Judging from the media release on this transaction, it appears that there are many reasons why it is likely to be a huge success.
Both entities are highly successful, and the merger will allow both to expand in areas where they wish to grow, as opposed to acquisitions which involve bailing out a company in trouble.
The cultures of both companies are very similar, with Etana’s Paolo Cavalieri having come from the Hollard stable where he was CEO before leaving in 2007 to make Etana the success that it is today.
Good news for the industry and brokers, in particular, is the positive focus on its distribution channels.
The companies have been acknowledged over the years for their service to the broker fraternity, having won multiple categories at the annual Financial Intermediaries Association Awards, an insurance industry event that rewards insurers based on a survey of more than 2000 financial intermediaries across the country. “For us, these awards have always provided an important insight into just how we are performing in the eyes of the broking community and will continue to be an important benchmark going forward” agree Cavalieri and Kohler (CEO of Hollard).
Media reports indicate that, should the merger be approved by the authorities, it will become the second biggest provider in the industry. There are a number of reasons why this is important.
Size carries clout – even rugby coaches embrace this theory. Coupled with its creativity in product design, it will have a huge impact on shaping the future of short-term insurance, and force the more stoic providers to follow suit. Innovations like policy contracts with simple, understandable wording help brokers comply more readily, and I trust that there will be further enhancements to address this aspect.
The recent drama around Outsurance’s refusal to pay out a claim, which led to National Treasury intervention, is still fresh in the mind. The new group is ideally placed to allay concerns that the regulators may have regarding the motives of providers in the industry. Hollard leads the way in simplifying policy wording – something the authorities are very keen to implement in all sectors of the industry.
There will be challenges, chief of which may be integrating personnel in the new entity. Despite assurances, there will be people who feel threatened by the merger. My experience of Hollard, which I know better, is that its treatment of its staff is amongst the best in the industry, and I do not foresee this as a major problem.
We believe that the new platform creates significant opportunity for growth, which is why there are important roles for the management of both teams in the new entity. In addition, the complementary nature of our respective businesses means that we do not anticipate any job losses, which is really important to us in the way we approach business.
