Seamless risk protection for mega-projects: Uganda

Vuyo Rankoe, head: Niche Business at Santam.

Infrastructure development is booming across Africa, due in no small part to significant economic growth and foreign direct investment. In line with this, and as part of Santam’s strategic expansion into Africa in partnership with Sanlam Emerging Markets, Santam Specialist Business has launched a Seamless insurance solution which offers comprehensive risk protection for mega-projects across Africa. In this series of articles, we speak to Vuyo Rankoe, head: Niche Business at Santam, and explore the opportunities in individual African countries for infrastructure development and the specialist insurance business. This month, the spotlight falls on Uganda.

Infrastructure for a growing economy

With a population of 40 million, Uganda is a poor country that relies heavily on donor and politically motivated funding of large infrastructure projects. The country has only one international airport, no operating rail network and a largely undeveloped road network. It is heavily dependent on hydro-electric power.

Infrastructure projects currently include a standard gauge railway, numerous hydro-electric dams and large road network projects, all of which are funded in part or entirely by donor agencies, or are initiatives by foreign countries such as China. “Funding from the World Bank was stalled in 2016 and the cost of the general elections early last year materially impacted the ability of Treasury to release funds for many projects. Both these situations have eased since the start of 2017 and we are seeing many more projects in start-up phase,” says Vuyo.

Uganda’s specialist insurance market

Historically, the country funding infrastructure projects has insisted that insurance be provided by insurers in that country – this has been a feature of Chinese construction projects, for example. The trend is now changing with Uganda’s requirements for local content now including insurance.

“In the marine sector, the law is explicit in that the insurance of goods being imported to Uganda must be insured by Ugandan insurance entities. This has in the past been completely disregarded, but is now an interesting example of East African unity as Kenya, Tanzania and Uganda are all enforcing the law.”

Vuyo says the overall general insurance market is considered over-taxed, with taxes making policies appear distorted. For example, the compulsory third party vehicle insurance carries taxes that are materially more than the actual premium. “It is not always easy to understand the complexities of doing business in Uganda and that is why we rely on our sister company in Uganda to chart our route through the minefield of tax and regulatory requirements. While the business environment remains complex, we are well-placed to manage the local issues to the mutual benefit of all parties.”

Through SGI Uganda, Santam is well represented in the general insurance space. SGI Uganda now has 5% market share and has rapidly moved to seventh position on the general insurer log. Santam is also licensed to provide all the Santam Specialist Insurance local covers. “We are confident that in 2017, through our arrangement with TIC Uganda, we’ll soon become the number one travel insurance provider in Uganda.”

Why insure with Santam Specialist Business?

Vuyo says mega-infrastructure projects, such as dams, transport infrastructure, and hydro-electric power plants have massive price tags with equally large insurable risks. “They require innovation, a high level of underwriting expertise and the special technical knowledge of a large insurer to effectively mitigate risk.

“Santam Specialist Business provides all these and more. We constitute teams of underwriting managers who are all experts in their respective fields, with a keen focus on entrepreneurial and big-thinking ideas. We are able to identify opportunities or threats to clients and, in turn, offer tailor-made solutions in order to mitigate those risks.”

Opportunities for Seamless Specialist Insurance in Uganda

Vuyo believes convenience and appropriate risk identification are vital when placing cover for complex mega-projects. “However, projects of this size are extremely complex – cover may be required for public liability, professional indemnity, marine insurance, contract works, project delays, assets, travel insurance and riot cover, for example. The basis of our Seamless insurance solution is that it covers all bases of insurance via a single touch-point – the client, whether the insured or an intermediary, does not have to deal with a number of different insurance parties and risk gaps in cover.”

Policies are issued and administered by MIRABILIS Engineering Underwriting Managers, which covers all aspects of a project by distributing comprehensive cover and manages the entire process from policy issuing to claims handling and processing.

“We are marketing our Seamless solution through corporate and commercial broker firms, since clients in the specialist business sector expect to work with intermediaries and insurers that understand their needs and offer bespoke risk management solutions that are appropriate at different stages of their business journey.

“With the increased activity in development and infrastructure projects, Santam’s Seamless insurance solution – the first of its kind in Africa – is perfectly suited to the Ugandan market. The product caters for both medium and large projects and provides clients and brokers with a single policy and single point of contact throughout the project life cycle,” concludes Vuyo.