For South Africa’s economy and development to succeed and compete globally, there is a constant reliance on successful business. For industry in turn to succeed there is a need for suppliers to provide innovative solutions and cost-cutting efficiency. Innovation Group South Africa falls within the latter domain and has helped to drive success for countless businesses across a broad spectrum of industries within South Africa.
The diversity started with South Africa’s automotive trade and has seen the company grow, broaden its markets and become integrated into the global solutions giant Innovation Group plc. To that end, the business had two formal beginnings, both in South Africa and in the UK, as Glen Mollink, CEO of Innovation Group SA, describes:
“The business in South Africa originated in 1982 and was previously known as the eQuals Group. The name derived from the fact that on the right-hand side of an equal sign you expect to find a solution and on the left-hand side there’s a business problem. We were, and still are, and administration solution provider.
“Back then, the company’s main focus was on providing motor warranties for the domestic motor industry (and still does today). However, during 1998 the South African motor industry was in crisis and the decision was taken to significantly diversify the business. This diversification saw the group transform in to an administrative solutions provider.
“Over the next eight years and during the economic boom period, the business further diversified and built-up a portfolio of 16 businesses. During this time our staff compliment grew from 77 to 800.”
In the meantime, thousands of miles away in the UK, a fledgling company called Merlinace was incorporated in 1996. Three years later its identity was changed to Innovation Group as the business refocused on developing claims software and outsourcing solutions for insurers to improve claims management effectiveness, increase customer retention and improve customer relationships.
The new focus proved an instant success and in 2000 the company issued a major Initial Public Offer (IPO), which raised in excess of £300 million. This was the platform for Innovation Group’s growth, as the business embarked on a series of acquisitions that gave the company a global presence and ultimately lead to the acquisition of 50 per cent of the eQuals Group in South Africa.
“Our parent company is listed in London and headquartered in Hampshire, England. The South African operations are headquartered in Randburg, Johannesburg, from where our South African interests are centralised,” Mollink explains.
“Our role today is to provide business processes and systems to a number of markets, with a key focus on the automotive and insurance sectors. Our products are customized to help reduce administrative costs, reduce risk, improve efficiency and to increase customer satisfaction and loyalty. We aim to not only help customers’ address their existing business needs, but to help design innovative solutions so that they are ready for future growth and challenges. Our job is to design and implement smart processes and systems for clients,” he continues. Hence our drive is to live up to our name as Innovation Group.
“We have over the years developed best practice processes and products for each market but instead of offering “off-the-shelve” products we work closely and in conjunction with clients to customize each solution to their unique business requirement. Our South African motto is “We exist to enable our clients’ success”,” he adds.
Mollink says that the global credit meltdown of 2008 and 2009 was Innovation Group South Africa’s cue to consolidate the business to four key divisions, which has since grown to six.
“During the economic recession of ‘08/’09 we operated from five separate buildings in one office park in Fourways, with another separate office based in Edenvale. We decided to consolidate these office locations in to one central location based in Randburg which has made it easier to manage our businesses and to communicate with our employees.
“Currently we have six business with our automotive division (accounting for approximately 40 per cent of our R550 million annual turnover), being one of our key strengths. We own roughly a 55 per cent market share, making us the biggest player within this space in South Africa.
“We provide a range of services, from warranty and maintenance plan management and administration (we have a broad network of assessment and repair specialists), to call centre and road side assistance. We work with a variety of clients within this space including some of South Africa’s leading financial institutions and OEM’s.
“Another of our key businesses is our insurance business which provides claims management, supplier management, assessments and legal recovery services. Our aim is to form strategic partnerships with players within the broker and short-term insurance market and help businesses to streamline processes, provide business process outsourcing and increase data analytics capabilities.
“The insurance business includes four areas: automotive insurance, home owners insurance, assistance services and appliance and electronics warranty insurance, which covers electronic goods against failure,” he continues.
Another growing business for the company is Insurance Software Solutions, which Mollink says is offered to both small and large brokers. With increasingly complex regulatory requirements and expenses, more brokers are turning to outside help rather than building their own IT frameworks.
