'Valuable business to be done in Africa'

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Insurance is one of these areas. Local brokers and insurers have been moving into Africa either directly or through alliances and partnerships so they can serve clients moving across SA's borders while tapping into and opening up new markets across the continent.

Jurie Erwee, CEO of Marsh Africa, says the company sees a lot of opportunity on the continent as a whole and has invested considerable time and money in expanding its presence in Africa to enable it to serve the broader African market.

"We entered the Africa market by following our clients in the mid-1980s. Our experience shows there is valuable business to be done on the continent and there are even greater opportunities for the future.

"The contribution from Africa is increasing and the high growth rates and premium flows coming out of the rest of Africa suggest this trend will increase," Erwee says.

At the same time, he argues that entering the broader African market is not a short-term play and companies need to take a longerterm view and have a meaningful presence in every country in which they wish to be active.

"It is not about making a quick buck. You cannot just fly in, write the business and leave. Instead, it is about building sustainable businesses in the countries in which we invest, committing for the long term and making a positive difference in those countries in which you operate."

Warren Bolttler, CEO of Price Forbes SA, says the continent offers attractive long-term business opportunities and many brokers have at least started spreading their wings across SA's borders.

"We have opted for a low-risk strategy and have not invested in subsidiaries and branded operations in other African countries. Instead, we have chosen to establish partnerships with established local players and we work with them on their wholesale requirements."

Bolttler says there is significant appetite from underwriters wanting to write African insurance business as they can see the macroeconomic situation and the fact that other African countries are set to grow noticeably more than SA and everyone wants a piece of the pie.

He says having local partners not only means having people who have local presence and knowledge serving clients but also not falling foul of potential regulatory hurdles.

"All African countries have highly regulated insurance markets and while regulations often require that at least a portion of the risk is made available to their local market, they often lack the capacity to cover risks in their entirety," Bolttler says.

As a larger player that is part of a large international organisation the company has ready and cost-effective access to South African and offshore insurance capacity.

"As we provide insurers with the channels to African business everyone wins. Local insurers are well placed to write business in their markets and with the partnership they have access to the insurance capacity and the skills necessary to write nontraditional business such as directors and officers' liability or commercial crime," Bolttler says.

Edwyn O'Neill, CEO of Zurich SA, says a number of businesses are expanding into African markets, particularly in the engineering and construction sectors.

"With this comes the need to choose brokers and insurers who are well versed in cross-border regulation and legislation and have reliable partners in-country.

"There is some uncertainty among brokers around the type of regulation that exists, how it will be enforced in-market and how they themselves will be held liable if the wrong advice is offered. This is why educational road shows and feedback sessions with brokers and insurers need to be prioritised. In this way, customers can be provided with the best cover possible, while still remaining within the boundaries of proposed legislation and governance requirements," O'Neill says.

Source: Business Day