Santam expands with corporate clients north of the border

Santam, South Africas largest short-term insurer, is placing special emphasis on growing its corporate business in more countries north of the border, by insuring companies for risks they face as they expand from South Africa into the rest of Africa.

According to Richard Payne, Santam's Head of Corporate Business, the South African corporate short-term insurance market is estimated at between R3.0 and 3.5 billion in terms of premium spending. Santam has an approximate 27% share of this market, and one of its avenues for expansion is offering tailor-made solutions to the many South African companies and multinationals now setting up operations in new markets like Kenya, Tanzania and Mauritius.

"We already insure many of South Africas top 100 listed companies across all sectors including mining, retail, industrial and commercial," Payne explains. "We aim to provide a holistic insurance solution for them by covering many different risks such as those to physical property and business premises, stock, vehicles, business interruption and others. For example, when you read about a major fire at one of our retailers' big stores, it's likely that we are the ones paying them out tens of millions of rand for lost stock, property damage and interruption of business. "

Santam already has international operations in Namibia, Zimbabwe, Malawi, Botswana and Zambia, where it has been successfully doing business for many years. It also insures the risks of multinationals with business operations around the continent, where generally multi-country risks are combined into one policy based in South Africa.

However, with retailers, telecoms groups, miners and construction companies looking to even greener African pastures, the company is now partnering with local insurers in many other countries such as Kenya, Tanzania, and Mozambique  to meet its clients diverse needs.

"The African insurance environment is complicated; regulations are different in each country," elaborates Payne. "Most African countries have strict regulations under which all insurance activity must be conducted by an entity licensed in that country. However, it is often the case that a local insurer is unable to underwrite the entire risk of a foreign business because the value of the policy is too large for them. We are partnering with local insurers to take on a portion of that risk, but only what they cannot absorb."

The insurer has set up a network of insurance partners with whom cooperation agreements are firmly in place, he adds. Thorough prior investigations of the partners and successful experience to date have made Santam confident of these partnerships.

"Generally, we are taking on the insurance of the buildings, while local insurers are able to cover the lower-value items like stocks and vehicles," Payne says. "But everything is done on a case-by-case basis so that the client can have a policy tailor-made to their exact requirements."

Large global insurers like Lloyds, Allianz, and Zurich are posing stiffer competition for smaller companies like Santam as they look to boost their own business in Africa, which is increasingly seen as a lucrative market. However, local insurers understanding of the local market can give it an edge over these players, the Santam executive points out.

"Some groups automatically look to international companies for their insurance requirements for the really large international risks, assuming Santam cannot handle them, but this is incorrect. We have a thorough understanding of conditions here and can often provide better solutions. 

"Even though Africa can be regarded as a niche market because it is relatively small, it is a priority for us. We see potential for good growth in our corporate business there going forward and are doing our best to provide insurance solutions anywhere on the continent," concludes Payne.