Age distribution of employees from registered INSETA levypaying organisations, Figure 3-7: Occupations and skills that are most in demand for occupational fields in the finance sector...71 Figure 1-6: Figure 1-7: Occupational distribution of employees by gender and disability in registered INSETA levy-paying organisations, Racial distribution of employees per occupational class within registered INSETA levy-paying organisations, Figure 2-1: Relatively robust GDP growth expected in Figure 2-2: Figure 2-3: South African insurance market value forecast: ZAR billion, Most common future technologies and focus areas...46 Figure 2-4: Projected mortality rates by race, Figure 2-5: Figure 2-6: Number of job losses/gains (from fourth quarter of 2010 to second quarter of 2011)...50 Global climate change vulnerability...51 Figure 3-1: Grade 12 pass rates from 2003 to Figure 3-2: Grade 12 pass rates in mathematics in 2009 and Figure 3-8: Figure 3-9: Training planned versus training implemented in INSETAregistered companies in The supply of and demand for skills in the financial services sector, Figure 3-10: Supply and demand trends in the risk management occupation...76 Figure 3-11: Supply and demand of skills levels in the risk management occupation...77 Figure 3-12: Supply and demand of skills levels in the financial advisory occupation...78 Figure 3-13: The supply and demand of skills levels in the financial advisory occupation...79 Figure 3-14: Skills supply and trends within the actuary occupation...80 Figure 3-15: The supply and demand of skills in the actuary profession...81 Figure 3-16: Skills supply trend in the administration and sales occupation...82

7 List of Tables Figure 3-17: The supply and demand of skills levels in administration and sales...84 Figure 3-18: Supply and demand trends of the insurance advisory occupation...85 Figure 3-19: The supply and demand of skills levels in the insurance advisory occupation...86 Figure 3-20: Supply and demand trends of the underwriting occupation...87 Table 1-1: Global forces vs South African policy imperatives Table 1-2: Table 1-3: Table 1-4: The impact of the strategic priorities on skills development in the insurance and related services sector Number of employers registered with INSETA by SIC codes Small, medium and large organisations in the insurance and related services sector, Figure 3-21: The supply and demand of skills levels in underwriter occupations...88 Table 1-5: Number of employees at small, medium and large registered organisations with INSETA, Figure 3-22: Supply and demand trends of the financial management occupation...89 Figure 3-23: The supply and demand of skills levels in financial management occupations...90 Figure 4-1: Scarce skills occupational categories in the insurance sector for Table 2-1: South African economic activity, Table 2-2: Table 2-3: Table 2-4: SWOT analysis of the South African insurance and related services sector South African insurance market value: ZAR million, South African insurance market value forecast: ZAR million, Table 2-5: South African insurance market segmentation: percentage share, by value, Table 2-6: Life expectancy in South Africa by age Table 3-1: Data source and labour market information provided Table 3-2: Supply of skilled labour from tertiary institutions, Table 3-3: Factors influencing occupational demand Table 3-4: Number of career seekers and recruitment difficulty per occupation Table 4-1: Scarce skills in the insurance sector Table 4-2: Critical skills required Sector Skills Plan

