Cell captive insurance solutions stand out in constrained economy

11 July 2024 Karen Naidoo, Chief Operating Officer (COO) of Old Mutual Alternative Risk Transfer Insure Limited (OMART Insure)
Karen Naidoo

Karen Naidoo

Mutual and Federal Risk Financing (MFRF) rebrands to OMART Insure

Cell captive insurance, a niche and specialised insurance offering, is uniquely positioned to thrive in today's economic environment.

This is the view of Karen Naidoo, Chief Operating Officer (COO) of Old Mutual Alternative Risk Transfer Insure Limited (OMART Insure), formerly known as Mutual & Federal Risk Financing Limited (MFRF), who says that the cell captive market offers companies an attractive means to diversify their income streams, especially when traditional means to increase revenue (e.g. through a company’s core offering) are under strain.

“For companies or organisations looking to expand their reach, cell captive insurance solutions are a firm favourite. When the bottom line is under pressure due to high inflation or high input costs, for example, many companies expand into financial services to offer more to their clients,” she explains.

This sentiment aligns with findings in The South African Insurance Industry Survey 2023 by KPMG. OMART Insure has experienced a 15% increase in the cell captive insurance market. This growth has positioned the company among the top ten insurers based on Gross Written Premium (GWP) market share, attributed to the establishment of multiple new cell captives.

Over recent years, cell captive insurers have demonstrated robust growth, signalling a rising interest in these innovative risk management solutions.

In addition, today's world is fraught with increasing risk events (e.g. climate change), which may reduce the appetite of traditional insurers to take on additional risk and continue offering some traditional covers, says Naidoo, presenting an opportunity for niche and specialised insurers.

"We enable and empower our clients through appropriate pricing and deal structures. With an element of risk sharing between us and those taking the risk, we can offer innovative solutions that traditional insurers may not have appetite for", Naidoo states.

One of the most compelling aspects of cell captive insurance is its focus on enabling client specific products rather than selling those that are off-the -shelf and common in the market. Naidoo highlights, “Through our partnership model we enable the execution of our clients’ creative product solutions.” This model allows clients to innovate and create unique products while relying on OMART Insure for underwriting and approval.

Naidoo says that the company is agile yet experienced enough to respond to the change in market trends and tackle challenges.

“The rebranding of MFRF to OMART Insure was a strategic move to create better synergies within the business. We have also consolidated our cell captive businesses offering life and non-life policies under one umbrella. Through this move, we can offer clients both a life value proposition (OMART) and a non-life value proposition (OMART Insure). This comprehensive approach strengthens OMART Insure’s position in the market and enhances its value proposition to clients”, says Naidoo.

What hasn’t changed, says Naidoo, is the fact that the business has been around for 27 years, and that it still operates with personalised service. Today it has R5.3 billion in underwritten premium, through 36 cell captives.

"We are a partnership-based organisation. Quality of partnership is more important than quantity. We view it as a marriage; we are in it for the long term", Naidoo asserts. “It is a strategic decision to focus on quality rather than quantity in terms of our client base. Clients like the fact that they can pick up the phone and call me directly to discuss innovative solutions”. This also extends to the way clients views its staff.

"We are a fully transformed business in all aspects of diversity. The average age of our staff is 33, and 70% of us are women”, says Naidoo, adding that in such a niche field, developing its own talent pool is crucial. “We aim to foster a culture that retains staff and encourages different thinking, which may explain our remarkably low staff turnover rate of just 1%”.

Looking to the future, she says that the company is keeping abreast of immerging trends and resultant opportunities.

“We are in the process of expanding the organisation with a micro insurance license. We are looking forward to the opportunities this brings for both OMART and OMART Insure”, concludes Naidoo.

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