Constructing the future of engineering insurance

Mirabilis has provided engineering reinsurance on the African continent since 2006, and globally since 2014.  This diversity has ensured sustainability that other local engineering insurers have not benefited from, especially as reliance on the local South African market can be fraught with difficulties. The impacts of the pandemic, the war, gas shortages, and low investor sentiment may be global challenges but these have been exacerbated by the South African disasters of rioting and looting, fires, floods and excessive hail storms, the declining economy, and adding further woe is the recent extreme and debilitating loadshedding regime.

While it may be that infrastructure development is highlighted as an imperative by the government, the projects are slow to manifest. It is not that the projects don’t exist, in fact the construction industry has been pleasantly surprised, says Curt Meyer, CEO of Mirabilis, by the creativity of the mid-market tier construction industry looking for new opportunities, including transforming commercial property buildings into residential apartments, and increasing private investment into expansion of manufacturing facilities. “If these movements hadn’t happened, the industry would be in a far more difficult space right now. However, in this environment, resilience and creativity are not the only nor most important factors that ensure profitability.”

“Anyone can issue a policy, but not many can pay the claims,” says Meyer, and that, it seems is the catalyst to ensuring survival and profitability during disruptive times. Shane Graham, who works alongside Meyer, as Head of Africa at Mirabilis proves the validity of Meyer’s statement when he recounts how at the peak of Covid, Mirablis was the first to settle its share of one of the biggest claims emanating from a Middle East project.

“We didn’t realise the incredibly positive impact of this on our brand until attending international conferences where we were congratulated and approached by companies wanting to do business with us.” This speaks volumes about how Mirabilis has positioned itself; enabling policyholders to recover quickly following an insured incident.

Mirabilis is discerning about the projects it underwrites. Meyer explains that this means asking the ‘difficult questions’ upfront so that Mirabilis can insure a project correctly, and correctly understand the insurance needs. “These questions may appear burdensome to the potential client and sometimes sways the choice of an underwriter to a competitor. This may be good in the short term, but the policyholder may find a claim is not valid based on issues that were not factored into the policy.”

An example is the extent to which environmental, social and governance (ESG) challenges have come into play in SA and the continent. “Those include understanding the political environment that could pose a problem for our clients in the future, and the ever-changing legislative environment,” says Graham. “We ensure we are kept well-informed of all macro and micro-economic disruptors through our closely connected network that operates across 32 African nations. This information is crucial to the success of our brokers, and to ensure that we keep risk prudent.”

While it may be considered by some as fortuitous that Mirablis expanded into Africa and the international markets to the extent that it did, it was a strategy based on taking stock of the changing economic, technological and competitive environment.  It has paid off, and Mirabilis has experienced good growth in the past few years.

It is the same well-defined considerations that saw Mirabilis avoid competing aggressively for market share in KwaZulu-Natal, years before the floods. “We determined that the cost of insurance was too low in the area, and priced risk accordingly. In retrospect, we’ve made all the right decisions,” says Meyer.

Keeping risk prudent has not impacted on Mirabilis’ commitment to support South Africa’s growth strategy. “If anything, we have further entrenched our service provision because we are confident that the South African construction industry will recover. We partner with 1600 brokers, providing them with support and technical knowledge, which enables them to successfully insure their clients projects.”

Meyer and Graham expect the engineering insurance portfolio to grow given the recovery of the construction industry, which was one of the most affected sectors during the Covid pandemic. Construction/engineering projects can however take considerable time to materialise, and involves multiple parties and stages of development that influence how the insurance is structured, with risk often spread across multiple insurers.

“We have always underwritten in response to emerging trends,” explains Graham, “which includes a full spectrum of projects, large or small, such as extensions to malls, industrial precincts and similar, large infrastructure projects, power generation, as well as smaller projects including residential homes and developments.”

That said, Meyer stresses that regardless of the Mirabilis global footprint, South Africa remains its home base and heart of its operations. “Without this base and the support of our South African brokers we would not have been able to launch successfully outside of South Africa’s borders. We are committed to remaining a lean and agile South African organisation. This message is delivered in all our markets, be that in India, Middle East, Egypt, Bangladesh, Morocco, or Cape Town.”

Mirabilis’ long-term strategy is to be the preferred and trusted provider of specialist engineering insurance in South Africa, Africa, and selected International markets. “This has served us well,” confirms Meyer, “and is a strategy that makes Mirabilis a trustworthy brand.”