Uncovering opportunities in emerging markets, particularly where Lloyd’s is underweight, can seem like a powerful source of revenue.
It takes the right mindset, along with a degree of agility, to make a successful return on investment. As Nick Bacon, COO at Probitas, explains.
“Yes, emerging markets do promise opportunities for significant premium growth over the long term. But, in the short term the challenges and obstacles can be daunting.”
“We’ve always had a clear strategy to build a footprint outside of the London market. Working as a standard-bearer for Lloyd’s wider geographic growth aspirations alongside our own.”
“In emerging markets, there’s certainly no point in focusing on a near term gain. It always takes longer than hoped to obtain the necessary regulatory approvals and critically, find the right team. Understanding these challenges and planning accordingly are vital to ensure establishment budgets are not exceeded and the office opened on time.”
“Despite the fact Lloyd’s is the most globally recognised name in insurance, it still takes a combination of expertise, self-belief and a dash of courage to realise profitable growth in countries that remain relatively untapped by Lloyd’s” Nick reveals. “But nevertheless, emerging markets are attractive because of the combination of rising urban populations and low insurance penetration.”
“It’s well documented that the demand for insurance increases in line with the aspirations of a rising middle class and their levels of financial sophistication. It’s a clear indication that they have a better understanding of the value of insurance.”
“Work to educate individuals and companies alike on the benefits of insurance is paramount. And, can only be done with buy-in from local brokers. It’s certainly made easier with your feet on the ground and a long term local presence.”
“We know from experience, just how important it is to be local” Nick reports. “As a company, we are already benefiting from our underwriters’ local knowledge and local relationships. They better understand the barriers and levers for growth and give us insight on how to ensure we’re strategically placed to tackle those reasons. And, they help local brokers to design suitable products for their market.”
“When it comes to emerging markets, we can’t just look at the opportunity for revenue. We also need to consider the stability of that market and the cost of doing business. For example, Chile has perhaps the most stable market in Latin America, however, the cost of doing business is relatively high. Thorough research must be undertaken as to the real ROI and value of opportunity, before making any investment.”
“At Probitas, carefully considered entrepreneurial investment is at the heart of what we do.”
Nick concludes, “With this in mind, we will be taking our time to evaluate the opportunity in detail, to ensure that it’s a viable business proposition. And, not one that’s actually too good to be true.”