Michael Creighton, team leader and executive director – financial solutions at WTW, shares his first-hand experience of a typical day working as a London-based broker dealing with African risks.


It’s early evening and I settle into a seat on the train for my relatively short commute: just enough time to reflect on what has once again been a very productive and interesting day as a credit and political risk broker at WTW’s London office.


First thing…

The day commenced with much anticipation of securing a new African-focused financial institution client, following many months of discussions with the organisation. The build up to this point required numerous conversations that included the client, our London-based team and our locally based colleagues, on the merits of comprehensive non-payment insurance, which the client finally accepted. These merits include Basel-compliant policy wordings that allow for capital relief, credit protection and obligor limit and country exposure management.

At WTW we are very thoughtful about how we present clients’ risks into the insurance market to have the best chance of securing appropriate terms. In addition, our broker team includes former bankers and insurers, ensuring that we have a firm grasp of the transaction and the risk being presented. Furthermore, we encourage regular, direct engagement between our clients and the insurers as we see real benefits in a tripartite relationship between insurers, insured and broker.

Insurers generally kick off their analysis by learning about the insured organisation, and today started with a market presentation by this new client. A number of insurers were invited to a face-to-face presentation enabling the client to present their credentials with a strong focus on their approach to credit and risk management.

The presentation was well-received and ended with much anticipation for the first enquiries to arrive.


Notification of a potential loss

It is said that the experience of making a claim is the ultimate test of an insurance policy. At WTW we have a dedicated claims team who support clients through the process. Earlier in the week, a client had informed us of a potential claim. To progress this claim, we set up two meetings, firstly just between the WTW team and the client, followed by a call which also involved the insurers.

In the first meeting, our claims team provided their assessment of the claim, taking the time to explain the process and the likely approach to be adopted by insurers. In the follow-up call, our client explained to the insurers how the claim had arisen and how they were managing the situation. The insurers in turn acknowledged their responsibilities and confirmed they would action the claim. Our client expressed gratitude and a degree of relief for the efficiency and knowledge displayed by our claims team and the insurers.


Mid-morning team meeting

Next up on the agenda was an internal team meeting to talk through the latest enquiries. We see a vast array of transactions with varying products, obligors and country risks. Today’s list included:

  • a renewable energy project finance enquiry in Southern Africa,
  • a receivable discounting trade finance risk in East Africa,
  • an infrastructure Ministry of Finance term loan in West Africa,
  • and an agriculture equity political risk insurance (PRI) enquiry received from our European-based colleagues for an investment in North Africa.

The team meeting involved a discussion about the various risks to ensure the clients’ requests were understood, with an agreement on who would take the lead on each enquiry, and identifying the appropriate broking strategy to adopt.

At WTW we believe that risks are best presented to the insurance market face to face; the approach adopted by Lloyd’s of London for centuries. However, the pandemic has changed things: hybrid work styles, greater transaction complexity and electronic tools are contributing to a move away from the traditional approach. At WTW we seek the appropriate balance between face-to-face broking and making use of the new styles and technologies, often settling on a combination of broking techniques on each transaction.


The afternoon

By late afternoon, insurer responses to our submissions were coming back. In general, Africa has a high demand for insurance cover and suffers its fair share of claims. This, together with rising debt levels and political uncertainty in several countries, means that insurers have restricted available capacity. However, this is where a good broker can really make a difference in acting as intermediary between insureds and insurers. The credit and political risk insurance sector has evolved significantly in recent years with an increasing number of insurers, greater capacity, longer tenors and more complex structures. Brokers with a sound knowledge of the risks and structures insurers prefer can be at an advantage in efficiently sourcing insurer support.

The initial responses have produced the usual mixed results: the customary NTY (no thank you) one-line emails have come in but are balanced by a number of insurers showing some interest in the various enquiries. The renewable energy enquiry has caught the attention of some specialist project finance insurers with a strong ‘green’ focus, despite the long tenors (in excess of 15 years) required in the deal.

The trade finance receivable discounting enquiry related to an obligor in East Africa is proving challenging, with most insurers declining the enquiry. However, the short-term nature of the facility and the excellent reputation of the insured has resulted in some positive responses.

The Ministry of Finance enquiry has also progressed during the day with some, although limited, success.

Many insurers have capacity constraints with various sovereigns in Africa. Fortunately, a number of new insurers have entered the market with fresh capacity, which generally means we are able to source at least some capacity in Africa for most enquiries.

Despite growing economic and political uncertainty triggered by recent global events, there does appear to be sufficient capacity for our equity PRI enquiry.

These early results are shared with clients, who will be kept regularly updated as further responses are received over the coming days.


A rush as the day ends

The day ends with us receiving a firm order to bind a policy. This was the culmination of months of negotiations with insurers to agree pricing and policy wordings.

Whilst it is late, we are likely to be able to bind the policy before the end of the day. Historically, much of the binding process required brokers to walk around the market trying to locate insurers to sign the policy, a process that could take some time. However, the pandemic triggered an immediate move to online policy acceptance.

On instruction from our client, the policy is uploaded and the underwriter, working from home, accepts the policy, allowing us to confirm that cover is in place. Our client is satisfied, and we reach agreement to celebrate in the coming days.

All in all, a satisfying day with a new client, a bound deal, a successful claims outcome, and several new enquiries with reasonable market interest.


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