Santam seeks more premiums from Africa

JOHANNESBURG – Short-term insurance company Santam will harness the skills of its specialist businesses in fields such as engineering and construction to boost premium income from the rest of Africa, says head of niche business at Santam, Karl Bishop.

Currently at 11%, Santam Specialist Business would like to grow the share of its premium that comes from outside South Africa to 15% over the next two to three years. “To move four percentage points on a topline number is not easy,” Bishop told Moneyweb.

Santam is the risk carrier a number of large and established underwriting management agencies (UMA), which are essentially mini-insurers that specialise in certain types of risks. Most notable among these for the purposes of Africa expansion are Mirabilis Engineering Underwriting Managers, corporate property UMA Emerald Risk Transfer, Associated Marine Underwriting and Santam Bonds and Guarantees. The technical expertise of these UMAs will be harnessed to provide cover for large infrastructure projects, such as dams and renewable energy plants on the continent.

The country’s largest short-term insurer has partnered with the emerging markets arm of its parent company, Sanlam in terms of which Santam takes a 35% shareholding in general insurance businesses outside of South Africa.

Sanlam Emerging Markets (SEM), which this week announced it had acquired a 40% shareholding in one of the largest general insurance companies in Ghana, Enterprise Insurance Company (EIC), operates in 11 countries outside South Africa across Southern, East and West Africa.

Santam Specialist Business also does business in countries where SEM is not represented, through intermediaries and local insurers, which in these cases would take in the region of a 5-10% line on these risks.

It has packaged the offerings of its various niche UMAs into a single policy in order to avoid gaps in cover or situations where cover is disputed at claims stage because of the number of insurers and risks involved. “It also makes the investors, financiers and intermediaries lives a lot easier to deal with one insurer,” says Bishop.

Opportunity in energy

In South Africa, Santam has exposure on a dam-based hydropower plant and two renewable energy solar farms. Bishop says the government’s Renewable Energy Independent Power Producer Procurement Programme is being rolled out at a far quicker pace than other infrastructure plans referred to in the National Development Plan (NDP).

“Other projects are there but certainly at a slower pace and not at the values quoted,” he says, noting Santam is on a number of “very large dams” in the DRC and mines in Zambia. “We’re investigating trying to work with a cement plant in Nigeria,” Bishop says.

While global construction companies operating on the continent will typically place insurance back into the European markets, Bishop is adamant that in order to develop local economies, premium must remain here.