Crucially, Mollink says that this service provides a platform for Innovation Group South Africa’s insurance data analytics, which, off the back of new legislation, is set to feature prominently within the industry in 2013.
“A main focus for our Insurance Software Solutions offering is the introduction of our global Innovation Insurer product suite to the local market. Insurer Analytics forms a key part of this product suite and we firmly believe that it is set to take the insurance market by storm from January 2013. The development and launch of Insurer Analytics is the culmination of Innovation Group’s involvement within the global analytics market and as a platform it is relevant to global IT platforms and comes from a deep rooted understanding of the insurance industry.”
With new legislation imminent, which will require brokers to switch all data back to the insurer on a transaction basis, Innovation Group’s innovation has a ready-made market.
The Short Term Insurance Data Exchange (STRIDE) is an initiative by members of the short term insurance industry’s product providers (SAIA) and intermediaries (FIA) that will provide a secure method of transferring underwriting data, primarily between insurers and intermediaries.
STRIDE aims to create a sustainable and trusted insurance industry that facilitates informed risk taking to all stakeholders in the insurance value chain, by defining the rules of engagement for data and process interchange and an electronic connectivity capability.
The legislator merely wants the insurer to be in control of what it is on risk for and it is anticipated that the STRIDE way of transmitting data will become the preferred medium for transferring insurance data, because of its wide acceptance as well as the direct involvement of a number of product providers.
“Insurer Analytics is a standard interface which we have built for clients and is compatible with the STRIDE switch. We believe that there is a significant opportunity for Insurer Analytics to sit with the switch like a plug and play technology. With this system, clients won’t have to worry about the administrative burden and reports will be readily available.
“This system has a standard interface for how insurers and brokers interact with one another and it will also add analytics to this. We believe a lot of background work has already been done and this will empower both to deliver exceptional, high quality reports.”
The company incorporates a contact call centre business called In-Touch, which employs 200 telemarketers and 130 customer care staff. This contact call centre handles over 10,000 new product calls and 160,000 incidents per month.
In-Touch offers clients the ability to fully outsource inward and outward contact centre calls and covers short term insurance, roadside assistance, warranty administration, repairers, electronic assessment and service and maintenance.
Innovation Group South Africa also has a controlling stake in TIC, a travel insurance company, which underwrites cover for outbound travellers; and runs an underwriting facility for small insurance brokers.
Mollink says that the business currently employs 840 employees across the various divisions and has made significant strides in developing its BBEEE rating to level 4, through the sale of 25 per cent of the business to Zico Capital, a black economic investment house.
Despite the economic downturn, Mollink remains very upbeat about the prospects for 2013:
“Our parent company is involved in insurance administration globally and has had experience of Solvency II requirement and our best of breed staff around the world have helped us with regulatory changes. The redraft of the South African insurance legislation is due in January 2013 and will be in line with European standards, which will allow South African insurers to become more multinational than before.
“Having just invested substantially in our technology, a number of significant opportunities exist within the insurance administration space. We have a significant value offer to the insurance industry and a key focus for us will be to sell the concept to the market.
“We are also only scratching the surface at present with our core contact centre capabilities and there are exciting opportunities to grow that side of the business.”
If diversity has delivered opportunities in the past, it is a lesson that Innovation Group South Africa wants to continue to tap into: “Our chief strategy for the next few years is to push for significant growth of our diversification. Internally we want to look at our performance targets and we need to do things faster and better than our clients can do for themselves,” Mollink asserts.
“We see huge opportunities to diversify both for existing and new clients and we will need to ensure we have enough people on board to help us grow by our target of 20 per cent per year. Our growth will ultimately be based on three things: phenomenal delivery, targeted sales and acquisitions.
“We are quite excited about the future of the business, but what we deliver going forward remains to be seen as it is done in tandem with our clients and their strategies and challenges. What I can say is that anything we do will break away from norm and we will continue to look for ways to innovate and improve upon processes and solutions,” he concludes.