8 Acronyms and Abbreviations ABET... Adult Basic Education and Training ART...Alternative Risk Transfer ASISA...Association for Savings and Investment South Africa ATR...Annual Training Report B-BBEE... Broad-Based Black Economic Empowerment BEE... Black Economic Empowerment BMI... Business Monitor International CA...Chartered Accounting CAGR... Compound Annual Growth Rate CBO...Community-Based Organisations CEO...Chief Executive Officer CJI... Career Junction Index CMS...Council of Medical Schemes CPA...Consumer Protection Act CPD... Continuous Professional Development CRISA... Code for Responsible Investing in South Africa CRM... Customer Relationship Management CSS...Customer Satisfaction Survey DB... Defined Benefit DC... Defined Contribution DFA... Dynamic Financial Analysis DHET...Department of Higher Education and Training DNT... Department of National Treasury DOE...Department of Education DOL... Department of Labour DTI... Department of Trade and Industry EC... Economic Capital ERM...Enterprise Risk Management ESG...Environmental, Social And Governance (Risks) ESSA...Employment Services for South Africa ETQA... Education and Training Quality Assurance Body FAB...Financial Aid Bureau FAIS...Financial Advisory and Intermediary Services FCR...Financial Condition Reporting FET... Further Education and Training FETI... Further Education And Training Institution FETMIS...Further Education Management Information System FIA...Financial Intermediaries Association FICA...Financial Intelligence Centre Act FPI... Financial Planning Institute FSB... Financial Services Board FSC... Financial Sector Charter FSP... Financial Service Provider GDP...Gross Domestic Product GDS... Growth Development Summit HEMIS...Higher Education Management Information System HET... Higher Education and Training HETI... Higher Education and Training Institution HRDSA...Human Resources Development Strategy for South Africa IAIS...International Association of Insurance Supervisors ICT... Information and Communication Technology IMF...International Monetary Fund INSETA... Insurance Sector of Education and Training Authority IOSA...Institute of Sectoral Occupations LEI... Leading Indicator LFS... Labour Force Survey LMA... Labour Market Analysis LMI... Labour Market Information LOA...Life Offices Association MMI...Momentum and Metropolitan Holdings MTEF... Medium-Term Expenditure Framework MTSF... Medium-Term Strategic Framework NCV... National Certificate Vocational NEDLAC... National Economic Development and Labour Council NGO...Non-Governmental Organisation NGP... New Growth Plan NHI...National Health Insurance NPC... National Planning Commission NQF...National Qualifications Framework NSA...National Skills Accord NSC... National Senior Certificate NSDS... National Skills Development Strategy NSF... National Skills Fund NSSF...National Social Security Fund NT... National Treasury OECD...Organisation for Economic Cooperation and Development OFO...Organising Framework for Occupations PFMA...Public Finance Management Act 8

9 Acknowledgements PIVOTAL... Professional, Vocational, Technical and Academic Learning POA... Principal Officers Association of South Africa PRI... Principals for Responsible Investment PWC... PricewaterhouseCoopers QCTO... Quality Council for Trades and Occupations QES...Quarterly Employment Survey QLFS...Quarterly Labour Force Survey RAF... Road Accident Fund RPL...Recognition of Prior Learning SAIA...South African Insurance Association SAIRR... South African Institute of Race Relations SAM... Solvency Assessment and Management SAQA... South African Qualifications Authority SARS... South African Revenue Services SDF... Skills Development Facilitator SDL... Skills Development Levy SDL Act... Skills Development Levy Act SETA... Sector Education and Training Authority SIC...Standard Industrial Classification SLA... Service Level Agreement SMME... Small, Medium and Micro-Enterprises SSP...Sector Skills Plan TCF...reating Customers Fairly USDA...United States Department of Agriculture WSP... Workplace Skills Plan Our appreciation goes to the Insurance Sector stakeholders and partners, for their support and dedication to the development and finalisation of this 2011 Sector Skills Plan. A special thanks to the INSETA Sector Skills Planning Committee members and the INSETA Board Sector Skills Planning task team for their guidance and support, as well as to the INSETA Chief Executive Officer, Chief Operations Officer, Management and Staff, for their contributions toward the finalisation of the Sector Skills Plan. Adeline Singh Manager: Skills Planning, Research and Development 9 Sector Skills Plan

