FEBRUARY 2016www.endeavourmagazine.com

INSPIRED BY YOUR SUCCESS

Centriq InsuranceFounding A Company

Transformation

In 2012, when Gareth Beaver became the skipper of Centriq Insurance Company as CEO, he was focussed on not merely just towing the line for the company. Uninterested in merely continuing marginal growth, he was seeking to find that special note that would instigate a transformation within the company. Today we investigate how successful he has been.

WRITTEN BY JOHANNES KING

FOUNDING A COMPANY TRANSFORMATION

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CENTRIQ INSURANCEWWW.CENTRIQ.CO.ZA

0027 11 268 6490

CENTRIQ INSURANCE

The independent insurance provider focuses on three main areas of business; customised risk financing and alternative risk finance solutions, underwriting management agencies

and brand affinity solutions. Beaver explained in an interview that the company is represented in conventional insurance space, but exclusively through the UMA (Underwriting Management Agencies) who is responsible for the marketing, underwriting and administration of specific insurance policy portfolios. Then, Centriq, provides them with access to their insurance licence, including all the governance and regulatory compliance tools, risk sharing mechanisms via cell captive structure, reinsurance capacity and administration services they need to successfully operate in the marketplace.

What this business model provides is the accessibility to offer the relevant insurance solutions to their score of industry sectors that range from aviation to marine and areas of personal indemnity and medical aid gap-cover; persons living with diabetes or HIV and the full spectrum of motor insurance cover that is available in the

market place today. There are not many areas in insurance that Centriq is unable to reach.

Secondly, the company’s risk finance and alternative risk transfer solutions business segment is what provides a full range of self-insurance financing solutions for the conventional and non-conventional type of risks that a company faces. Here, clients originate from a variety of large organisations such as corporates, parastatals, non-governmental organisations (NGOs) and mid-sized commercials and associations in the agricultural sector. Each one may use the Centriq licence in a different way to self-insure certain things that may be uninsurable by the conventional market, or simply too expensive to insure. This truly reveals the benefit of having Centriq in your corner.

Thirdly, Centriq offers brand affinity insurance solutions, whereby it partners with non-insurance entities who want to add to a market and sell a sold-on insurance product with a product that they already offer. Targeting all sectors, including non-financial services companies who wish to provide an insurance option

CENTRIQ INSURANCE

A leader in the niche insurance field and benefiting from a strong record for growth and the ability to provide specialised insurance solutions to a vast array of industries, while not sacrificing its position in the market as a major institution, the company now known as Centriq was created from the merging of two insurance giants in 2007. The merging of Nova Risk Partners and Santam Risk Finance created an opportunity for the company to fully strategise through the market and establish an even more secure footing, with Santam becoming 100% shareholder of the company.

CENTRIQ INSURANCE

alongside other products. An obvious example of this would be a cell phone brand wishing to link phone handset insurance to the sale of an air-time package; motor warranty protection for new and used vehicles and retailers selling household goods like TVs and washing machines, for which they need to protect either the asset purchased against accidental damages or the ability of the consumer to pay their instalments after retrenchment, disability or death.

These have also evolved to include insurance policies of value to customers such as funeral benefits or education pay out policies that are linked to death or disability.

ASSURANCE IN INSURANCEAs of this year there seems to be a never ending supply

of obstacles and hurdles for South African companies and the insurance industry is no different. The short-term industry has experienced difficult conditions in recent years. This is due in part to the industry being over supplied with risk capital, while premiums are under-priced relative to the risk insured. At the same time, an increase in incidents of large losses, such as weather

related accidents, has occurred meaning that insurance companies and reinsurers, nationally, have produced some poor results over the last two years. It has taken Centriq to form a strategy of de-risking in selected market segments that were under priced but it’s still clear that the insurance industry is under pressure.

Not satisfied with merely keeping afloat however, Centriq can take stock of a number of positive changes that this period has instigated within the company. Offering new prospects for growth that have helped the company to amplify its position as a niche insurance leader in the market place as well as adding new skills to their specialist risk financing team from accounting and banking sectors.

NEW PRODUCTS FOR THE FUTUREA new venture recently fell into place whereby Centriq secured

significant capacity in the mining rehabilitation guarantee space thanks to specialist skills via a new UMA where they will be the majority shareholders. This has made them able to provide guarantees for environmental impairment liabilities, as required by mine owners in SAs mining industry.

Contact: Denise, Chummy, Alistair or Iola88 Monkor Road, Randpark Ridge, Johannesburg

Tel: +27 (0) 861 00 0090 Fax: 27+ (0) 861 00 0030 email: info@keu.co.za

www.keu.co.za

KEU Underwriting Managers (Pty) Ltd is an authorised financial services provider, FSP No. 5076. KEU products are underwritten by Centriq Insurance Company Ltd. We partner with registered short-term insurance brokers to ensure your risk is covered. KEU is a member of SAUMA.

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UNDERWRITING MANAGERS (PTY) LTD

We are proud to be associated with Centriq. Centriq is driven by fair treatment of customers

and high ethical standards.

EVENT LIABILITY • EVENT CANCELLATION • FILM PRODUCERS’ INDEMNITY • PRIZE INDEMNITY • EQUIPMENT ALL RISK

CENTRIQ INSURANCE

Yet again this provides a niche funding solution that Centriq offers that not many others are able to and with these types of guarantees, the insurer effectively takes a credit risk on the client by offering it a funding mechanism that, in turn, enables it to meet the financial obligations associated with the environmental clean-up requirements at the end of a mine’s lifetime.

It goes without saying that the mining industry is one of the arenas in the world and one that transverses a number of commodity classes. However, as mining occurs, damage the environment follows and companies are legally liable to clean up the site once the mining has been completed. To meet this liability they need to make financial provisions and that’s where Centriq is able to step in and lessen the burden of organising this.

There have commonly been two options available. One is to set up a specialist trust into which contributions are made according to the underlying environmental liability or, companies can try to get an acceptable banking institution to provide a financial guarantee, for which the miner would typically need to cede certain assets to the bank. A third alternative is to turn to one of only a handful of DMR approved insurers, like Centriq, to provide such guarantees.

To secure this particular avenue, it was necessary for Centriq to secure half a billion Rand capacity from international reinsurers to provide the mining guarantees. They also had to demonstrate that they had the relevant expertise on board. At this stage there are only two other insurers in the field that are contributing in a meaningful way, meaning that there is not a lot of competition due to the requirements of specific skills and expertise to secure the reinsurance capacity.

With this in mind it means that not only does Centriq capture a share of this specialist product class, but they also provide a much needed funding solution to a market that makes up a significant chunk of South Africa’s gross domestic product (8.3% to be exact).

It is this very diversity that has enable the company to grow, despite the difficult climate they find themselves in. Conventional insurance space is highly competitive because there are a lot of players in the market, but they have founded themselves in the niche area and have been able to develop a sizeable head start in the markets of alternative risk finance and brand affinity.

For the future, it would seem, the plan is to further widen this gap.

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