Fueling the expansion of engineering insurance in Africa

Specialist Business

Fueling the expansion of engineering insurance in Africa

Published: 24 April 2021

Mirabilis is ready and equipped to respond to the insurance needs of Africa’s construction and engineering sector.

Innumerable reports inform us that two-thirds of Africa’s cities are yet to be built; that an estimated US$100-billion of private and public funds have been planned for investment in new African city projects; and that because of rising urban growth rates the continent will require homes for an additional 950-million people by 2050. Also on the agenda is much-needed public infrastructure development that supports inter-continental trade and facilitates improvements to socio-economic conditions.

This bodes well for the construction and engineering industry, particularly in South Africa, which is one of the sectors hardest hit by the country’s economic decline and the Covid-19 pandemic. Over the years the sector has also faced other challenges aside from toughening market conditions and political and investment sentiment; natural disasters impact heavily on projects because of the unpredictability of, for example, weather and ground conditions.

The vulnerability of a project is, therefore, very dependent on how, and the depth to which, risks are insured. This responsibility falls to construction and engineering insurance underwriters, who not only need to be skilled in the underwriting of complicated insurance solutions but also have expertise in all aspects of process, mechanical, electrical, building, civil, and structural engineering projects.

This is one of the reasons why Mirabilis, Santam’s construction and engineering underwriting business, which has a vast footprint spanning Africa, the Middle East, Central and Southeast Asia, and the Indian sub-continent, demands the adoption of, at minimum, professional global best practice standards. CEO Curt Meyer, provides further clarity.

“Risks in this sector are difficult to quantify because construction and engineering insurance is highly specialised.  No two risks are the same and similarly no two underwriters will underwrite in the same manner. But what is assured at Mirabilis, is that a minimum standard is applied. This is crucial because there is pressure on an insurance broker to produce a policy timeously, sometimes within hours of the awarding of a project, and one that meets the contractual requirements of the project.

To underwrite complex risks involves the collection of vast amounts of information that can include a proposal form, detailed scope of the project, summary of the Bill of Quantities, details of ground conditions, site drawings, and engineering method statements.  Beyond those are the unique aspects of the project. This is when the Mirabilis underwriters engage their industry skillsets, knowledge, and experience to ensure that additional information is sourced, all of which is in the best interests of the stakeholders. 

“This information takes cognisance of the insured’s requirements, from whom full disclosure is required. If such disclosure is not provided at underwriting stage, it could lead to disputes at claim stage“, explains Meyer. “It cannot be stressed enough, therefore, that regardless of the pressures imposed on underwriters by insurance brokers to issue a policy, the attention to detail is paramount.”

This is not a simple underwriting effort, regardless of the level of expertise of an underwriter.  The nature of construction and engineering is that it is ever-changing, meaning that there is always new knowledge to be acquired, which is why Mirabilis ensures that its underwriters are regularly trained and made aware of advances and challenges in the sector.

Understanding these challenges requires exposure to the array of differing conditions faced by international and continental contractors.  As such, Mirabilis has, in the past 15 years of its existence, built a network of localised credible affiliations.

For example, in Africa Mirabilis has tapped into Santam’s extensive network of partnerships such as Sanlam Pan Africa, Sanlam Emerging Markets International, and Saham Finances. Also in Africa and selected international territories, it has aligned with New Reinsurance Company Limited (NewRe), a Zurich-based reinsurer that has authorised Mirabilis to act as an agent to underwrite and accept, on NewRe’s behalf, engineering classes of reinsurance business.  

The association with NewRe allows Mirabilis to offer Standard & Poor’s (S&P) “AA-” credit rating.  This further supports Santam’s local counterparty credit and insurer financial strength, which is rated by S&P as ‘zaAAA’. 

Mirabilis is optimistic for the near future given that the number of requests for quotations is increasing.  “We remain hopeful that the SA government also follows through on its stated intention to inject some R791-billion capital into the industry by way of awarding infrastructure projects,” says Meyer.

“The private sector has also begun to invest in development projects boosting business confidence, which in turn further stimulates foreign direct investment into SA, and by default, the rest of the continent. This is a key growth area for Mirabilis especially as we are able to respond to engineering underwriting needs given our holding company Santam’s extensive African network.”

However, Mirabilis does not solely depend on reputation nor experience.  It is an innovator as demonstrated by its engineering insurance online quoting platform in SA.  This has been designed to provide insurance brokers, at their convenience, with real-time underwriting feedback, quotations, and policy documents.  “The platform caters for the smaller Contractors’ All Risks insurance policies, and feedback from our trials is exceptionally positive” says Meyer. “We see this as another tool in our cache to enhance the service delivery of our brokers to their clients, especially during the current business-unusual circumstances.”

Business-unusual for Mirabilis can be interpreted as ‘business as usual’ if based purely on the adoption in 2021 of a new motto: ‘Going back to basics”. To move forward in tough economic times is, as Meyer says, dependent on what has successfully maintained Mirabilis’ strong reputation in the market since 2006.   

“We have walked a long path with our brokers, helping and supporting them to grow.  We keep them visible at all times, such as currently in the wake of the pandemic, where we are engaging them on a one-to-one basis,” says Meyer, who is himself living the motto through his daily leadership.

“We are in touch with what our brokers require from us to enhance their ability to sustain and grow their operations. Their success is inseparable from our own and that requires us to be fully committed to their needs.

“The strongest message that we are delivering is that while it may be difficult to offer competitive pricing in a volatile market, we must be collectively focused on our endeavors to be the preferred and trusted provider of specialist construction and engineering insurance in Africa and our selected international markets.”

Mirabilis continues to apply its philosophy of listening, understanding, and problem solving. “We also continue to embrace Treating Customer Fairly (TCF) principles, which further adds credibility to all our stakeholders,” confirms Meyer, who recognises and identifies with how tough it has been for many, and may still be for some time.

“Never before have the insurance needs of the African construction and engineering sector required more care, and our brokers can take comfort in knowing that Mirabilis is a brand that can be depended on with confidence.”