10 Foreword The Insurance Sector Education and Training Authority (INSETA) presents the draft annual Sector Skills Plan for the period 2011/12. The Sector Skills Plan (SSP) has been prepared in accordance with the National Skills Development Strategy III (NSDS III) - for the period 2011 to The main purpose of the SSP is to depict the sector under the jurisdiction of INSETA, to analyse the demand for and supply of skills to the sector, and, on the basis of this analysis, to determine the skills needs and the skills development priorities for the sector. Strategies for addressing the skills needs and meeting the NSDS lll targets, also form part of the SSP. In addition, the New Growth Path (NGP) and National Skills Accord (NSA), as well as other key strategic documents like the Medium- Term Strategic Framework (MTSF), policy documents from National Treasury (NT), and the National Planning Commission (NPC), have served as a foundation for the development of this SSP. The SSP has been considerably informed by the latest available and relevant research reports and South African policies. INSETA has also made a substantial investment in purchasing the latest research reports on economic and other trends that have an effect on the insurance and related services industry. The projections and forecasts for the industry up to 2014, are drawn from a series of authentic industry reports. Key economic indicators specific to the insurance and related services industry, are used to measure overall performance of the industry. Statistics for typical insurers are also provided. Other data sources are drawn from various research projects commissioned by INSETA and the insurance and related services sector professional associations, as well as surveys, in order to identify trends influencing the sector - especially those directly linked to skills development. INSETA wants to be seen as a leader for the sector in terms of education, training and development initiatives. With this in mind, INSETA would like to use this SSP to enable the insurance and related services sector, to move into the future with the necessary skills required to grow and sustain the sector. Like every other sector, the insurance and related services sector has had its fair share of challenges, but what makes this sector so resilient is its unrelenting adaptation to global as well as economic, social and technological changes. In October 2011, INSETA conducted further broad-based consultative processes with various stakeholders falling within the insurance subsectors. Furthermore, INSETA has convened a sector advisory group, which encompasses a team of highly skilled sector experts and skills development specialists that have substantially contributed to each chapter of the SSP. By March 2012, INSETA would have received the endorsement of every chapter of this SSP, not only by the INSETA board, but also by these sector specialists, who have been the driving force behind the finalisation of this document. This will ultimately become a document for the sector, by the sector. 10

11 Executive Summary In accordance with SSP requirements, the SSP is a five-year strategic framework, with clear deliverables that will allow the insurance and related services sector to: Determine skills development priorities after an analysis of skills demand and trends, and the supply of skills within the sectors. Identify a set of sector-specific objectives and goals that will meet sector needs, economic or industrial sector growth strategies, and meet scarce and critical skills in the sector. Identify strategies to address these objectives and goals. Identify activities that will support these strategies. Implement and resource these activities. Report on performance in relation to the objectives and goals. Look beyond the planning period, to identify new skills that could be required in The SSPs have shown how the insurance and related services sector has transformed over the years, not only in terms of the racial complement, but also in its increasing commitments towards skills development initiatives. It is expected that the SSP will provide valuable insights towards making education, training and development more relevant and responsive to the human capital needs of the insurance and related services sector, as well as contributing to meeting the priorities of the NSDS III. If the widely held assumption is accepted that increasing investment in education, training and research is the route for South Africa to improve living standards, expand opportunities, create prosperity and ensure national economic competitiveness in the global economy, then the role and function of skills development agencies such as the Sector Education and Training Authorities (SETAs), are fundamental in achieving these goals. As a statutory body charged with driving skills development in the insurance and related services sector, INSETA is uniquely positioned to serve as a mechanism to improve the skills base of the sector. It should be noted that a significant challenge encountered by the research team, was determining skills supply and demand. There are data constraints that negate the possibility of making precise forecasting estimates. For instance, the Quarterly Labour Force Survey (QLFS) issued by Statistics South Africa, incorporates insurance data under the broader sector of financial services. Moreover, data are kept in very broad occupational levels, which are of limited value in identifying specific occupational needs. South Africa also does not have a functional national labour market information system. This is a serious problem for a country with active labour market policies. The absence of this facility restricts researchers from optimally converting data into labour market intelligence. The lack of relevant, real-time statistics implies that public spending in education, training and research is exposed to the inevitable risk of over- and under-investments. Furthermore, where data are available, such are dated or of questionable quality. In such a scenario, research and decision-making becomes highly problematic, because sound decision-making requires credible, relevant and up-to-date data. This SSP has five objectives: to analyse the economic performance and outlook of the sector; to review the labour market profile of the sector; to explore factors driving change in the sector, including risks and legislative forces; to analyse skills supply and demand; and to present a strategic plan to INSETA to address the skills development priorities of the sector. These objectives are addressed in five separate chapters, and have been reviewed as part of the annual (2011/12) SSP review process. The objectives are now articulated as follows, given the review from the initial SSP: Chapter 1 analyses the economic performance and outlook of the insurance and related services sector. Projections and forecasts for the industry up to 2014 are given, based on a number of national and international research reports produced by leading firms in the industry. Key economic indicators are used to measure overall performance and the rating of the domestic insurance industry. The drivers of change are also included in this chapter, in accordance with the guidelines of the Department of Higher Education and Training (DHET). Key drivers of change, both locally and internationally, and the associated skills development implications, are identified. Both sector-specific and non sector-specific change drivers are discussed. For example, a significant change driver is the proliferation of legislation towards reconfiguring the insurance landscape. These efforts are part of a process to make the sector more effective and efficient in its quest to support national social and economic goals. 11 Sector Skills Plan

