Old Mutual explains restructured short term unit

OLD Mutual Holdings Namibia has acquired 100% shareholding of Mutual & Federal Namibia. The company will now be called Old Mutual Short Term Insurance Company. The Namibian’s Chamwe Kaira asked managing director, Sakaria Nghikembua about implications this will have on policy holders.

THE NAMIBIAN (TN): Is the integration of Mutual & Federal into Old Mutual’s main stream operations part of cost-saving measures and how does this move affect policy holders? Will there be any benefits to policy holders as a result of this?

SAKARIA NGHIKEMBUA (SN): The objective of integration is to provide our customers with convenience in the sense that they are able to access a wide range of product offerings and advice under a one stop shop. This means that our customers can access life insurance, savings and investments and short term insurance under the auspices of the Old Mutual brand in Namibia. Of course our customers can still access our services via their brokers or directly as in the past. But the fact is that they will get everything from one company called Old Mutual, which will have all their products in one place. Because of the increased branch network, customers will also be able to place their queries at existing Old Mutual offices, in addition to broker offices and former Mutual & Federal branch offices. So our accessibility to customers has increased. The main objective of the integration is therefore convenience to the customer and is in line with the Old Mutual Group’s strategy of becoming the financial services champion on the African continent, by providing a one-stop shop for our customers.

TN: What new products can we expect from the merged operation?

SN: First, I do need to clarify that this is not a merger. It is important that we get this clear, because it can cause confusion amongst people. What has happened is that the ownership of Mutual & Federal Namibia changed from Mutual & Federal South Africa to Old Mutual Holdings Namibia. So, it’s first and foremost an ownership change. With this ownership change, the previous Mutual & Federal Insurance Company of Namibia has now become the Old Mutual Short-Term Insurance Company of Namibia or OMSIC for short. This means that, with this transaction, OMSIC has become a fully operating subsidiary of Old Mutual Holdings Namibia. Integration in itself does not mean that we must now churn out new products because we are integrated. However, as a business that is responsive to the changing needs of our customers, we will constantly be reviewing our products to ensure that we continue to satisfy our customers’ needs. We will do so by either enhancing current products or by introducing new ones. The objective should be that if ever we introduce new products or change any existing products, it must be because that is what the customers are asking for. That’s our guiding mantra.

TN: How did Mutual & Federal resolve the controversial Mariental flooding issue?

SN: We do not provide flood cover for Mariental because we are dealing with an unmitigated risk here. It is important that we act responsibly towards all our premium-paying customers. If we take on unmitigated and therefore uninsurable risks, we would not be treating our customers fairly as we would not be managing our business sustainably. It is important that we focus on this sustainability, so that we would be there for all our customers the day their own claim happens. Is the Mariental flooding issue controversial? Not in my mind. It’s a straight forward business decision we have taken to ensure that we do proper risk management in so far as flooding in Mariental is concerned. So, only flooding is excluded.

Our clients in Mariental are still insured for all other risks, such as fire, theft, machinery break-down, etc. It’s important that this message is clear because some people think that short-term insurers do not insure any clients from Mariental at all. Only flood is an exclusion in our policies and there is nothing controversial about that. In fact, this is the situation with all short-term insurers in Namibia. It is common to have exclusions in any insurance policy for unmitigated risks.

TN: What is OMSIC’s market share and how many clients do you have?

SN: A benchmark measure for market share in our industry is Gross Written Premiums. We are currently second placed in the market using this metric. We do not focus so much on customer numbers because we have a mix of individuals, commercial entities, farms and corporates. A corporate would generate more annual premiums than an individual, hence the focus on Gross Written Premiums as a measure of market share. Of course we do track how many individual policies we have but that’s almost secondary to us.

TN: There is a general perception that the short-term insurance industry does not live up to its promises in terms of paying claims. What is your comment on this?

SN: I can comment in so far as OMSIC is concerned. We find every reason to pay a claim here. If a customer has taken out cover for a specific event and a claimable event happens, we pay. Period. That’s our philosophy and you can confirm this in the market, especially with brokers who do business with us. Customers take out insurance for specific reasons or events, and their legitimate claims must be honoured. I say legitimate because there may be customers who periodically want to claim for something for which they do not have cover. Or they are under insured and then want to claim at a level that is higher than the level of cover that they have taken out.

TN: Anything else that you wish to add?

SN: It is important to emphasise a couple of things: firstly that our mandate remains the same. We are a short-term insurer. We continue to offer our products and services as a short term insurer through the same channels, that is intermediaries and directly. Our customers can still deal with us via their brokers. That has not changed. If they are direct customers, they can still deal with our teams at our offices. Secondly, this is not a merger. This is a shareholding change. Therefore, this is not an exercise that makes employees’ jobs redundant or anything like that. Everyone continues to do what they have been doing prior to the ownership change. And our employees know this upfront but it is important to just let everyone else be clear about it. Thirdly, this change is good for our employees from a career-progression point of view because unlike in the past, they can now get opportunities and exposure in the bigger Old Mutual in Namibia. This possibility motivates people because they do not have to leave their professional family to progress in their careers.

* Share with us your experiences with the short term insurance industry via email: bottomline@namibian.com.na

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