There is a familiar saying that good things come in small packages. Of course in business, size may seem to offer greater security but size can also make smaller niche markets seem less viable. Within insurance circles, Natsure may not be one of the biggest names, but the company continues to excel within those niche markets that the bigger players often spurn.
Based in Hatfield, Pretoria, Natsure is a multi-licensed niche insurance business (through its wholly-owned Guardrisk cell captive arrangement and its Authorised Lloyd’s Coverholder status) that operates mainly through underwriting management agencies (UMAs).
If further proof were needed that smaller niche businesses can succeed in the insurance market, the company’s forthcoming forty fifth anniversary, is ample evidence that Natsure more than holds its own with the bigger players.
The business was established in 1968 and has grown through a succession of key alliances that have built specialist knowledge, as Bertus Visser, Head of Distribution and Business Development, describes:
“Natsure is basically a partner of different insurers and we provide solutions for underwriting managers; we work on a number of solutions varying from self-insurance to full-on risk underwriting. We prefer taking a minimum stake of 26 per cent in all new (specifically start-up) UMA partners and our preferred remuneration arrangements are to align the interests between us and our partners through a combination of fee basis as well as profit share. We then also provide capital, IT, actuarial and financial accounting and distribution services to our partners. I think if you look statistically, there are not many companies that survive 45 years, this is indeed an achievement.”
The company has enjoyed a number of major successes recently, perhaps its most significant achievement being the launch of the Lloyd’s binder for aviation, as Visser explains:
“Access to meaningful capacity is critical in the aviation business. Our Lloyd’s Binder not only provides us with significant new capacity but it also allows us to offer clients the benefits of Lloyd’s paper, as you know, the quality of Lloyd’s paper by far surpasses any other local players.”
The company is also about to release a new GIT solution through one of its strategic partnerships, news that has Visser excited:
“We have a long-standing relationship with Paul Buckley, who had previously worked for many years with a rival insurer before establishing itself on his own as a hugely successful underwriter with expertise within the transit and marine markets.
“Paul is about to launch a new business called XL Transit and we will work together once this business is launched in February. This class of business is not new in South Africa but will certainly bring diversity to Natsure and also another area of expertise that fits our model. I am excited to be working with Paul as he has been very successful in GIT before and we offer him a customised ‘turn-key’ model that works for him.”
Diversity has proved a significant cornerstone for a business that prides itself on its specialist knowledge of niche markets and its flexibility when it comes to delivering what the client wants.
“We developed a strategy to become a more diverse organisation and today we work in a highly competitive market environment,” Visser affirms.
“Together with our UMA and product specialists, Natsure offers products in a variety of industry sectors including: aviation, engineering, liability, livestock, property, alternative risk transfer, credit life and marine transportation.
“Global regulatory harmonisation and an economic downturn have made the insurance industry over-subscribed in many areas and that is why we try not to play in areas where the bigger providers concentrate or has the appropriate expertise. Instead we compete in markets where the big players are less focused on.”
Visser says that at present almost all the company’s business is sourced in South Africa, although Natsure also has a presence in Namibia and some arrangements in Botswana. Despite its local focus, he says that global events do have a knock-on effect in South Africa, in particular regulatory events in Australia and the UK.
“I believe that players such as us are on top of the game when it comes to the interpretation of the regulatory environment as we typically attract individuals with entrepreneurial flair and people with a ‘can do’ attitude.
“Scale does help, but in my opinion it doesn’t necessarily give the bigger companies an advantage; it depends on the extent to which they are capitalised and sometimes the bigger businesses may err more towards a conservative approach.”
Being smaller can in fact bring advantages to clients, as Visser is keen to explain: “We can definitely offer greater agility; for example, we can go live on a new partnership project in as short a time as eight weeks, which the bigger players cannot achieve.”
Partnership is undoubtedly one of the key words to describe the past success of Natsure as well as its current business approach. While the business employs about 30 staff, the company’s success has been built on quality rather than quantity, with each individual partnership bringing unique industry knowledge to the table:
“Much of what we do still depends on experience and this gives us an edge in the niche markets we have chosen,” states Visser. “Good examples are the aviation and engineering industries; it is vital to have someone in the team who has a strong working knowledge of the particular field. In South Africa, there are very few specialist underwriters and we are privileged to have some of the most experienced underwriters.”
While Natsure is fortunate in having such individuals on board, technology also plays a crucial role and Visser fully appreciates the importance of getting IT right:
“I would say that without the right technology you won’t survive in this industry. Technology also gives us a competitive advantage through the ease of doing business.
“One of the biggest challenges is to ensure that the entire process from getting a quote out to a client, right through to having the business on the books is efficient. It is also crucial that IT makes it easier to roll out programmes for clients.
“We use a system called TIAL in which we have invested heavily and which plays an integral role in helping us to get set up with new partners as quickly as possible.
“However, we also provide the IT platform for our partner, along with actuarial pricing, policy wordings and templates. We also provide accounting, premium collections, reconciliations and administrative services and it is essential that the IT system is quickly integrated.”
At present, the company’s turnover is around R250 million and a meaningful portion of this revenue comes from engineering and aviation. Visser says that maintaining partnerships that are mutually beneficial is a key element to Natsure’s future:
“One thing that we have learnt in business is that it is important that every partner feels there is a solid contribution and benefit for its efforts. Most of our partnerships are reviewed regularly to ensure that all parties in the relationship feel they have a win-win situation – and it is critical to create strong partnerships in this industry.
“With that in mind our future is very much to ensure that we create sustainability for our business partners and it is a priority that they remain successful. While we will look at new opportunities, we have to make sure these can add value. We want to grow purposefully based on quality, and not just for the sake of premiums.”
One of the world’s biggest current challenges is to create renewable energy and Natsure has recently also entered this market, providing cover for wind farm and solar farm projects.
“We have partnered with GCube, the largest international players in the renewable energy insurance space. It is a very new concept locally, where we cover from ‘cradle to grave’ on the entire project,” Visser describes. “South Africa faces a huge energy demand going forward, resulting in a strong focus on renewable energy. In this regard, South Africa approved 28 new projects as part of its 1st round renewable energy allocations and Natsure (together with its engineering partner C&G) procured the insurance on 13 of these (given us almost a 50 per cent market share).” he continues.
“Ultimately we want to operate where we can make a difference – not only for our partners but also for our own group of special people!”