Jurie Strydom, Joint MD, Regent, shared his thoughts on the company’s business model in a conversation with Tony van Niekerk.
COVER: How has the combining of the two companies under one managerial structure worked for you? Are you realising the synergies you were hoping for?
The merger of the two companies has worked extremely well. We now have one distribution channel for credit-related products, both life and short term. We are also able to run these products off a single operating platform and IT system so there have been significant cost benefits realised. Going forward we also expect great benefits to be attained through product innovation.
COVER: Regent is quite focused on credit insurance. There have been quite a few factors impacting on this environment. Firstly, the National Credit Act which prohibited single premiums. How did you overcome this and how did you restructure that specific type of business?
JS: We introduced new products to the market that required a monthly premium instead of a single premium. At the same time we introduced innovative product features that encourage the customer to hold the policy to the end of its term. This creates a win-win because it improves our policy retention and ensures that the customer enjoys important cover for as long as he needs it.
COVER: Secondly, with the downturn in the economy and the resultant credit squeeze, you must be feeling the pressure more than other insurers. How are you dealing with this?
JS: Certainly the whole industry is having to adapt to the circumstances. Over the last number of years we have actually diversified our business away from the sole reliance on credit insurance, and this has helped during this consumer downturn. For example, we are now the biggest insurer of commercial vehicles in South Africa. On managing an insurer in these times, our view is that there are three key things:
- Control costs – we underwent significant cost reductions in 2008, probably slightly ahead of some of our competitors;
- Price appropriately for your risk – we keep a very close eye on this;
- Innovate – we look to differentiate our products so as to continue to grow market share, even when the overall market is under pressure.
COVER: Have you seen any changes in the general credit insurance landscape since the Credit Insurance Commission?
JS: I think all market participants are more aware of the need for rigorous regulatory compliance processes as well as the importance of providing good value to customers. I am sure that there will be further changes in the market going forward.
COVER: What diversification strategies do you have in place for future growth of the business?
JS: We are already diversified into a number of non credit-related areas including personal lines, commercial lines, as well as more specialised areas like aviation and marine insurance. We also have a growing presence in the individual funeral cover market.
COVER: Your business also relies quite heavily on partnerships. How do you make that work for you and where do you see the future growth in this specific environment?
JS: Partnerships require an even-handed approach to ensure that you see a problem from all perspectives. We feel that we do that well. We like to bring excellence to a partnership but then also require a fair return on that investment.
As the South African market develops there are many new and alternative distribution models which are ideal for a partnership approach, so we see significant growth in that area.
COVER: Are you involved in cell captive business and if so, how do you see the future of this area of business? Is the market overtraded or is there still place for growth?
JS: We very recently began operating in that arena. We believe there is a role for cell captives in allowing new entrants to the insurance market and fostering innovation. Whilst cell captive insurer margins may have been unsustainably low at times, our approach is to bring value to the partnership and get a fair return for that.