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It may be that the maxim ‘cargo at rest, is cargo at risk’ is still applicable but in the current environment even cargo in transit is fraught with theft and hijacking threats; more so when high-value items are transported, especially minerals. It is also not just about the Rand value of the entire load that is attractive to criminals, but also those items considered as ‘in-demand’ goods. Such would be cigarettes, pharmaceuticals, cosmetics, liquor, electronic, and even designer wear, be that jewellery, clothing and speciality foods.
While 2020 saw a decline in cargo crime-related losses, be that through theft, pilferages, armed-robberies and hijackings, when global economies began to open up in 2021 after Covid-19 lockdowns relaxed, increasing trade and import/export volumes similarly increased criminal activity. This is concerning to Kennedy Ntenjwa, head of Santam’s Marine Division, who points out that today’s transporters are now burdened with the additional costs of applying full security measures to protect their loads, such as Satellite Tracking devices and armed escorts. In fact, without those measures, insurance policy warranties may be negatively impacted.
“Security measures today are key when pricing or quoting on a risk,” he says. “It stands to reason that good security attracts more competitive pricing, and with so many players in the market, it puts extreme pressure on pricing overall.”
Currently South Africa’s total marine business is estimated at R2-billion, of which Santam’s market share is some 25%, and Santam Marine wants to increase that margin this year by 20 percent. It’s somewhat of a tough mission given that the country is yet to fully engage its planned infrastructure, mining and construction projects, which will bring much needed economic activity, let alone recovery from the decline of clients’ sums insured declarations following the Covid-19 pandemic restrictions, which in turn led to a reduction in premiums collected and profitability overall.
“This is the entire industry’s challenge,” says Ntenjwa. “We are all having to rebuild relationships in our market following the almost one year’s lack of physical interaction in 2020. We’ve put a lot of effort into this, resulting, last year, with Santam Marine realising an increase in the sums insured, which has had a positive impact on our Gross Written Product (GWP).
“It remains, however, that price is king, and the drive to reduce costs across industry lines has also had a major impact on loyalties.” To counteract this, and rebuild brand support, Santam Marine has taken the strategic decision to rejuvenate the value proposition to its clients and brokers, and is doing so in a number of ways. First is tackling the security issues that transporters of marine goods experience.
“We are working with security companies that provide patrol security to trucks, to see how they in turn can take this value proposition to our clients and brokers. We have also increased our ongoing client webinar education around risk management and risk mitigation measures,” explains Ntenjwa. “What is crucial to understand is that while security measures may bring additional costs to the transporter, some of those costs are mitigated by a decrease in premiums.”
Another target that Santam Marine is focused on in 2022, is rebuilding the value of marine insurance through quality education of brokers, especially among the small to medium demographic where such brokers don’t have the right product knowledge nor expertise. “Through Santam’s Learning and Development portal, they can access an upskilling programme, and which is also designed to clarify the value of marine insurance.
“This is particularly important so that the industry can attract the youth into a marine insurance career. There is a misnomer that marine is too complicated, takes too long to master and progress a career. We tackle that head-on because our solution is a combination of education and training, and yes, possible mandatory certifications. But this will translate into improved remunerations and the likelihood of study incentives, which we believe will encourage the youth into an exciting career,” confirms Ntenjwa.
Strategically some traditional business drivers remain in Santam Marine’s focus targets, although those have been upped in terms of intensity. This includes responding to market demands for new ‘quality’ products, more effective and speedy claims settlements, a more in-depth focus on client interactions, and the use of technology platforms that create ease-of-doing-business scenarios.
“Overall our goal is to see the revival and sustainable strength of the marine insurance sector. All stakeholders need to forge improved relationships, be that private industry, brokers and clients, to combat threats in the market. We must all be willing to commit time and resources to protect our respective interests,” concludes Ntenjwa.
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