Shaking up the market
As a relatively niche competitor, competing with very large, well established and highly esteemed competitors, Maggs explains how Forbes itself was trying to disrupt the status quo by shaking up the market and bringing a fresh perspective and a lot of energy to the table.
“We would like to see our role in the market as more than just insurance brokers who transact insurance, and we’d like to get our hands dirty in a more general sense as problem solvers. So we’re open to innovation, experimentation and doing things differently,” she says.
With a technical background in mining, having worked on gold, coal, diamond, lime and platinum mines, Maggs has been instrumental in setting up Forbes African reinsurance strategy and broker partner network.
She says four major types of competitors, or players, have an impact on the space that a facultative reinsurance broker wants to play in. These include competing facultative brokers, cedent insurers, the Lloyds market and the global markets. “The risk is that while there will always be a place for brokers in the chain of service providers which facilitate an insurance transaction, (as is particularly the case with the more complex deals), the relative value that they bring to the deal could be watered down in relation to the value that is being provided or created by other competitors.”
So with facultative brokers feeling pressure from these four corners, how can they stay relevant in the market?
Maggs says the first step to staying relevant is to appreciate the degree of specificity that is needed and to be careful not just following trends.
“Very often when we hear people speak about the region, it is generally lumped into one enormous category, called Middle East and Africa.”
She says the sensitivity to the regional differentiation is often lost when looking at things on a global scale. “We don’t need one strategy for Africa, because ‘Africa’ is not a country. There are 54 or 55 countries on the African continent, so at the very least we need 55 strategies. And that is not even taking into account the different sectors per country or the differing risk profiles.”
If we think one strategy for Africa is sufficient, we are grossly underestimating the nuances which exist on the continent, in terms of geography, sector and particularly in terms of levels of development. “So if we can’t appreciate nuance – how can we claim to be relevant?” questions Maggs. “It is more relevant to hear your broker talking about a strategy for hydropower projects in Zambia than it is about a blanket strategy for Africa,” she says.
If you are going to do business in Africa, brokers need to narrow down the playing field to targeting only certain kinds of business in certain areas. “Chasing the easy opportunities, or the low hanging fruit, will simply result in overselling to an oversubscribed market and reduce relevance.
The key is stepping out of one’s comfort zone and tackling the difficult markets where there is a real need for broking services, rather than where it is easy to do business.
Telecoms is a good example. It’s attracting a lot of interest, but there is great variation across the continent in terms of roll out of telecoms. The various markets each have a need for telecoms but it is clear that each has different requirements in terms of sophistication and risk exposure. Maggs says brokers need to be sensitive to the actual exposure, as well as have the ability to make the reinsurance which is sold scalable without over-selling the cover.
“Very often as brokers we market and sell the products we have access to, rather than solving the actual problems of the clients we have. At Price Forbes, we argue that a good reinsurance broker should not be led by macro-economic trends, but rather by clients’ needs.”
And identifying who those clients are is the next step. “Simply offering the same set of solutions to the same set of clients results in an over-saturated market in which nobody wins. “If brokers don’t start to innovate and learn to attract new markets they will slowly but surely become irrelevant,” concludes Maggs.
