New kid on the block comes of age

Momentum Short-term Insurance (STI) recently celebrated its 5th birthday. FAnews spoke to CEO Brand Pretorius about the company’s growth and success, and the vision for the next five years.

FAnews: Has Momentum STI’s growth of over the last five years been in line with expectations?

Brand: Our year-on-year growth has outperformed that of the industry by a fair margin every year. From a profitability perspective, we reached breakeven in line with our original business plan projection and have maintained profitability ever since. Also, our operational targets, such as claim turnaround times, loss ratios and client satisfaction index, are in most cases - where comparable data is available - exceeding industry standards. We opened our doors with less than 20 staff members in September 2005 and currently employ more than 140 people. Although our first five-year growth targets were not entirely met, we are certainly satisfied with the growth achieved.

FAnews: What makes Momentum STI different?

Brand: We are one of only a few insurers that use an individual underwriting model in the intermediary space. As such, we offer clients the best of both worlds: rating and pricing benefits as a result of individual underwriting, as well as the quality advice and service of intermediaries.

FAnews: What was the original specific target market for Momentum STI and has it changed?

Brand: In the insurance industry, low risk clients are highly prized and targeted by all insurers. This applied equally to Momentum STI. However, when the company was launched, we were fortunate to have access to considerable data, which allowed us to rate clients individually using our scientific underwriting model. This means that there is no cross-subsidisation between higher and lower risk clients – each client pays only the premium correlated to his/her specific risk profile. As such, we have seen that success is not a matter of finding the low risk clients, but rather a matter of charging the right premium in relation to the client’s risk profile.

FAnews: How does Momentum STI minimise exposure to “bad” risks?

Brand: We believe there is no such thing such as a “bad” risk or a “bad” client - there are only bad, or rather, incorrect premiums. Our approach is simply to calculate the right premium for the rated risk profile. This allows us to adjust each client’s premium in accordance with his/her individual risk profile. It is important to note that clients have the power, with the assistance of their intermediary, to improve their risk profile by implementing mitigating factors such as installing tracking devices in vehicles or correctly using their alarms at home.

FAnews: Have the loss ratios been in line with expectations? Any surprises?

Brand: Our loss ratios continue to exceed our expectations and we’ve been fortunate to have had minimum “surprises” along the way. We attribute this to our underwriting philosophy, which enables us to rate risk more accurately than most. All our risk classes have set loss ratio targets that are currently well within the determined range. We monitor and manage each loss ratio individually, not just the overall average.

FAnews: What is Momentum STI’s philosophy with regard to intermediaries?

Brand: Momentum has always had a relentless focus on the intermediary. Because of this, we also have an entrenched support model enabling intermediaries to focus on providing quality advice and service, whilst we take care of the often cumbersome administration involved in the process.

FAnews: What is Momentum STI’s value proposition to intermediaries?

Brand: Momentum’s commitment towards intermediaries in general, combined with our value for money products, efficient administrative support processes and legendary service ethic, provides a very compelling value proposition to intermediaries.

Our innovative underwriting philosophy assists the intermediary to acquire and retain low risk clients. In addition, our underwriting model, which is also traditionally used by direct insurers, provides a suitable counter against or alternative to these insurers.

Our tried and tested service, especially our claims service, speaks for itself. Providing awesome service to brokers and clients alike is one of our company values. We truly pride ourselves on the service we provide and strive to improve this on a daily basis.

A wide range of covers, great benefits and flexibility make our products very appealing. We have also spent a lot of time on simplifying our products, making them understandable and providing easy-to-read policy wordings. In the era of consumer protection, this makes the life of an intermediary much easier.

And, of course, the Momentum brand name is highly regarded, has been around for some time and is well received by clients.

FAnews: What level of support has Momentum STI received from brokers?

Brand: We are very encouraged by the increase in supporting intermediaries we have seen recently. A large percentage of new brokers joining us are specialists within the short-term insurance environment, who historically did not do any business with the Momentum Group.

FAnews: What unique solutions does Momentum STI provide?

Brand: Our scientific underwriting model makes it possible to provide not only stand-alone motor insurance, but stand-alone insurance on any item a client wants to insure. Looking at each client’s risk profile for the relevant item, we can rate the risk correctly for the particular item. This is a unique selling proposition Momentum STI offers. We are also proud to say that because of our underwriting philosophy, we are one of only a few insurers who run a profitable motor book.

FAnews: Are telematics the answer to the challenges experienced with motor books?

Brand: Telematic devices have been used internationally in vehicle rating and underwriting for a number of years. In South Africa, only a small number of insurers have developed such products, with limited success. The data acquired through the use of such devices is certainly valuable and very predictive from a rating perspective, but the relatively high cost of these devices is prohibitive and as such make it appealing to only a small portion of the insurance market.

FAnews: What is Momentum STI’s biggest challenge at the moment?

Brand: Our biggest challenge at present is to grow our business significantly, specifically our commercial book, whilst maintaining current levels of profitability.

FAnews: What is Momentum STI’s future strategic imperative?

Brand: We want to be seen as a “seeded” player in the commercial-lines market. We know that it will be challenging, but we are confident that we have the expertise and capacity in place. Providing commercial cover has been Momentum STI’s largest growth sector in recent times, signaling a likely competitive advantage and area of operational competence that has corresponded favourably with the needs of clients and brokers alike.

FAnews: Any exciting new developments?

Brand: We understand that in order to reach our goal of becoming a preferred commercial insurer, we need to provide intermediaries with niche products in certain industries. We are well on track with product development in this regard. We aim to take these niche products to market during the first half of next year.