12 Executive Summary continues Two drivers of change that were not fully covered in previous SSPs are: The green/environmental and sustainability agendas. Social media, which has a major impact on the insurance industry. This chapter has been considerably informed by the latest available and relevant research reports, as well as the latest available South African policies. In 2015, the South African insurance market is forecast to have a value of R391 billion, an increase of 55.3% since Global forces and the South African policy landscape were found to be contradictory relative to key imperatives such as job creation, and it is argued that a customised South African solution should be pursued. Chapter 2 presents the labour market profile. Issues such as employment trends, the size of the workforce, the number of companies or enterprises, occupational levels (specifically the trends and shortages by Organising Framework for Occupations (OFO) categories) and skills intensities are addressed. The major challenges facing the sector in terms of labour availability are identified. The chapter also discusses equity issues, which remain a persistent factor in the sector, as well as regional variations and rural needs. To compensate for current weaknesses pertaining to data available in the labour market, the services of a labour economist have been secured. Further updates of data will be included in the March 2012 SSP update. Chapter 3 outlines the skills demand and supply in the insurance and related services industry. As an industry with a fairly high education and skills level, the insurance and related services industry needs to take proactive action, especially from a longer-term perspective, to ensure that the required skills demand is addressed. Skills in demand are within the clerks, administrators, sales workers, managers and professionals occupational categories. A noticeable trend is that the skills that are both in demand and scarce, are intermediate and high-level skills within occupational categories. Skills demand for the future landscape towards 2020, will result in an increased demand for skills in areas on strength of the drivers of change, that were not fully taken into account in previous SSPs. The 2020 landscape calls for new skills in areas such as the green agenda, social media and the growing black middle class. This chapter lays a solid foundation for skills demand and supply, in order to address the issues of scarce and critical skills in chapter 4. While much training has been conducted in the clerical and administrative category, and these occupations still show a demand, more attention must be paid to direct skills development interventions, in line with the projected growth of the sector. This implies that INSETA must focus on developing specific skills within the professionals category - for example, actuaries and risk managers. To further support this area of focus, the supply and demand dynamics per skill/occupation clearly show that the demand trend is towards skilled individuals in occupations, as opposed to entry-level or junior skills. In this instance, skills development interventions must be strategically directed at upskilling entry-level and junior skilled individuals within these occupational categories. This requires a concerted collaboration between INSETA and their levy-paying organisations. In certain instances, like that of actuaries, future skills development planning is critical in ensuring a supply to the expected growing future demand, while at the same time relieving the current demand for upskilling existing employees. It can be concluded that the increase in the professional standard of occupations in the insurance and related services industry, has a significant impact on the supply of skills in accordance with demand. Despite these challenges, INSETA is well prepared to proactively address current and long-term skills shortages and requirements. Chapter 4 explores scarce and critical skills from a labour market perspective. Deficits in some types of occupations are identified and evaluated, in order 12

