Seamless risk protection for mega-projects: Tanzania

13 July 2015 Karl Bishop, Santam
Karl Bishop, head: Niche Business at Santam.

Karl Bishop, 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 Karl Bishop, 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 Tanzania.

Infrastructure for a growing economy

The Tanzanian port city of Dar es Salaam lies only 3500km from Pretoria by road. As a result, South Africa (5.1%) is third on the list of Tanzania’s import partners, after India (25.0%) and China (24.6%). Tanzania’s population (49.6 million), economic growth rate (7.2%) and inflation rate (6.2%) are key indicators of a potentially favourable business environment.

“The currency has been stable for the last three years, and the political system for decades, which creates a good environment for business,” says Karl. The economy is projected to grow by around 7% in 2015, driven by tourism, transport, communications, manufacturing and agriculture, and supported by public investment in infrastructure.

“These are all good catalysts for increasing Tanzania’s lure as an investment destination. Furthermore, international donor and foreign direct investors are paying growing attention to Tanzania as an eastern gateway to central Africa's booming economies of Rwanda, Uganda and the Democratic Republic of the Congo (DRC).”

There are several regional development corridors (spatial development initiatives) running out of Tanzania:

• The TAZARA Development Corridor, aimed at rehabilitating and upgrading road and rail infrastructure and linking 1970km from the Ndola copper belt to the port of Dar es Salaam via northern Malawi
• The Mtwara Development Corridor, aimed at linking the southern regions of Tanzania with Malawi and Zambia across Lake Nyasa and north-eastern Mozambique
• The Nacala Development Corridor, aimed at linking by 1033km of road the port of Nacala in north-eastern Mozambique and Chipata in south-eastern Zambia.

These projects are accompanied by wider connected peripheral infrastructure developments and upgrades linking these corridors to growing industrial, retail, farming and tourist activity across the affected districts in Tanzania and its neighbours.

Projects along the Mtwara Development Corridor include:

• The Mchuchuma coal mine development (US$100 million)
• The Liganga iron ore development (1200 million tons)
• The Songo Songo island gas reserves (US$375 million).

Specialist insurance opportunities abound

Although the specialist insurance market in Tanzania is currently underdeveloped, there are huge opportunities resulting from economic growth and the government’s focus on infrastructure investment, explains Karl. The figures for economic growth per sector are: agriculture (26.9%), industry (25.2%) and services (48.0%).

“Santam Specialist Business is focusing on developing this market for its niche products. Agriculture, for example, currently makes up 80% of the export market, and Specialist Business can play a role in this space. The challenge is the availability of relevant scientific weather data and the number of hectares per insured, since most producers are small-scale farmers.”

Tanzania’s strong dependence on agriculture may well change in the medium term however, as the country has a large infrastructure deficit which is being addressed by both local and regional infrastructure investment programmes. “The Tanzanian government is particularly focused on developing the country’s infrastructure, industry, ports and transport networks.”

According to Karl, Santam Specialist underwrites risks in Tanzania through various broker channels in the market. “Our main presence in the market is via the Sanlam Emerging Markets partnership with NIKO Tanzania, however. Through NIKO Tanzania we offer motor, accident, fire, engineering, marine, liability and aviation products. Our market share through NIKO Tanzania is developing rapidly and we see Tanzania as a key growth market for us.”

Why insure with Santam Specialist Business?

Karl says mega-infrastructure projects, such as dams, transport infrastructure, and renewable energy projects and 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. By partnering with one of Tanzania’s top general insurers, we are able to identify opportunities or threats to clients and, in turn, offer tailor-made solutions in order to mitigate those risks.”

The expertise offered by Santam Specialist Business which is most suited to the Tanzanian market includes:

• Engineering all risk, construction all risk, project liability insurance – targeting both large infrastructure and smaller, sector-specific commercial construction projects
• Specialised commercial property insurance targeting mining projects
• Marine cargo and transit insurance targeting the movement of goods in and out of the port areas
• Project guarantees for advance payments received by contractors and project performance guarantees
• Travel insurance targeting commercial clients
• Aviation insurance targeting helicopters and light commercial aircraft.

Opportunities for Seamless Specialist Insurance in Tanzania

Karl 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 Tanzanian 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 Karl.

Quick Polls


How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?


Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now