Momentum Short-term Insurance (MSTI) Inaugurates their new offices

On 24 February 2009 we saw the official inauguration of Momentum Short-term Insurance’s new premises, Lake Buena Vista Building in Centurion.

The new facilities are testimony to the stakeholder’s endorsement and commitment to the relatively newly formed short-term insurance division, who have to date, successfully achieved target expectations of both profitability and growth.

Since its launch in September 2005, MSTI has:

· Grown its client base to over 20,000 members *

· Increased staff to over 130 *

· Paid over R 240 million in claims *

· Established active relationships with more than 3,000 intermediaries *

(* Figures to February 2009)

Commenting at the opening, Brand Pretorius, MD of MSTI said. “In what is undeniably the toughest financial environment in decades, Momentum Short-term Insurance has continued its strong and steady growth. During the past financial year MSTI increased its premium income by more than 60% and its client base by more than 50%. Proudly we have also achieved our first months of break-even during this financial year. With our own dedicated space and the implied vote of confidence, we have every assurance of continuing on this path”.

The MSTI office overlooks Centurion Lake and Momentum’s Head Office is possibly a stone’s throw away on the other side of the Lake.

Logistic challenges involved a smooth IT and operational transition without a second of noticeable downtime. The new building is aptly poised to accommodate future growth projections. MSTI now has room for 180 dedicated call centre stations with additional high tech training suites for ongoing assessments and skills upgrading. The lake-side balcony, stretching the length of the building has proved to be popular retreat for pressurised call centre staff.

A considered operational philosophy and several innovations have contributed to MSTI’s steady growth:

Individual Underwriting Model

A primary operational advantage is MSTI’s use of an individual underwriting model for risk assessment. This means that his clients’ premiums will not depend on the general claims experience of an entire portfolio, but rather on the unique risk factors and experience of each individual client. This approach is diametrically opposed to the more traditional underwriting methodology of portfolio underwriting (which is still widely used), whereby premium calculations are less scientific, and cross-subsidies are created between higher and lower risk clients. The trend has been for such broker books to erode over time, as the lower risk clients move to underwriters offering them a better rate, resulting in escalating premiums from the higher risk pool remaining.

Commenting on MSTI’s confidence in this methodology, Pretorius said, “Ours is a brutally competitive market and short-term insurers who have not focused on a sustainably successful underwriting model are under pressure as cash burdened consumers become increasingly more price sensitive.

We are sure we have got this right and our results back this up - Insurers who are able to differentiate and then choose individually rated lower risk clients are able to successfully manage and sustain margins. Given our scientific underwriting philosophy, our commitment to providing industry-leading service, and our value for money products, we are well positioned for future growth and development”.

Further differentiators include MSTI’s launch of product innovation CORE, an affordable value-driven offering and its collaboration with Good Fellas Chauffeur Service, which is available to members.

CORE – Product Innovation from MSTI

Particularly suitable during the current economic down-turn, CORE offers low-cost cover for those in need of basic, inexpensive insurance, as well as those who are downscaling and rationalising their insurance costs. It is not seem as an alternative to comprehensive cover, but rather offers a lower cost alternative to those in a different set of circumstances.

CORE will allow greater penetration into the mass market with an increased client base that may be untapped and under-serviced by financial service providers. CORE is cover stripped to its basic requirements, making it simple, easy and affordable.

Defined requirements are key in keeping CORE affordable. For example, requirements for vehicle cover are that your car must over 5 years old, under R50,000 in value and not financed. Claims are paid in cash, allowing customers to negotiate the best possible deal on panel beating or use the money for a deposit to get them mobile again, as soon as possible.

The low cost, no frills approach means that additional options like coverage for sound equipment, roadside assistance and car hire are excluded; however premium reductions certainly make up for and reflect this.

MSTI partners with Good Fellas Chauffeur Service

Launched to coincide with the festive season last year (2008) MSTI is particularly proud of its partnership with Good Fellas Chauffeur Service. For a subsidised and nominal fee, MSTI members simply call to arrange a pick-up and then a personal chauffeur drives them home safely, in their car. The service is available in Johannesburg, Pretoria, Cape Town, Durban, Port Elizabeth and East London and once you are signed up as a member you are welcome to use the service in any of these locations. Throughout the year, whatever the occasion, MSTI members using Good Fellas will make it home safely.

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Pictured above
Pieter Erasmus,Head of Marketing MSTI
Lynette Boschoff, Chief Operation Officer MSTI
Nicolaas Kruger, CEO The Momentum Group
Brand Pretorius, CEO MSTI

 (Click on image to enlarge)
Pictured above
Louwrens Smith, Optimum Financial Service Group
Pieter Erasmus, Head of Marketing MSTI
Sam Goudvis, Sam Goudvis and Associates
Bertus Jansen, Optimum Financial Service Group