13 to emphasise the skills development needs of the sector. The focus of the chapter is on the following issues: Critical skills are aligned to existing major occupational classes, but also to change drivers that make the biggest skills impact, for example green skills. The skills gap in terms of scarce and critical skills that are required in the sector. The skills supply is predominantly determined by the INSETA Workplace Skills Plans (WSP) and Annual Training Report (ATR) data. Labour Market Analysis (LMA), involving the interpretation of Labour Market Information (LMI) to produce labour market intelligence. LMI comprises signals and indicators that are collected and interpreted to provide insight into the labour market. The specific signals and indicators used and interpreted, are the skills in supply, the skills in demand, labour recruitment patterns such as the Career Junction Index (CJI), training provision, and workplace skills plans. LMA, facilitating a more accurate interpretation of the supply of, and demand for, scarce and critical skills. Analysing the INSETA WSP/ATR data, providing a more accurate determination of the scarce and critical skills, by tracking skills training conducted (supply), and comparing it against demand. The following conclusions are made: Scarce skills in the sector still remain within the big five occupational categories, namely professionals, managers, clerical and administrative, sales, and technicians. While much training has been conducted in the clerical and administrative category, and these occupations still show a demand, more attention must be paid to direct skills development interventions, in line with the projected growth of the sector. This implies that INSETA must focus on developing specific skills within the professionals category - for example, actuaries and risk managers. To further support the above point, the supply and demand dynamics per skill/occupation, clearly show that the demand trend is towards skilled individuals in occupations, as opposed to entry-level or junior skills. In this regard, skills development interventions must be strategically directed at upskilling entry-level and junior skilled individuals within these occupational categories. This requires a concerted collaboration between INSETA and their levy-paying organisations. In certain occupations, like actuaries, future skills development planning is critical to ensure a supply to the expected growing future demand, while at the same time relieving the current demand for up-skilling existing employees. Chapter 5 was completely rewritten and offers a set of deliverables, presented in the form of a strategic plan that encompasses the skills development priorities for INSETA. Clear deliverables have been formulated within a challenging 5 year delivery period. These deliverables, which are aligned to the NSDS III priorities, are derived from the key findings of the preceding chapters, and provide the foundation for future skills development interventions. As outlined in Chapter 1, it was decided to study the anticipated insurance landscape up to 2020, as it was argued that the current strategy should have a longer-term view. The effective delivery of skills required in 2020, should therefore commence during the planning period of It was found necessary to ensure delivery towards 2020, during this SSP planning period. 13 Sector Skills Plan

14 Executive Summary continues The INSETA strategic objectives will be linked to four key programmes, that include the strategic focus areas for NSDS III. These programmes are: Programme 1: Research and benchmarking. Programme 2: Youth education and development. Programme 3: Addressing the need for scarce and critical skills. Programme 4: Small and micro-enterprise development. These 4 strategic programmes for INSETA and the insurance and related services sector, are viewed as a firm basis to address future skills needs. The following key issues have emerged, inter alia: There is a pressing need for training and development interventions to be directed at improving research skills in the sector, as confirmed during the research process, especially from a longer term perspective. The current shortage in labour market information, constitutes a notable barrier in the way of decision-making and policy development in the sector. Advances in technology have presented noticeable challenges for the sector. International trends in online insurance sales appear to be driving change in the sector. From this change, certain skills needs have emerged. Based on current trends, training interventions must strive to improve IT and ICT skills, in order to leverage the current growth of technology. The emerging green economy has recently received much attention. Growing environmental concerns, coupled with ever-changing consumer needs and constantly changing risks, mean that skills development in this area has become a priority area, and INSETA s training should be reflective of this. In providing training programmes to address the skills needs, INSETA will forge relationships with the Institute of Sectoral Occupations (IOSA), and with the insurance and related services sector and other partners. New skills for which delivery mechanisms are not currently in place, will be required for the 2020 insurance landscape. It is essential that provision be made for skills that will be required as a result of technological innovation, and other parameters that emerged from the drivers of change. It is clear that the delivery plan is well informed by the preceding chapters, as a result of a highly focused research process. 14

