In conversation with
Mr Johann Claasen

What is the DNA of the Botswana Insurance Company Limited (BIC) and what is the company’s positioning within Botswana’s short-term insurance sector?

Johann Claasen: The BIC is the longest serving insurer in Botswana and currently the biggest short-term insurer in the country, with a market share of 24%.

The market penetration of the short-term insurance sector is 1% of Botswana’s Gross Domestic Product (GDP) and long-term insurance is 2%. This is quite low compared to our neighbours Namibia and South Africa. Therefore there is no doubt that there is a need for education, growing awareness of the insurance industry and how it helps with stabilisation.

What new developments, if any, are you working on in order to grow BIC and Botswana’s insurance market? Are there any local or global trends you believe the market here should follow and focus on?

Johann Claasen: If you look at the insurance market in Botswana, it is clear that the same products are being marketed and sold to customers. If you want to grow the market you can either educated the market and sell more of your existing products, or you need to sell a product you believe people need and do not have.

We try to play in the latter space as much as possible; therefore we try to develop new products for our existing and potential clients. We have a department within the company that is specifically designed to focus solely on creating new products.

We are not trying to reinvent the wheel, so we do not try to develop products that have never been seen or heard of before. A lot of research goes into exploring and finding out what other short-term insurance products exist, especially outside of Botswana. We then determine the viability of the product in our market and, should we think we should offer it to the locals here, we either partner with a company to develop it or we develop it on our own.

We are currently busy with three new products, mainly on the commercial policy side. However, we are also focusing on new products for people, mainly designed to help the everyday man on the street.

It is very important for us to be able to improve the quality of life for the people here. These products are still in their development stages, therefore I cannot reveal a lot about the specifics; however, I can say that helping those who would be crippled without good insurance coverage is something we want to address.

There are also some niche products we sell. However, the uptake within the market is quite slow. For example, if we were to launch a specialised product now we would only see real results in about five or six years.

That said, we are developing new niche products, specifically aimed at the agriculture sector. Farming is very big in Botswana and there are quite a few areas within it we can grow into from an insurance point of view.

The only way to continually grow your insurance business – or any business, for that matter – is to continually develop your product and service offerings.

According to a recent World Economic Forum (WEF) Africa report, financial literacy and educational standard are among the challenges hindering Botswana to become an African and global investment hub. How do you see the population grow and develop and what products can the BIC offer that truly understands the people and their circumstances?

Johann Claasen: It is difficult to design and offer products in a way that truly understands the Botswana people, especially those who are not financially literate or well educated.

We base our offerings on our staff demographic, mainly because we have a very diverse group of employees. Our staff complement is of various ages, education, and backgrounds, which is often a very good gauge of what our existing and potential clients are like.

There is a big split between the older and younger generation in Botswana. Due to the technology currently available and the fact that the younger generation has more access to it, they tend to understand our products better. They are also more knowledgeable about the insurance sector and the importance of having insurance cover.

The marketing of insurance products to the two generations differ quite a bit as well. The young people do their research online, look for as much information online as they can find, talk to each other and want to talk to us; the older generation will typically hire a broker to be the middleman.
From a financial literacy point of view, this changes the way Botswana’s population learns about insurance and financial services in general. Until a few years ago there were no courses available to study insurance; we as BIC have tried to address this by helping interested students study the subject and the industry. Technology changes things, and we need to start understanding how Botswana’s young and future generations will learn about financial products and the importance of managing finances, regardless of their backgrounds.

In terms of economic diversification, can insurance play a greater role for Botswana to achieve the desired diversification and can the insurance sector be the driver behind other sectors playing their role?

Johann Claasen: The insurance sector, typically, plays a backend role. I do not believe that it will be at the forefront.

The industry will better serve the role of comforting and assisting other sectors, including the government. However, as mentioned, educating people on the fact that we are here and on what we can do in that capacity is important.

We certainly assist through acquiring investment and there are talks of forming partnerships with companies in order to inject more of the capital we have into Botswana. However, I cannot go into too much detail about this at the moment.

Given the current status of the macroeconomic environment and the macroeconomic policies that exist, Botswana could and should be positioning itself as a safe haven for investment and the gateway for North Africa. How do you believe you can provide the comfort and security for investors for them to consider Botswana as their investment base?

Johann Claasen: Botswana is somewhat of the crown jewel of Africa: it is relatively stable compared to other African countries in terms of politics and its economy. This makes doing business within the country very easy.

However, the government need to make it easier to get into Botswana, especially in terms of setting up a company. The potential is definitely there and it is a matter of attracting investors and keeping them here. Once you are established in Botswana, it is very easy to expand and invest in most other African countries.

Concerning our own investment, as BIC we have invested and are continually investing both directly in Africa and reinvesting in Botswana. We have expanded quite a bit and through investing in our own holding companies, our shareholders and likewise other companies we have invested heavily into Africa.

Our investment philosophy is investing in Africa and we only invest in African companies, even if they are listed on internationally exchanges. There is no doubt that there is a buzz about and interest in Africa – people want to invest in the continent. We need to make it as easy as possible for them do to so, meaning that we need to give them easy access to the right information and easy access into the countries.