In a recent interview with George Parrott, partner of the engineering division at King Price Insurance, we gained valuable insights into the state of the engineering insurance sector and the broader commercial environment in South Africa.
Despite the country’s economic challenges and the ongoing impact of the COVID-19 pandemic, there are encouraging signs of growth and opportunity in the construction and engineering industries. In this article I delve into the key takeaways from the interview, highlighting the positive signs and discussing the ways in which businesses and brokers can navigate the financial pressures and structure their clients’ insurance policies effectively.
Positive signs in the construction and engineering industries
George acknowledged the pressure faced by the country’s economy but emphasised that the construction and engineering sectors are witnessing positive signs of growth. Construction activity can be observed across South Africa, supported by both government initiatives and the private sector, and the ongoing demand for housing due to population growth.
He also mentioned road construction projects happening nationwide, further contributing to the positive outlook for the industry. King Price Insurance’s commercial division is actively involved in numerous projects and sees considerable insurance opportunities in this space.
Activity for small and large businesses
The positive signs of growth extend to both small and large businesses, although they face different challenges. Larger companies benefit from greater stability and wider client bases, which provide them with an advantage in securing projects. On the other hand, smaller businesses face cash flow constraints, making timely payment from their clients critical for their survival.
George emphasised the importance of making early and prompt payments to smaller contractors, allowing them to complete projects and continue bidding on new ones. Despite these challenges, smaller businesses demonstrate resilience and agility, positioning them for growth and success.
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Balancing insurance costs and financial commitments
George highlighted the significance of broker guidance in managing insurance costs effectively during times of financial pressure, especially in the commercial and specialist lines of insurance cover. Collaboration between insurers and brokers is crucial to navigate the challenges faced by clients. He advises businesses to work with their brokers to assess their risks and identify risk areas that have material impact on their operations.
By focusing on those risks and implementing measures to mitigate them, such as theft prevention and maintaining an acceptable risk profile, businesses can lower their insurance risks and costs. A favourable loss ratio at policy renewal can provide long-term benefits, creating a sustainable insurance portfolio.
Diversified commercial offerings
King Price offers a comprehensive range of insurance solutions within its broad commercial portfolio. While the company has traditionally excelled in personal car insurance, it has expanded into other various other insurance product lines such as engineering, construction, commercial
property, and goods and transit insurance, as well as a full portfolio of business insurance solutions, and specialised cover for community schemes, agri risks, and cyber risks. By diversifying their offerings, they aim to provide brokers and clients with a broad range of solutions tailored to their specific needs.
This approach allows them to develop long-term relationships with brokers and clients, ensuring a holistic view of their insurance portfolio and enabling the provision of comprehensive coverage across multiple lines of business.