15 Chapter 1: Introduction: Inseta, Government and the Insurance and Related Services Sector 15 Sector Skills Plan

16 Chapter OVERVIEW OF INSETA INSETA aims to grow the pool and quality of scarce and critical skills in the insurance and related services sector, thereby enhancing the sector and supporting the country s transformation agenda. INSETA embarks on skills development programmes in the form of Learnerships, Bursaries, Internships, Skills programmes and Special projects. INSETA is committed to growing the professionalism of the sector, by supporting it in its educational and skills development requirements INSETA FUNDS Skills development grants can be claimed back from INSETA if a company pays a skills development levy. From the skills levy paid by employers to SARS, the following payments are made: 1. The National Skills Fund (NSF) is allocated 18% of the levies, and the fund is used for specifically identified training projects. 2. The South African Revenue Services retains 2% as a handling fee. 3. SETAs receive 80% of the levy paid to SARS, from which the mandatory and discretionary grants are paid. This amount is divided into three, for payment of the following: o 50% for Mandatory Grants o 20% for Discretionary Grants, e.g. Learnerships, Internships, Bursaries and specially designed projects for the sector. o 10% for the SETA s administrative costs INSETA LEARNERSHIPS A learnership is a structured learning programme that consists of a theoretical and a practical component, and leads to a qualification that is registered on the National Qualification Framework (NQF). Learnerships are where learners spend time working under the guidance of a skilled worker or mentor in the workplace, and they also learn theory. A learnership is regulated by a learnership agreement between an employer, a learner, and a training provider. An employer can enter into a learnership agreement with an existing employee or with a learner who is not an employee. In summary, a learnership provides a learner with an excellent opportunity to gain experience in the labour market, whilst studying towards a qualification. It also helps with personal development and increases self-esteem, and the learner receives an allowance from INSETA if they were previously unemployed INSETA INTERNSHIPS AND WORK-BASED EXPERIENCE PROGRAMME Internship Programmes These are structured, work-based programmes designed by Employers, and aimed at affording unemployed graduates and those who have completed National Diplomas, with work experience in companies in the insurance sector. Internship Programmes give students workplace experience or an opportunity to practice the work skills that they have studied and will practice in future, in their chosen occupations. Training Providers are normally not involved, unless the employer has products that the Interns need to be trained on. An Internship is not a Learnership, and does not lead to a formal qualification. It is a work-based experience programme Work-Based Experience These programmes are aimed at students who are enrolled at a tertiary education institution (FET Colleges) for a SAQA-registered qualification, and are required to obtain practical experience as part of their study programme before they can acquire a certificate. In both cases Interns should be unemployed and between the ages of 18 and 35 years. 16

17 1.1.4 INSETA BURSARIES Applications for bursaries are considered in accordance with the INSETA critical and scarce skills, as identified in the Sector Skills plan. Only bursary applications for studies through Accredited Learning Providers are considered. Levy-paying companies registered with INSETA can access bursaries when the bursary window opens each year. INSETA bursaries are given for a maximum period of 1 year INSETA PROJECTS Types of Discretionary Grants There are three types of discretionary grant projects that INSETA will periodically make available a Funding windows INSETA will determine the criteria for a particular area in which funding is to be made available, e.g. the establishment of a Centre of Excellence for the insurance sector. An invitation to apply for funding will be published, and applications will be evaluated against the criteria. A grant may then be made if the applicant(s) meet(s) the criteria. INSETA will then enter into a funding agreement with the successful applicant b Strategic Projects INSETA will, in consultation with its stakeholders, Council or INSETA management, identify specific interventions that will have benefit for the sector and which will support the National Skills Development Strategies and INSETA s strategic priorities. These interventions will be addressed through projects that are managed by INSETA staff, and which are funded by discretionary funds. Where necessary, projects will be outsourced to specialist providers c Joint Ventures and Strategic Partnerships INSETA will enter into strategic partnerships with project delivery partners, as guided by national priorities and sector imperatives. These projects are submitted to the INSETA Finance and Administration Committee for consideration and recommendation to the INSETA Board. 1.2 LEGISLATIVE FRAMEWORK AND OTHER MANDATES WITHIN WHICH INSETA FUNCTIONS The table below represents the Acts/other mandate documents, which predominantly direct and influence INSETA with respect to skills development. TABLE 1.1 POLICY DOCUMENTS AFFECTING SKILLS DEVELOPMENT Act/Other Mandate Documents Purpose Of The Act/Other Mandates The Skills Development Act (as amended) Provides Institutional Framework to devise and implement national sector and workplace strategies, to improve the skills of the South African workforce. Skills Development Levies Act, 1999 Provides for the imposition of the skills development levy and matters related thereto. FAIS Fit and Proper (FSB) The Act sets out the fit and proper requirements for financial services professionals. New requirements include compulsory Regulatory Examinations, with strict timeframes. National Qualifications Framework Act, 2009 To provide for the National Qualifications Framework. National Skills Development Strategy III (NSDS III) To create a skilled and capable workforce that shares in, and contributes to, the benefits and opportunities of economic expansion and an inclusive growth path. National Skills Accord To provide defined commitments which talk to the National Growth Path strategy objective of creating five million new jobs by Sector Skills Plan

