Seamless risk protection for mega-projects: Zambia

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 Zambia.

Infrastructure for a growing economy 

With a GDP growth rate of 6.3%, Zambia is one of the fastest growing economies in sub-Saharan Africa. Around 36% of Zambia’s imports come from South Africa, Zambia’s largest import trading partner. The country is viewed as being politically and economically stable, making it an attractive business destination. Several South African corporates have expanded their operations to include the Zambian market. 

The country’s industrial output is growing at 8% per year, copper mining being the major driver (80% of national exports), says Karl. “Until now, most infrastructure activity has focused on Lusaka, linking the capital with the copper belt towns of Ndola, Kitwe and Chingola. Further development – including roads and bridges – is now needed in Luapula province. Increased utilities and telecommunications services are also required to meet the needs of the growing economy,” says Karl. 

There are currently three large trans-border projects at various stages of development:

• The North-South Rail Corridor which links Zambia and the Democratic Republic of the Congo to South Africa
• The Serenje-Nakonde Road Project, which runs for 614km from Nakonde in Muchinga province to Serenje in Central province
• The Chingola-Lobito Corridor Rail Project, which links the port of Lobito in Angola and Zambia’s new north-western copper belt.

Specialist insurance opportunities abound 

As a result of the continually increasing economic activity in Zambia and the numerous infrastructure development projects either already underway or in the pipeline, the growth potential for specialist lines of insurance is decidedly optimistic, explains Karl. “If one looks at the five-year annual average growth rates of the various sectors, it is easy to see which are most likely to benefit from specialist insurance: construction (24.3%), mining (13.1%) and industrial/retail (11.3%).” 

According to Karl, Santam’s current presence in Zambia is via Sanlam Emerging Market’s 62% shareholding in NICO Insurance Zambia. NICO Zambia offers both personal and commercial lines of insurance and is the second largest general insurer in the country by market share (15.7%). A full range of specialist lines is also offered, including engineering, project liability, marine, aviation, goods-in-transit and property (large assets). Between 10% and 15% of Santam Specialist Business premiums are currently derived from Zambia. The company has provided insurance cover on various mega-projects, especially in the copper belt area. 

Why insure with Santam Specialist Business? 

“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 Zambia’s top general insurers, we are able to identify opportunities or threats to clients and, in turn, offer taylor made solutions in order  to mitigate those risks,” says Karl. 

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

• Engineering all risk, construction all risk, project liability insurance – targeting both large infrastructure and smaller commercial construction projects
• Specialised commercial property insurance targeting large retail, commercial or mining projects
• Marine cargo and transit insurance targeting the movement of goods in and out of the copper belt, and to and from international ports
• 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 Zambia 

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 Zambian 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.