By Dickens, it works
t isn’t much fun writing up the results of such an irritatingly well-managed company as Santam. Its main problem last year, the property insurance book, has swung back to profit as it persuaded more of its clients not to resort to arson.
The motor book, run as a loss-leader by most of its competitors, brought in R513m of underwriting profit.
The only sector at which anyone can point fingers is its liability business, which went R49m into the red — but much of this was because of R100m in liability claims for its large food-processing clients over the listeriosis outbreak. As Santam insures 85 of the top 100 JSE companies, it is rarely far from such battles.
Perhaps Santam is not seen to be at the cutting edge of technology: it often treats its Miway subsidiary as the guinea pig for insurtech innovation. It still relies on its agents meeting clients in coffee shops and filling out application forms with fountain pens.
But CEO Lizé Lambrechts says it isn’t actually as Victorian as it seems. There are portals that clients can use to access their accounts, and a related portal for brokers and agents. She says the new information-rich models such as Discovery Insure and Hollard-backed
INaked are undoubtedly impressive. But the information gleaned from a dozen tried-and-tested underwriting questions has proved 95% as accurate as the hitech version. Lambrechts tactfully refers to how Santam’s competitors don’t have enough consistency. Santam has made hay while its main competitors, principally Old Mutual Insure and Bryte, have continued living in the world of the long lunch and golf every Wednesday.
At last there is a good business in the second slot, namely Hollard. The businesses will be going head-to-head on cyberinsurance; they both have a solid strategy at this end of the market.
Old Mutual Insure has taken the easier route of focusing on its new high-end sports car insurer Elite Risk Acceptances, run by the media-friendly Christelle Colman. It’ll be a good business, but is designed for the polo set.
One business that might not have a long-term future at Santam is crop insurance. As expropriation without compensation is possible, farmers will battle to get bank finance to plant crops in the first place.
Hitting the sweet spot
Fats Domino sang about Blueberry Hill his rock ’n roll classic. You can now invest in your own blueberry hill
in through the new Fedgroup app. Or, if you prefer, you can invest in a beehive or a solar panel. These impact investments in the agricultural sector are available for as little as R300 and they don’t carry the usual hefty fees, as they are not housed in life policies or unit trusts. This is a bottom-up model that does not rely on a squad of Maseratidriving brokers to sell the product.
Fedgroup CEO Grant Field says it differs from the traditional model for an impact fund which, despite the “impact fund” label, could sit with 70% of its assets or more in government bonds or even cash while waiting for investment opportunities.
Field has entrusted the investments to old hands. The fund’s blueberry farmers are highly specialised and would consider growing strawberries to be reckless diversification. Their berries have loyal clients overseas — these are berries that are eaten on their own, not second-rate fruit that is squashed into muffins and pancakes. Field also hopes to lead a revival of real, single-source honey: much of the honey now sold in SA is disguised syrup or thrown together from 20 different countries.
Santam still relies on its agents meeting clients in coffee shops and filling out application forms with fountain pens