18 chapter 1 continues NATIONAL SKILLS DEVELOPMENT STRATEGY III The third version of the National Skills Development Strategy (NSDS III), has changed the focus from top-down to interactive skills planning. INSETA, therefore, follows a more consultative approach to plan future skills. A new performance orientation is viewed as a more practical approach, and the strategy presented in Chapter 5 contains clear deliverables and time frames based on the principles of goal-setting and success indicators. Specific attention is also paid to funding levers such as PIVOTAL (Professional, Vocational, Technical and Academic Learning) grants. Considerable effort was therefore made,, to align this SSP with the specifications and requirements of NSDS III THE NATIONAL POLICY AGENDA VS GLOBAL FORCES OVERVIEW In a rapidly changing industry such as the insurance and related services sector, global forces have a major impact on the way in which business is done. Through globalisation, factors such as competition become more important. Amid the global forces, the insurance and related services industry in South Africa is also subject to the implementation of the South African policy agenda. The following contradictions between global forces and the South African policy imperatives, have been identified: Table 1-1: Global forces vs South African policy imperatives Global forces Reduced employment in the insurance and related services industry, as a result of technological developments and legislation. Market forces. Labour market forces. Political transformation is not always affecting the sector. Integrated regulatory control. South African policy imperatives Increased employment levels and job creation are required. Historical inequalities need to be addressed. B-BBEE needs to be accelerated. Imperative political transformation directly affects the sector. Regulatory control is uncoordinated. The above assessment of South Africa s position confirms work done by the National Planning Commission, especially in terms of the economic realities of South Africa. The assessment is discussed under section 2.11: Drivers of change. It is therefore essential that a customised South African solution be implemented as strategy, as in Chapter 5. Although South Africa has to find solutions to solve conflicts between global demands and South African policy, the realities of Africa, with South Africa as leading player in the African content, should also not be overlooked THE MEDIUM-TERM STRATEGIC FRAMEWORKS STRATEGIC PRIORITIES The Medium-Term Strategic Framework (MTSF) sets the scene for major transformation in South Africa, with specific impacts on skills development. Against the forces of the global landscape, it will be very challenging to meet the objectives of the MTSF, as set out in Table 1-2, below: 18

19 Table 1-2: The impact of the strategic priorities on skills development in the insurance and related services sector Priority 1. Speeding up growth and transforming the economy to create work which is sustainable within the insurance sector. 2. Massive programme to build social and economic infrastructure 3. Comprehensive rural development strategy, linked to land and agrarian reform and food security. 4. Strengthening the skills and human resource base. 5. Improving the health profile of all South Africans. 6. Intensifying the fight against crime and corruption 7. Building cohesive, caring and sustainable communities 8. Pursuing African advancement and enhanced international cooperation. Impact on skills development in the insurance and related services sector This priority will be very challenging in the current and legislative economic climate, but all efforts should be made to pursue it, in the best interests of all stakeholders. Innovative solutions will be required to position the insurance and related services industry so as to meet this objective. This priority has to include innovative solutions on how to address the regulatory requirements for entry-level qualifications, and people who have to work under supervision due to regulatory requirements. The solutions must be cost-effective and time-efficient. This priority is also very challenging in the insurance environment, but is part of the skills development plan. Economic and social infrastructure is technically not part of the insurance industry s agenda, but cannot be ignored. The increased Internet coverage that is a possibility in rural areas, is one alternative that should be exploited, but also micro-insurance and consumer education. The insurance and related services industry is technologically driven, which makes this option more realistic. The primary focus of this SSP is aligned towards achieving this priority in the insurance and related services sector, in accordance with the changing landscape outlined in this chapter. Most empowerment efforts should be aligned with improved health, especially pertaining to pandemics such as HIV/AIDS and non-communicable diseases (lifestyle-related) - through education. The National Health Insurance (NHI) will make a further contribution over the long-term, as it is introduced. The insurance and related services industry operates in an electronic environment, where the utmost care should be taken with regard to corruption. However, crime affects claims, security claims campaigns, and insurance fraud. The insurance and related services industry should also focus on community development through the services it renders, including through consumer education. A financial planner can make a significant contribution in this regard. Managing the contradictions between the South African environment and global forces, forms an integral part of this SSP. More focus on key drivers such as increased B-BBEE, should be reflected in the SSP. Another option is to consider international regulation and requirements of a G20 country, which is a much greater concern than B-BBEE. 9. Sustainable resource management and use. Resource optimisation is of critical importance in the insurance industry, especially from a technological application perspective. 10. Building a developmental state, including improvement of public services and strengthening democratic institutions The successful implementation of the entire SSP should support the realisation of this priority, which directly impacts and compounds claims. Improving skills in the public sector should be a sector imperative. 19 Sector Skills Plan

