In 2017, Sasol had a good run rate on its South African facilities resulting in high output. But that productive year came at the environmental ... cost of an elevated emission footprint. Based on that, the listed integrated chemicals company has now revised its greenhouse gas (GHG) emissions target upwards to 30%, from an initial 10%, by 2030.
The venture is in the discussion phase with four or five MTN national operating companies and is aimed at market entry, Botha says from Johannesburg. The markets under consideration are in West, Central and Southern Africa.
Launched in 2017, aYo offers hospital and life cover in Zambia, Uganda, Ghana and Côte d’Ivoire. It had 6m active policies at the end of 2020.
The boards of insurers need the ‘recovery mechanism’ provided by reinsurers to be able to pay major claims, Botha says.
Botha, who was previously at the helm of Stangen Life Insurance, took over as CEO of aYo in November 2020 and inherited the venture’s micro-insurance strategy. He sees the firm’s scope widening beyond the ‘low-hanging fruit’ of insurance products.
“We can’t become stale in an existing market” as competitors will quickly copy products, he says. “The opportunity is bigger than micro-insurance.”
For now, the focus is on markets where MTN is present. Botha hopes aYo will enter one new MTN market in early 2022, and another by the end of next year, offering hospital and life cover first.
However, he says, the timing of this venture is complicated by national regulatory restrictions for insurers and telcos. aYo plans to request for funding from MTN and MMH for the expansion.
Insurance penetration in Africa has been held back by a combination of what Botha terms as the “three As: accessibility, affordability and attractiveness”.
MTN’s ability to allow clients to transact using airtime and mobile money can help to overcome the first two challenges, he says.
The company favours a pay-as-you-go model, with low premiums and maximum flexibility. Building trust between insurers and clients, he says, is facilitated by the fact that potential customers have a pre-existing relationship with MTN.
Another factor that may impede insurance penetration is South African insurers – such as MMH and Santam – resisting to pay business-interruption claims as a result of Covid-19. MMH’s GuardRisk subsidiary and Santam fought against paying out on their contracts despite repeated rulings from South Africa’s courts that found them liable.
aYo acts as a broker for insurance products created by MMH. Santam and MMH argued that Covid-19 and government restrictions were two separate events, with business interruptions caused by the restrictions rather than the pandemic; a line of reasoning repeatedly rejected by the courts.
The article continues below
Get your free PDF: Top 200 banks 2019
The race to transform
Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 200 banks from last year. Get your free PDF by completing the following form
MMH and Santam have said they are unlikely to continue to offer business-interruption pandemic insurance.
The insurers resisted the claims under pressure from global reinsurers who assume the final risk. The boards of insurers need the ‘recovery mechanism’ provided by reinsurers to be able to pay major claims, Botha says. If that is not available, then the only option is for insurance company shareholders to fund the losses themselves, he says. “It becomes a capitalism issue.”
Before Covid hit, MMH and Santam were collecting premiums for business-interruption policies. The industry will need time to overcome the breach of trust.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options