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Started in 1998 by Willem Roos, René Otto and Howard Aron, OUTsurance has become a big player in the financial services sector, with 1m policies in South Africa.
In 2008, Youi (which provides personal lines short-term insurance cover directly to the Australian public) was launched in Australia, and expanded to New Zealand in 2014.
OUTsurance also operates in Namibia.
So how did this company come to be?
Roos and Otto met at Aegis – in which Rand Merchant Bank Holdings (RMBH) held a 50% stake – where they were both working at the time.
Aegis was a very traditional insurance company in the sense that it was intermediary distribution based, and Roos and Otto identified three opportunities for doing things differently: cut out the middle man, develop a sophisticated underwriting system and improve customer experience. And all of this needed to be underpinned by strong systems.
Roos and Otto pitched the idea to the RMBH board on a shareholders’ day. Otto gave the presentation, while “I was just the guy who pressed the spacebar for the PowerPoint presentation”, quips Roos.
Although the concept of direct insurance would not work within the intermediary-based framework of Aegis, the chairman of the FirstRand Group, Laurie Dippenaar, asked them to draw up a business plan.
At this point Howard Aron came on board to build the systems that would serve as the foundation for the business.
The initial business plan wasn’t approved because it required too much capital. After scaling down the plan, they presented to the RMBH board and within six weeks of the original shareholders’ presentation the team received the capital to start.
And so OUTsurance was built from scratch. A year later it launched.
“From the start we put good foundations in place because the vision was always to build a scaleable business,” emphasises Roos.
The biggest challenge was building the systems. However, Aron and two to three programmers did an amazing job building everything, explains Roos.
This left a lot of the original capital for the most important thing: marketing.
Think about it. Even if you aren’t insured with OUTsurance, you will immediately recognise the green and purple logo, know the number to dial, would have heard the R400-cash payout ads or been directed by its pointsmen.
So when did they know they had arrived?
Roos reframes the question: “Look, I hope we never think we’ve arrived…rather, when did we think this thing wasn’t going to fall over?”
They managed to get their loss-ratio under control fairly quickly and about 18 months after OUTsurance had launched, they were almost at breakeven “and we knew we had something here”, says Roos.
At that stage, they were still not sure how big they would get, but once they were able to start paying their first OUTbonuses (paid to clients that go claim-free for three years), business really took off.
The people and the culture
Walking into the OUTsurance office in Centurion alone gives you an immediate sense that although this is big business (the office houses 2 800 employees), this is not your run-of-the-mill corporate.
There are no suits and everything is open plan. Not even the CEO gets his own private office.
Roos believes strongly in the approach that “you must take business seriously, but not yourself”.
If you are interviewing for a top post at OUTsurance and expect “your own office, a thick carpet and your own boardroom table, it’s not going to work out”, he says.
When it comes to top-brass remuneration or “the knowledge workers, key players and senior management” as Roos calls them, the company pays market-related salaries and provides them with an equity stake in the business.
OUTsurance believes in the owner-manager culture, because, according to Roos, that helps you spend the company’s money as you would your own.
“We like entrepreneurial flair and risk-taking, but appropriate risk.
In the corporate world you sometimes get those who aren’t shareholders taking very big risks. If it comes off, they get a very big bonus. If not, the shareholders lose money and they just walk away.”
When you’re a shareholder, you tend to focus on sustaining profits in the long term, according to Roos, not chasing the short-term results.
What’s next?
OUTsurance is now an incumbent in the very industry it entered almost two decades ago.
So if Roos never wants to fall in the trap of thinking that he (or the company) “has arrived” and wants to continue innovating and adapting, what is next?
“We always look at expanding. Can our brand expand to other financial services? You need to balance that expansion with focus. We made the strategic decision to go to Australia and build business and that’s where most our efforts were focused,” says Roos.
At home Discovery has launched its own short-term insurance company and is in the process of applying for a banking licence.
“I think Discovery is probably becoming our biggest competitor. It’s a very disruptive, brilliant business with lots of capital to back it up.”
Would OUTsurance do something similar? Without dodging the question entirely, Roos plays his cards close to his chest.
“We’ll certainly keep looking to branch out our financial services offering but I can’t give you a clear roadmap.”
What he can say is that their approach would be slightly different to Discovery’s. Discovery caters for the higher-end market built around Vitality, “being everything to everybody” and changing behaviour, says Roos.
OUTsurance is more about cost-effective cover, great service, and great value for money.
“We want to build a quality product at an affordable price… We don’t sell BMW or Mercedes. We sell Toyota.”
One thing is certain: Roos won't stop trying to get everything out.
This is a shortened version of an article that originally appeared in the 4 August edition finweek. Buy and download the magazine here.