20 chapter 1 continues THE NEW GROWTH PATH AND SKILLS ACCORDS A press release dated 13 July 2011 states: Government has coordinated a process of social dialogue on the New Growth Path (NGP), at the National Economic and Development Labour Council (NEDLAC), to promote implementation of the policy framework. This process brings together government departments, organised labour, organised business and community groups, to engage on key areas identified in the NGP. All constituencies have committed to the NGP goal of five million new jobs by According to Accords 1 and 2, Representatives of business, organised labour, the community constituency and government have agreed to partnerships to achieving the New Growth Path of 5 million new jobs by The creation of 5 million new jobs is indeed challenging, especially in a rapidly changing industry such as the insurance sector. Global forces result in more work to be done by fewer people, and this is viewed as a real challenge within the realities of a job creation policy. The highly regulated environment and entry requirements should also not be overlooked. However, innovation is high on the international insurance agenda, and in South Africa innovative solutions to create new jobs will be required. These solutions would include a skilled labour force to meet INSETA s response to the NGP, and initiatives like supporting regulatory requirements, SMME development, and new business leading to employment creation OTHER RELATED POLICY It is clear that the South African policy landscape makes sufficient provision for long-term skills planning to improve the quality of life of people, as well as to improve economic and social development. A document that is also of great significance, is the Department of Higher Education s Strategic Plan , which sets out clear deliverables. The Human Resources Development Strategy for South Africa (HRDSA) ( ) also plays a significant role in skills development required by industry. The longer-term focus of this strategy also informs the 2020 orientation of INSETA, especially in view of the following focus of the strategy: Government s economic policies require human resource development on a massive scale. Improved training and education are fundamental to higher employment, the introduction of more advanced technologies, and reduced inequalities. Higher labour productivity will be the result of new attitudes towards work and especially new skills in the context of overall economic reconstruction and development. New and improved management skills are urgently required. (HRDSA, 2009). Concerted efforts were made to fully align the INSETA SSP with all relevant policies and legislation. 20

21 1.3 PROFILE OF THE SECTOR THE INSURANCE SUBSECTORS AND EMPLOYERS IN THE SECTOR The insurance and related services sector is classified into ten categories of the Standard Industrial Classification (SIC) codes. These include (Table 1-3) the following subsectors under insurance and related services: Table 1-3: Number of employers registered with INSETA by SIC codes SIC code SIC code description 2010 employers 2011 employers LPE 2 NLPE 3 LPE NLPE Unit Trusts (or collective investments) Risk Management Insurance and Pension Funding, except compulsory social security Life Insurance Pension Funding Health Care Benefits Administration Short-Term Insurance Funeral Insurance Reinsurance Activities Auxiliary to Insurance and Pension Funding (including brokers/ intermediaries) Total LPE - Levy-paying employers 3 NLPE - Non-levy-paying employers Source: INSETA Skills System, EMPLOYERS AND EMPLOYEES IN THE SECTOR In the 2010/11 financial year, INSETA s subsectors comprised levy-paying organisations, and non levy-paying employers. For INSETA s financial year 2011/12, the number of levy-paying employers declined by 141 companies. This was mostly attributed to mergers and acquisitions, liquidations, companies transferring out of INSETA, and a decline in organisations payrolls to below the levy-paying threshold. Despite this, INSETA s levy income has increased steadily due to the exemplary performance of the insurance and related services sector, and the growing number of companies that have transferred to INSETA from other SETAs. There is currently a total of registered employers from the insurance and related services sector, registered with INSETA. 21 Sector Skills Plan