Despite more players joining the insurance industry, the sector still remains profitable and sustainable, Hollard Insurance Botswana Managing Director, Jane Tselayakgosi, has said. Tselayakgosi, who was accompanied by Hollard Regional Head, Frans Prinsloo, said even though the industry has new seen new entrants in recent past, there is still more room for growth for the insurance industry in Botswana. She was speaking in an interview on Thursday, a few days after the group announced the acquisition of Regent Botswana Group. Tselayakgosi said since Hollard started operating in Botswana in 2005, the growth in the market has been adequate, except in the last couple of years in which the industry experienced an influx of new players. “The landscape is quite competitive but despite the increasing levels of competition, it still remains a very profitable market. You just have to find your space, your strategy in terms of retaining or growing your market share by finding innovative ways,” she said. Hollard Insurance provides both short term and life insurance, though mostly predominant in former, of which the company started when it opened its doors in Botswana over a decade ago. The group only started its life company four years ago and has entered into partnership with Botswana Post to come with a policy known as Motshidisi Plan which caters for the lower end of the society.
“Through this we wanted to reach out to the lower end of the market; it is basically aimed at the people who can’t afford insurance. We have a simple funeral cover for that group and also for the higher end of the market,” said the MD.
“The two key challenges that we see is that we are all aware of the economy; things have been tough for the past couple of years where we have seen mine closures. You don’t only lose the commercial side as people are being retrenched and it means you get less people buying insurance,” she said, adding that even though they have products that cover for stuff like that such as retrenchment covers. From that perspective, Tselayakgosi said it has been quite difficult to achieve the kind of growth targets they were hoping for. The other key challenge that the insurance industry faces, according to Tselayakgosi, is the limited pool of skills. “Insurance is quite specialised in terms of the skills that are required to run the business, which is why we at Hollard are actually behind training the people that we have to up skill them so that we can have people who are able to do their jobs,” said Tselayakgosi. Prinsloo, who is Hollard Regional Head, chipped in to say one of the challenges that the industry is facing is the number of new players coming into the market. “We have a number of small players coming to the market and often compete purely on price and I think for us is not about price; it is about stable company, very good financial resources providing good security and good service to the people,” he said. Hollard appears to be one of the industry leaders in the short term industry and once the new business of merging it with Regent is complete, Prinsloo said their market share would be 30 percent on the short term insurance side. “On the life insurance side we are still small, we have a very dominant player there who has over 75 percent market share and I think this acquisition is also very good from the life perspective because we now going have three stronger life players in the market to challenge the big dominant player,” he said.
Committed to Botswana
Despite challenges of mines and others, Prinsloo said they are committed to Botswana and the continent and are taking a long term view. “What is important is that the insurance business is a long term investment; as insurance business cannot just come, set up, operate for a year or two and leave,” he said. He said amidst such challenges, there is still room for growth in the insurance in Botswana explaining that the insurance penetration globally is around 10 percent of the GDP and locally insurance penetration is sitting under 3 percent of the GDP. Prinsloo said he does not anticipate that the local industry will get to the 10 percent of the GDP anytime soon which certainly leaves room for growth.
More acquisitions underway
After announcing the acquisition of Regent this week, Prinsloo does not rule out the possibility of more acquisitions in the future at group level, focusing on the whole of the continent. He said the group is built on strong partnerships, innovation and long term vision and that would continue. The group has been operating on the African market for close to 15 years now. “The African market has really been exciting for us; it’s been good growth over this period of time and the Africa business is very important for our growth and to expand we are doing that in this region with this acquisition which provides us with good bulk in Botswana,” he said. He said they have also done some acquisitions in Lesotho and Zambia, adding that they will continue expanding across Africa and has recently added Ghana with more West African countries on the horizon and East Africa. If Hollard is to further grow its portfolio here in Botswana, it will not be much into the short term insurance as the group already has a market leading position and Prinsloo reckons it will be difficult to go past the Competition Authority as they already have a stronger position in that space. In the cut throat industry which requires innovative ways to stay relevant and probably grow and retain the market share, Prinsloo said what sets them apart from the rest is that they have entrepreneurial spirit and believe in the fact that they have to empower the local team.
Earlier this week, Hollard group announced that it has acquired Regent Botswana Group which comprises Regent Life Botswana, a life assurance company, and Regent Insurance Botswana, a short-term insurance company. The two, Hollard and Regent in Botswana, are said to have reported gross written insurance premiums of approximately P714 million in their most recent financial year. The merger is expected to create an entity known as Hollard Botswana, which will employ approximately 120 people, creating Botswana’s largest short-term insurer and the country’s third-largest life insurer. The acquisition has been approved by relevant authorities, both the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) of Botswana and the Competition Authority of Botswana.