The credit insurance industry in South Africa is changing significantly. Until very recently there have only been three underwriters in this sector, with Credit Guarantee being the dominant player followed by Coface and Lombard. The entrance of new players to the market has significant implications for the industry and clients.
The past 12 months has seen a significant shake-up in the South African credit insurance industry with the entry of a new underwriting company, Credit Insurance Solutions. International underwriter Euler Hermes is also expected to be fully operational in South Africa by the end of the first quarter of 2015 and there are rumours of another international player launching during the year.
Besides bringing more underwriting capacity and international products to the market, increased competition also means better pricing for clients, and even more importantly, fosters fresh thinking and innovation in the industry. Established underwriters are also forced to develop new products and show increased flexibility, which holds an array of benefits for our clients. Especially interesting for our multinational clients is the access to global markets that international service providers bring.
Though clients should be excited by these new entrants, it helps to bear in mind that it is not only pricing that drives the choice of insurer, but also their capacity to mark limits, administration, and policy structure. More competition will also drive innovation and efficiency in these areas.
The industry as a whole will benefit greatly from the increase in competition, as it will give brokers the opportunity to showcase their independence - and brokers who are not truly independent will quickly be exposed.