Crazy things to make it work
In 2010, SRM Aerospace was born, a specialist aviation insurance brokerage which facilitates the placement of aviation cover for general insurance brokers across the continent. “The opportunity was in providing the ability for general brokers and insurers to place aviation insurance, where previously they might not have had the expertise. We facilitate the placement for them.” Starting the company as a consultancy (SRM International) in Switzerland on his own, Raath returned to South Africa and launched SRM Aerospace. The business has gone from strength to strength since then, with a network of partners extending across the continent and significant premium growth, reaching over half the size of their biggest competitor on premium income in just four years. “We’ve been very lucky. Last year alone we grew 70 per cent on what was a fairly reasonable base.” The team now consists of six based in the Johannesburg office and three based overseas. “Roughly 75 per cent of our business is from outside of South Africa. We do a lot of business in Botswana, Kenya, Namibia and Tanzania and are now seeing good growth in North and West Africa,” Raath explains. Raath foresees opportunity in developing trust in wholesale broking on the continent – the heart of the SRM model. “There’s huge opportunity in that because we can deal with a few brokers and have access to many more clients than we would by going directly to clients. This model enables us to remain small and efficient but have access to a huge amount of premium income,” he explains. “The local broker often has a better relationship and knowledge of the client than we would be able to create in a few meetings. We can’t take a Tanzanian client out to dinner and lunch every single week, whereas they can.” Nonetheless, there’s no running the business from a desk in Johannesburg for this team. “We are in planes a lot. I travel every week – I’ll go to 3 different countries in a month, and things can change quickly day to day. I’ve started a day at 8am thinking I wasn’t travelling, and by 11am ended up in Windhoek. On one occasion, I waited for three days in Uganda to get to see one client for 20 minutes.” “If you’re going to take a big risk and start a business like this, you have to pull out all the stops and do some crazy things to make it work.” It seems this aspect of the business is unlikely to change anytime soon. As a specialist broker, Raath says it is unlikely that SRM will ever need local offices in countries. “As a business, a big challenge for us is just the sheer size and diversity of the African continent – each country has a different outlook and way of doing things, I cannot see how, as a niche provider we can better our network or manage the sheer diversity. South Africans for instance don’t always have a good name in some countries. In other instances some markets are very brand conscious and like to deal with London brokers directly due to past history or culture. Trust levels vary, so each one is different and balancing this is key to success on the continent. The difficulty going forward will be maintaining the growth but still keeping the service levels and the interaction with our clients the same. That would be my biggest issue at the moment, to try and maintain the relationships and grow the business. African brokers and insurers don’t want to deal with five different people, particularly in aviation. They want to be able to give you something and you must ‘sort it out’. They don’t want to go to five different specialists. They want a solution to all their aviation problems and that’s what we have to provide if we want to maintain the relationship.”
A Swiss experience
Raath began his career in South Africa in a long-term insurance brokerage, focusing on pilot-specific life insurance. He later bought out the brokerage with a vision to offer clients aircraft insurance, as well as life cover – enabling more regular client engagement and a fuller service offering. He later sold the business and moved to work in Switzerland in 2006. During his four years in Switzerland, Raath worked for a large aircraft fleet management company. Gaining invaluable experience and wide global connections, he then spent a couple of years consulting to major banks, handling repossessions and insurance of aircraft. He then returned to broking and it was here that he noticed the regular requests for aviation placement from other brokers – particularly African brokers and brokers from other high risk areas of the world.