Branching out into Africa
As most South African insurers and brokers look for new growth areas, the inevitable is finally happening, the Great Trek into the Rest of Africa is in full swing.
While these ventures have massive prospects for growth and profits, there is also the usual challenge of doing business in a new untested environment.
Reinsurance offerings
The core aspect of a reinsurance broking service to clients is not only limited to renewing contracts and pricing risks. The administration of the contract in the form of premium collections and claims service is equally important for the broker to provide and remain competitive in an ever changing broker landscape.
There is no doubt that claims are a central part of the reinsurance broker offering, and the only reason that insurers take out reinsurance is to assist them to pay claims and maintain a healthy balance sheet.
The fact that brokers administer different types of reinsurance contracts for their clients is another challenge hindering service level agreements. Reinsurers are very strict in receiving certain documents that enables them to settle claims within contractually stipulated time period.
They want the policy schedule, assessors report, cession details, a signed discharge voucher and any other documents pertaining to the loss to enable them to settle the claim.
This information is not always forthcoming; partly due to red tape and then also because of a lack of reinsurance training.
Missing puzzle pieces
While clients appreciate the importance of providing documentation to enable reinsurers to settle claims, it is still a challenge for them to provide the required information. This places brokers in an unfavourable position and compromises their ability to provide claims service to get reinsurers to settle promptly.
In cases where clients have provided information in full, the biggest hurdle is the settlement of premiums. It is not a secret that reinsurance contracts stipulate that minimum deposit premiums (MDP) must be paid on or before a specific date. Usually it is on a quarterly basis; in some instances it is on a semester basis.
Clients have to ensure that these premiums are paid in full on time otherwise it jeopardises the claims collection process. Brokers then find themselves in a catch twenty two situation in which all documents are provided but the premiums are outstanding.
This is a challenge in any business environment when there is a disregard for contractual obligations. These are the challenges to ensuring brokers provide a claims service that can assist our clients getting their claims paid on time hence alleviating cash flow burden.
A view into the future
Brokers must ensure that reinsurance training is provided to clients making them aware of the importance of providing information.
Advice is a key function of our industry as brokers, that we must provide good advice that assists clients in fulfilling their contractual obligations. Brokers and underwriters alike must also move away from transactional broking in that once the contract has been renewed, administration is not as important.
We need to build collaboration with clients, help them align technical accounting departments with claims to enable them to understand the importance of paying premiums and providing the necessary documentation.
Claims service should be built as a core skill in any insurance and reinsurance offering as opposed to a post office or admin which it is often seen as. In fact, this is the shop window and the reason people purchase insurance.
The bottom line
The future is bright and prospects for growth are buzzing in the rest of Africa.
For brokers to show their value, they must embrace a collaborative approach that not only focusses on efficient placement but also ensures that the administration of contracts is a key component of treating customers fairly and providing unmatched service.
