We spoke with Richard Miller, Head of TradeRisk Solutions at PIB Insurance Brokers and part of the PIB Group to hear about their experience in the African insurance space.
Can you give some context about PIB Insurance and some of the services that you offer across Africa?
Launched in 2015, we have grown rapidly through acquisitions and by employing outstanding individuals with a wealth of knowledge and experience across the insurance market. The Group is bringing together companies and individuals recognised as leaders across a range of specialist markets and we will use the expertise and insights gained over many years to deliver the highest levels of service to our customers.
The TradeRisk Solutions team invest time in getting to know our clients and understanding the risks they face so that we can build bespoke solutions around their goals and challenges to provide security and peace of mind.
We work with financial institutions, exporters, and corporates in various industry sectors, with regards to trade into and out of Africa. Our insurance solutions are placed with Lloyds underwriters and across our global network of insurers for a range of cover. These range from lenders interest, trade and structured credit solutions, non-honouring of letters of credit, non-payment of trade loans, RCF’s, project finance, trade finance facilities as well as covering pre-payments and non-delivery.
In which African countries have you provided bespoke solutions to date?
We have provided solutions in the oil and gas industry in Egypt, various renewable energy projects in South Africa as well as aid projects into central African countries.
What are the biggest challenges for banks, non-bank financial institutions and corporates when seeking structured credit insurance on the continent?
There are a number of challenges that need to be addressed when looking at structured credit insurance. A number of these affect banks, FI’s and corporates alike. Information is key to a successful placement. Insurers would ideally like to see up to date financial information on a counterparty, and while audited and verifiable figures are imperative, these can sometimes be difficult to obtain. In an ideal circumstance, the Insured party will be conforming to the applicable customs and trade regulations. In addition, insurers will want to review any contracts in place, the Insured’s credit write-up as well as details of any prior experience.
Whilst these are beholden on the Insured, the insurers have their own challenges. In some cases, insurers may not have the available capacity to accommodate a transaction due to caps on the amount of cover (limits) they can underwrite on a particular obligor or country. Political instability in the risk country may also prevent an insurer from underwriting. Additionally, a poor claims experience may impact their decision, and of course, premium pricing could be a challenge if this is too high.
However, these can all be managed to a greater and lesser extent with healthy dialogue, information and negotiation.
What are your views on the actual vs perceived risks of African markets?
Generally, Africa is seen as a high-risk for trade and investment, but there is a limited understanding of the prospects and a platform such as Orbitt helps distinguish between the perception and the reality. It must be noted however that Africa is no different to the rest of the world where inherent risks and perception differ from the actual reality in regions such as the Middle East, Asia, Europe and North & South America.
Although weaker infrastructure in terms of transportation, IT and energy, does not assist trade, huge strides are being made through investments in this area and the establishment of the African Continental Free Trade Area (AfCFTA) will no doubt encourage major investment and boost inter-regional co-operation to strengthen supply trade and enable and easier trade.
Potential investors and exporters should focus on the myriad of opportunities within Africa and design insurance strategies to tackle the risks. As in all business environments, an understanding of local market practices, government strategies and priorities, a deep analytical understanding of the counter-parties in trade, as well as the supply chain and local economy will all help dispel perceived risks.
How does Orbitt help your business development across Africa?
Orbitt provides us with access to African-focused opportunities. As a new company, PIB is looking to develop our Africa offering and Orbitt provides this for us in a very focused and managed way. This also allows us to offer our services to a wider range of clients and increase our profile.