Cover spoke to Gareth Beaver, CEO, Centriq Insurance about the past decade and their growth from zero to now.

Centriq Insurance is turning 10 this year… And a successful 10 years that is, because they are reaping the fruits of their labour, persistence, resilience, dedication and commitment to sustainable insurance solutions. The market is tough yes, but Centriq is tougher. So tough that a report from the Ombudsman for Short-term Insurance rated Centriq one of 2014’s top 10 insurers in South Africa.

For two consecutive years, they received a Silver Achiever Award in Deloitte’s Best Company to Work for Survey. And in 2015, the Global Credit Rating Company gave Centriq an –AA investment grade rating for their claims payment ability. They are also hosting their 3rd Tour de Conference this year – a cycling event they launched to give back to the community – because at the heart of it all, Centriq cares about their business partners, customers, employees and the people of South Africa. This mind set, they incorporate into everything they do.

Centriq recently partnered with Tradesure and Affinity… Is the UMA model still central to your business model?

We do conventional insurance through UMAs – so yes, it’s still a key part of our business model. We have an amazing mix of UMAs and we will continue to expand our portfolio.

How are the smaller underwriters doing amidst the heavy economic pressure?

The harsh reality is that the smaller UMAs, especially those that do not focus on a niche or specialist market segment are currently battling to survive under the weight of the current battling to survive under the weight of the current difficult economic environment. Similarly, the larger insurers, which have benefits of scale and size, but not the portfolios that include a material amount of specialist market business, are not generating very exciting bottom-line returns for their shareholders at the moment.

What are the secrets of those that are still doing well?

Generally, the UMAs that are still doing well are those that underwrite a specific niche line of business. As a result, their expertise is deployed in the underwriting of each and every risk where the premium being quoted is sold by the intermediary at a price that reflects the value of the cover the client’s needs.

Specialist insurance is clearly an essential part of the industry and independent brokers’ business. However, we see a move to bring more of these specialist underwriters closer to the corporate structures. What is your opinion on that?

This dynamic is being driven by several factors – one being the need for greater insurance carrier to exercise a greater degree of control and influence over their outsourced business partners to meet the ever increasing governance and regulatory requirements imposed upon insurance carriers. Secondly, as many of the founding entrepreneurs who established these specialist UMAs near retirement, they wish to reduce their work commitments, but their financial exit plan can hardly be afforded by their junior successors in the UMA. And so the insurance carrier often jumps in to acquire the equity. In doing so, they bring these UMAs closer to their corporate structures.

When it comes to the value of advice, what do you think the real value is and how do you prove that to the client?

Advice is only valuable if it turns out to be good advice – bad advice is worse than no advice at all! Good advice, I believe, can only come from someone with experience; someone who is not conflicted in terms of an incentive or reward that may compromise the advice in their favour and at your expense. While you can prove these two aspects to a client, the fact of the matter remains that it is generally difficult to easily quantify the value of good advice. However, the cost of bad advice is usually simple to quantify – most times the experience is in actual rands and cents. When something goes wrong due to bad advice, the cost will become known. When nothing goes wrong due to continued good advice, the value thereof in not easily determinable. This is the challenge that advisers deal with, and for which there is no simple answer. Providing it to a customer is therefore difficult.

What is your favourite part of being a leader?

Most definitely when you see people in your team shine and achieve things through challenges and exposures which they may not ordinarily be expected to deal with – it’s very rewarding indeed.

If you can change one thing in the industry today, what will it be?

The fundamental structural weakness which promotes, encourage or demands that brokers are of little worth unless they obtain a premium price reduce to levels which knowingly will result in a loss for the insurer and possible insufficient commission for the broker and renewal or when taking on a new account. Think about this for a while – we all have a favourite restaurant that we probably have been going to year after year… have we ever seen the prices on the menu go downwards from one year to the next? No – but we keep going back. Why? Because we value the food and the experience and we know that the cost of the food and beverage which the restaurant owner buys goes up each year. And so we pay the higher price, provided we still experience the same value.

Good insurance cover from a good insurer has value and if the cost of continuing to deliver that value goes up each year, then why are industry participants discounting the price below the value thereof?