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AfricaMoney | August 18, 2017

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Insurance ExpertSpeak: Mauritius sees fierce competition in general insurance

Insurance ExpertSpeak: Mauritius sees fierce competition in general insurance

The Chief Executive Officer of Mauritius Union Assurance (MUA), Bertrand Casteres, elaborated on the organisation’s foray into Africa to access the vast Eastern African market with its high growth potential. (Image: Cecilia Samoisi)

The Chief Executive Officer of Mauritius Union Assurance (MUA), Bertrand Casteres, spoke to AfricaMoney in an exclusive interview on the insurance sector in Mauritius, where he reiterated that insurance is a promise made to the customer, which must be kept at all costs. He also commented on the fierce competition in the general insurance space in Mauritius, and what steps the MUA is taking to counter the same. Finally, he noted the organisation’s foray into Africa since June 2014 with the acquisition of Phoenix Transafrica Holdings Limited, in order to access the vast Eastern African market with its high growth potential.

Edited excerpts from an exclusive interview:

Mauritius Union today stands as the leader in the insurance sector. What are your expectations as a newly designated CEO of MUA for this new financial year?

There are two aspects to this question. The first aspect is that Mauritius Union is effectively a leader in the insurance sector and particularly, in motor insurance. The second aspect is that we have had a financial year when there was low GDP growth and thus low growth even in the insurance sector. Accordingly, we need to look for new strategies in order to reach a level of growth which leads to profitability and helps improve the financial health of the company. In line with this objective, at the end of last year, we delivered a new strategic plan called ‘MUA Ambition 2017’ which proposes a new value proposition for three main stakeholders. These three main stakeholders are, first and foremost, the employees, who are encouraged to deliver good service to our customers so that they can be happy and feel valued; then the community, which is our second stakeholder, and the customer who is our third stakeholder will automatically place value upon our organisational services; and when the three are given due recognition, it is the company which will benefit from it.

Mauritius Union brands itself as a reliable insurance organisation. At this stage, where do you set the bar to sustain your leadership in the insurance sector and quality service delivery?

Insurance is a promise. People will look up to you if you deliver on your promises. Anyone can make a promise, but the one who emerges as a leader is the one who is able to fulfil his promises. Thus, the fact that we are leaders in the insurance sector is linked to our ability to respect our promises, and fulfilling our promises is linked to the quality of service delivery, because this is our promise to our customer. Thus, to be a leader we are clearly keeping our promises in terms of quality of our services. In our strategic plan ‘MUA Ambition 2017’ there is an entire pillar based on customer satisfaction: How is the customer valued by our staff? How do we create value for our customer? All these parameters are based on the ability to respond to our commitment. Our customer focus is already paying off with many projects that we have launched, notable reduction in delays for reimbursements. This can also be seen in the arena of motor insurance where there is a big mismatch in the market between the sum insured and the sum reimbursed when you file your claim. So, in our company what we want to do now is to establish claim fulfilment on an agreed value basis, so that when you have a claim there are no unpleasant surprises. You know exactly how much you are going to receive against your claim in due time, as we make it a point to respect our promises.

According to the official market classification of companies by the Stock Exchange of Mauritius, Mauritius Union Assurance established itself at the 9th place with an annual return of 19.75%. What are your long-term strategies in order to place MUA among the top 5 key players of the corporate world?

It overall sums up what I have been stating earlier. I am not here to play to be first or second in the market on financial terms. According to me, what matters the most is that I keep my shareholders happy so that they can invest further in the company, and, that they get a minimum expected return which should be much more than the benchmark of the market. Having met this objective, even if I am not in the top three but am number four or number five in the market, I am still happy. I would like to increase our profitability in the insurance market and will give insights now into how we intend to do this, despite growth in Mauritius being limited, though positive. What MUA has done then to sustain this growth is that we have made an acquisition in East Africa such that since June 2014, MUA is the owner of the Phoenix Transafrica Holdings Limited. Besides, in Eastern Africa, economies like Kenya, Tanzania, Rwanda and Uganda enjoy a growth rate which is higher that the growth rate in Mauritius, so foraying into Africa will allow us to enjoy an average growth rate that is higher than that of our competitors and higher that the other corporates in Mauritius. Instead of waiting for growth to come to us, we are going to markets where growth is, which is in Africa.

Please comment on the company strategy to lead MUA towards a new organisational and corporate service perspective.

First of all, I would like to say that our company’s Africa foray is led by Kris Lutchmeenaraidoo, the ex-CEO of MUA, who is now the CEO of Phoenix Transafrica Holdings Limited (PTHL). He reports to the board and he will lead the strategy there. As he has been the CEO of MUA in Mauritius, he is better placed to consolidate this new acquisition to our advantage. He knows the company, he knows the board expectations and he can guarantee consistency across the locations. Like I always say, we make most value out of an acquisition when we manage higher sales at a lower cost. Very often it is through lower cost that we create value, that is, economies of scale are the objective of an acquisition. There are some similarities between Africa and Mauritius and we will try at the earliest to profit from our competences, especially in terms of medical insurance, which is growing very fast in Africa. In fact, we are leaders in the field of medical insurance here in Mauritius and we are going to export our competences to the region and we will also try to develop life insurance in Africa, as there is currently no life insurance in PTHL. These are our main priorities on how we are going to create value in Africa.

Furthermore, private medical insurance is growing in Mauritius and the fact that medical prices are increasing in Mauritius, is causing insurance prices to increase as well. However, we can see that there was a fiscal incentive given two years ago by the government such that they allowed tax exemptions for every Rs 12,000 spent on medical insurance. We can say that the government has really helped us to raise awareness among the Mauritian population on private medical insurance. I think that this focus should continue with the new government. I am in favour of tax reliefs on medical insurance as this really helps us to sustain growth in the medical insurance sector.

Can you give us your insights into the prospects of the overall insurance sector in this challenging economic period?

One big challenge that we face is the fierce competition in the general insurance space. It is more likely to be an ethical issue as the client is opting for an insurance package; one should not only consider the price but also the offerings and benefits of the whole package. We should not forget that it is a promise, so if the client is going for a lower package with lesser benefits, the lesser will be the promised service. And, on the other hand, in the Global Financial Sector in Mauritius, the rates are going down, therefore it has an impact in terms of the life insurance payback which is also being lowered. So, each time the Bank of Mauritius decreases interest rates it will have a direct effect on pension on a long term basis.

Given this context, the Mauritius Union Assurance is about to establish a strategic plan as from 2015, with innovative and attractive products tailored for the Mauritian people. One very pertinent aspect is the changing economic future with the arrival of new young professionals. So, we are going to target the youth and launch digital insurance where anyone can find an insurance cover within a few minutes at a very low price online. Moreover, hopefully by the end of this year, we can come out with a strategy where the client can make a claim directly from his mobile phone.

We aim to be the reference point in terms of insurance among Mauritians. We are the most widespread insurance company in Mauritius with 9 branches as we want to stay close to our policy holders.

And finally, how did the transition go between you and the former CEO of MUA?

The transition went very smoothly indeed. Kris and I are very close and he has acted as my mentor and I have learnt a lot from him. He also has vast experience in the Insurance sector of Mauritius. During the last two years, I have taken more and more responsibilities at the MUA. In fact, when he went to Nairobi last year, I was managing the company and reporting to him. However, we also assure our employees and customers that there will be not be sudden or drastic changes and we will emphasize and focus on the new generation and new technology for delivery. Finally, as a key player in the economy, we also have a duty towards the community, hence we will innovate on our CSR strategy.

- By Cecilia Samoisi & Kashish Jadoo

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