Expertise key to driving specialist insurance sector

A thorough understanding of clients’ business and the industry challenges and risks they face are the key requirements for insurance clients in the specialist business sector, says Quinten Matthew, Santam’s Executive Head, Specialist Business.

Specialist insurance is far more complex than everyday ‘off the shelf’ insurance and requires a set of distinct underwriting skills and industry experience. Essentially, it is the type of insurance which looks after companies or individuals with an interest in industries such as aviation, marine, logistics, construction, engineering and large complex industrial and manufacturing concerns.

Santam brings 93 years of know-how and believes that industry knowledge, focus and understanding of a client’s industry, business and risks, is critical in the specialist business sector.

“Specialist insurance is far more complex than personal cover because the environments that the client’s businesses operate in are affected by a very different set of risks. A broker and insurer that not only understand your business, but also the industry that you’re in and the challenges you face is best placed to navigate the inherent complexities involved,” says Matthew.

Santam has developed relationships with close to 5000 brokers who are skilled to offer advice on how best to protect and manage these exposures.

“Clients in the specialist business sector need to be treated differently. They expect to work with brokers and insurers that understand their business and that also offer bespoke insurance and risk management solutions.

“Companies that offer a one-size-fit-all insurance offering are not sustainable in the specialist business sector, which is driven more by individual, expert advice, efficient claims resolution and an insurance solution that is tailored to match the very risks that they face,” says Matthew.

“Clients want to know that their risk is secure. The value of an insurance firm is always delivered at the claims stage of the relationship and our ability to consistently and efficiently manage claims has been at the centre of our success. We have, over the last two years, worked hard at improving our claims division to make it the best in the business, and we plan to keep it this way,” says Matthew.

Efficient claims resolution remains a top priority for the sector and for Santam.

Managing risk equals lower premiums

Volatility in global economic markets, compounded by an increase in natural disasters around the world has forced local companies and individuals operating in the specialist business insurance sector to take their risk exposure more seriously.

Although South Africa has, to a large extent, been protected from the global economic crisis and natural disasters, these events have had a positive effect on the insurance sector because companies have become more prudent about their risk exposure and are managing their assets with more care.

Santam says that this is a positive move for both insurers and clients and will ultimately result in lower premiums as insurers like Santam reward proactive risk management with discounts.

“The benefit of proactively managing your risk, and understanding what part of that exposure to transfer to an insurer and what to manage yourself, is a key driver in obtaining lower premiums,” says Matthew.

Managing the challenges

Although the local and African specialist market is set for exponential growth, both brokers and clients face some tough challenges in the year ahead.

Matthews says that both large and small companies are increasing their liability insurance to meet the requirements of the Consumer Protection Act (CPA). Inconsistencies in regional municipal service delivery, wide-spread fraud and corruption have also meant that companies have had to become more serious about insuring against risks.

Underinsurance and non-insurance is still a major concern for Santam. “It is worrying that during the floods of the beginning of this year, less than a third of those impacted were insured. It is old-fashioned to view insurance as a grudge purchase. Very few of us can afford to lose our livelihoods to a once-off catastrophe like that. It makes sense to understand the crucial value of protecting your assets and financial well-being appropriately,” says Matthew.

Brokers and the insurance industry also face the challenge of complying with stricter regulations and legislation. Matthew expects that smaller brokerages and insurance companies will consolidate to manage these challenges.

Although brokers are increasingly facing tougher competition from the direct market in personal insurance, the value of the broker, especially in a more complex specialist business segment, will continue to grow.

“We don’t expect the value of the broker to erode in the specialist market, as these professionals are a critical source of information and advice that help clients navigate the complexity of the specialist insurance industry,” concludes Matthew.