In conversation with
Mr Johann Claasen
Managing Director | Botswana Insurance Company Limited
FDI Spotlight: 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 the biggest short-term insurer in the country, with a market share of 24 percent.
The market penetration of the short-term insurance sector is 1 percent of Botswana’s Gross Domestic Product (GDP) and long-term insurance is 2 percent. This is low compared to our neighbours Namibia and South Africa. Therefore, there is a need for education, growing awareness of the insurance industry and how it helps with economic stabilisation.
What new developments are you working on 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, the same products are being marketed and sold to customers by the various market players. 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 new or different product you believe people need or 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 designed to focus on identifying and creating new products.
We try not to reinvent the wheel. 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 for our market and, should we think we should offer it locally, we either partner with a specialist company to develop it or we develop it on our own, for the Botswana market.
We are busy with three new products, on the commercial risk side. However, we are also focusing on new products for the individual, designed to help the everyday man on the street.
It is very important for us to improve the quality of life for our people here. These products are still in their development stages, therefore I cannot reveal a lot about the specifics; however, I can say helping those who would be financially 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 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, aimed at the agriculture sector. Farming is enormous in Botswana and there are quite a few areas within it we can grow from an insurance point of view.
The only way to grow your insurance business – or any business – is to develop and improve your product and service offerings.
According to a recent World Economic Forum (WEF) Africa report, financial literacy and educational standards 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 understands the people and their circumstances?
Johann Claasen: It is difficult to design and offer products in a way that benefits the Botswana people, especially those who are not financially literate or well educated.
We base our offerings on our staff demographics because we have a very diverse group of employees. Our staff complement is of various ages, education, and backgrounds, which is often a fantastic 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 available and the fact that the younger generation has more access to it, they 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. The young people do their research online, look for as much information online as they can find, talk to each other and they want to talk to us; the older generation will usually work via a broker to be their middleman and look after their interests.
From a financial literacy point of view, there have been positive changes the way Botswana’s population learns about insurance and financial services. Until a few years ago there were no locally available education courses available to study insurance; we as BIC have tried to address this by helping interested students study the subject and understanding the industry. Technology changes things, and we need to understand how Botswana’s young and future generations will learn about financial products and the importance of managing finances and risk, 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 background role. I do not believe it will be at the forefront.
The industry will better serve the role of supporting and assisting other sectors, including the government. However, as mentioned, educating people on financial services and on what we can do in that capacity is important.
We assist through investment and we are in talks about forming partnerships with other players in the financial market. We also will continue to inject more of the capital we have into the Botswana economy.
Given the current status of the macroeconomic environment and the macroeconomic policies that exist, Botswana could and should position itself as a 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 the crown jewel of Africa: it is stable compared to other African countries in terms of politics and its economy. This makes doing business within the country easy.
However, the government needs to make it easier to get into Botswana, especially to set up a company. The potential is there, and it is a matter of attracting investors and keeping them here. Once you are established in Botswana, it is easy to expand and invest in most other African countries.
Concerning our own investment as BIC we have invested and are investing both in Africa and reinvesting in Botswana. Through our holding companies, our shareholders and likewise other sister companies the group has also invested and expanded into Africa.
Our investment philosophy is investing in Africa and we only invest in African companies, even if they have listed on international stock exchanges. 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 we need to give them easy access to the right information and easy access into the countries.