Africa is the new frontier of insurance

Africa is the new frontier of insurance and Aon Corporation, through its newly enlarged presence in South Africa and its network of offices in the sub-continent, is well poised to provide a full spectrum of services to this burgeoning market.

So says Anton Roux, CEO of Aon South Africa, following the recent successful acquisition of Glenrand M.I.B. The acquisition of Glenrand M·I·B by Aon doubles Aon’s market presence in South Africa.

Putting Aon’s expectations for South Africa into perspective, Roux said the country is pivotal in the evolving emergent markets scenario which, in turn, is intertwined with the re-rating of Africa’s prospects as a key global market where no less than six of the ten fastest growing economies in the world are to be found.

“This is on the back of the longest commodities boom in recent times coupled with massive political and socio-economic changes that have altered the face of Africa from one that, in the past, was largely socialist in character to one of open market economies, free enterprise, significant investment opportunities, technological progress and growing sophistication,” he adds.

“In this scenario South Africa is a centre of business gravity in that it is the largest economy on the African continent and is viewed as a crucial platform for accessing the still evolving potential defined by millions of newly emerging middle-class African consumers.

“Furthermore, the country’s gravitas on the world stage has been put into perspective by its role as host for the 2010 FIFA World Cup, which provided it with huge exposure and set to rights many of the misconceptions that lingered about its degree of sophistication and the capacity of its communities and business base.

 

“The country’s importance has been further underlined by its invitation to join the Bric group, now more colloquially known as the ‘Brics’ group of nations and its enhanced international stature, underlined by its membership of the United Nations Security Council and the important roles it plays in bodies such as the African Union.

“Moreover the country remains the key producer of vital minerals, a successful exporter of manufactured goods such as vehicles and a potential host for such sophisticated developments as the large array space telescope.

Against this background multinationals have identified South Africa as their base for the penetration of the greater African market and foreign direct investments reflect this increased interest.

“By the same token South African countries have moved heavily into sub-Saharan Africa in particular post the 1994 elections and have built a powerful presence which has seen associated with economic growth and the creation of business opportunities.

“Large insurers’ growing interest in Africa provides a further indication of the sea change in attitudes towards prospects for the continent and Aon, with its strong representation in 14 African countries, is well placed to meet the insurance needs of various constituencies generated by the bilateral and multilateral business opportunities that are emerging.

“There remains a lingering perception that trade with and investment in Africa is fraught with risk. Fundamentally however nothing is uninsurable provided it’s associated with risk management and adequate scoping of covers such as export short term insurance, political risk, credit cover, marine and aviation cover, and so on.

“Credit and political risks admittedly remains proportionally higher than when dealing with the developed world. However reducing that risk through insurance instruments is entirely possible.

“It’s essential of course to have an affinity with trade in African markets and an understanding of intricacies of insurance in those markets with their varying degrees of sophistication and transparency.

“For instance where a country has insufficient foreign exchange and the forex controls are stringent it’s possible to nominate a convertible currency in which to take cover.

“In terms of insurability it comes down to the quality of the deal involved and in terms of trade with Africa this has to do mainly with the company and the country rather than the size of either.

 

“Also, necessary cover varies on a country-by-country basis and even a case-by-case basis. In many instances it’s preferable for example for a South African importer or exporter to manage their insurance risks within the South African market and to consolidate all their trade risk into a single insurance package including transit and commercial risks.

“Advice on the ground from Aon is crucial to the success of exploring the African markets however in that insurance requirements frequently have a particular risk profile, requiring a tailor-made approach to cover, taking into account a numerous relevant local factors.

“In this scenario Aon South Africa adds huge value while Aon’s global capacities translate into best practice and innovation in a two way exchange of intellectual capital and expertise.

“Challenges remain. These include skills shortages and language barriers but Aon had established strong African positioning based upon the use of local personnel and local partners.

“Going forward, risk on the continent is going to continue to evolve but the opportunities are enormous. It’s a little known fact, for example, that Mozambique’s Tete province has the largest untapped coal reserves in the world.

“On a lighter note Aon’s sponsorship of Manchester United gives us an enormous profile in football-mad Africa. It also offers important touch points for internal and external branding centered on the ‘team’ and ‘united’ messages and this will help to propel Aon to ever greater heights on the continent” says