Constantia Insurances remarkable turnaround

I spoke to Peter Todd, Chief Executive Officer at Constantia Insurance Group about the remarkable turnaround they achieved in a short time.  

Tony: It is great to see Constantia making waves, making lots of noise and getting things done. Constantia’s presence and visibility in the industry has increased quite considerably and I think that has contributed to the momentum you have managed to create over the past two years and bringing about the significant turnaround for the Group. Please tell us a bit about that. 

Peter: I am happy to say it has been a big turnaround and a challenging exercise for us. It was very much a people led turnaround. We had to start off, as I shared last time, with a very tough exercise of restructuring the business and going through a retrenchment exercise. The reorganised team really responded positively and have taken us along this journey where we now see sustained turnaround in our business. At the half year we reported results that showed good growth., We spent a lot of time, optimising underperforming business and it is nice to see that we are now in a growth trajectory, as  we become more externally focused.  

If I look at the key parts of our business, which make up more than 80% of our revenues, those all operate at a combined ratio of just over 95%. That is our long-term objective, which is incredibly positive. Then, with our remaining bits, we are doing a lot of work in terms of our strategic focus and we have  plans in place to turn those businesses around and to achieve the same kind of results.  

So yes, it has been a lot of hard work and as I say, it has very much been a collective effort. Everybody had to put their shoulders to the grindstone, and I am immensely proud of the team and everything they have achieved. 

Tony: What are your thoughts in general on the performance of the industry, currently and for the rest of the year. Do you think that we will be able to sustain the momentum? 

Peter: It has been a tough two years for the industry. Firstly COVID, then the riots – even though it is more of a SASRIA impact, the reinsurance markets will pick up a lot of that impact as well. Then of course the KZN floods. So, we have really had three big events and the reinsurance markets are going to harden because of that. We are also seeing that in terms of our reinsurance renewals.  

We have another looming challenge. This whole question around Eskom and blackout scenarios ,we see reinsurers tightening their conditions which will filter down to insurers as well. So as an industry, we are in for another tough year, and it is going to affect the insurers’ performance. 

However, this is the time for the industry to shine as these events again demonstrate the importance and noble purpose of our industry. It is hard to estimate what the final insured losses will be in KZN, and I hear numbers are anywhere from R5 billion to more than R10 billion, but whatever it is, it is a sizeable number, and that is money that the insurance industry is pumping back into that economy. 

What makes it more interesting is that most of it goes through to the re-insurance market and most of that market is obviously an international re-insurance market. So, it is a form of foreign direct investment that flows through the industry back into our economy. As devastating as it is and particularly the loss of life, which is terrible, the industry is standing up and playing its role, for which we seldom get credit.  This is one time that we deserve credit. It will be interesting to see at the end, how much the industry has put back into KZN versus the government, for example. 

Tony: I remember specifically how the Knysna fires revived a lot of the local economy again. Through various businesses jumping in, small businesses coming in and the construction industry etc. I suppose in Kwa-Zulu Natal, renewal of the infrastructure will also contribute overall. 

Peter: Yes, absolutely. But there is a massive backlog because you still have all that work from the riots. There is still a lot of clean-ups happening from that and now the floods. The contractors there are terribly busy while people from other parts of the country, are heading that way to try and help and get things repaired. There is the saying that every cloud has a silver lining and I think in this case, it is the economic boom that comes post a tragic event.  

Tony: Working through partners is an essential part of Constantia’s business model. It is a partnership business. That is a big part of your model. We recently heard that Ami Sure , a new business that is going to be launched with Christelle Colman and some partners including Constantia. Can you tell us a little bit more about your focus on innovation and partnership and bringing that together? 

Peter: Ami Sure is very exciting for us and a really a positive endorsement for our strategic focus around partnerships and enablement of partners. The success of Constantia has always been through partnerships and the fact that the likes of Christelle and Carel chose to partner with Constantia, is a strong endorsement for the value proposition that we are looking to roll out and focus on. It gives us the confidence that we can build out our partnership model in other areas and other lines of business. 

Tony: A lot of the focus there is on digital transformation in the broker distribution environment, where you are a focused player. What are your thoughts on digital transformation in the broker environment?  

Peter: It is key to the Ami value proposition, which is what attracted us to the partnership. An advantage for us at Constantia is that we do not have much legacy when it comes to systems and technology, which means we are well-positioned to adopt innovative technologies and do things a little differently. We have done a lot of work around data and aggregation of data from multiple systems. 

We consider ourselves as a tech light business and therefore more agile, more flexible. That was also a key consideration in their decision. For me, there has been so much focus from insurers on the front-end sales and disintermediation through technology. Using bots, et cetera to replace people when it comes to selling of products and advice is not a segment that we operate in.  

We promote the value and importance of advice. Just look at recent incidents that we were talking about earlier, that advice is critical. How many people find themselves underinsured, for example, just do not have the right insurance or did not have SASRIA cover? That is the consequence of  not having the right advice. 

For me, where technology is more interesting, is how you enable the advice process to be more efficient, more effective, and how you use technology to make claims a far less laborious process than what it currently is. So, for us, the focus is not only on the sales front. It is more on the back end support and administration and making that as effective and efficient as possible.