Tag: insurance

By Hanna Ziady for Business Live

Capitec, the lender that indelibly disrupted SA’s banking sector, entered the insurance market with the launch of Capitec Insure on Monday.

It will dip its toes in the water with a funeral plan underwritten by Sanlam-owned Centriq Life Insurance Company.

“We know what our banking clients are paying to other providers and we are coming in well below the competition with more cover,” Francois Viviers, executive of marketing and communications at Capitec, told Business Day on Monday.

The vast majority of the bank’s clients had funeral policies with other providers. It would target these customers initially before launching marketing campaigns, Viviers said.

Capitec, which obtained its banking licence in 2001, now boasts nearly 10-million customers. About 46% of these are primary banking clients, who not only have loans with the bank but make regular deposits into their Capitec accounts, mainly salaries.

It now has 289,000 active credit cards in issue, launching that product at the beginning of 2017 to target wealthier customers. Its credit card product had a book value of R2bn at the end of February — about 4.2% of Capitec’s total loan book.

The funeral insurance market in SA is reportedly worth more than $500m in annual premiums. The Financial Services Conduct Authority could not confirm this figure at the time of publication.

Funeral insurance was a “good opportunity” for Capitec, as it had been very lucrative for large life insurers such as MMI and Sanlam, said Renier de Bruyn, investment analyst at Sanlam Private Wealth.

“Margins are high, which means Capitec can charge less and still be profitable,” he said.

There were 15-million funeral insurance policies in circulation covering 19-million adults, Viviers said.

“Based on our research, we estimate the average policy in the market to cover a main life, spouse, two children and one extended family member costs between R175 and R295.

“Capitec provides the equivalent cover at approximately R140 in branch and R124 on our banking app,” he said.

Policies start from R25 a month, through the Capitec app and R40 a month when applying in branch.

Funeral cover ranges from R10,000 to R100,000.

The product would be accessible via the Capitec banking app, where customers could change their cover amounts depending on monthly affordability, Viviers said.

The funeral plan featured cover for up to 21 dependants, including the policyholder.

Other features include a doubling of the funeral payout if a life assured died in an accident and a six-month premium waiver if the policyholder died for the remaining life assureds.

In addition, there was a voluntary policy pause for up to six months, with no premiums payable and no cover.

Capitec hoped to launch other insurance products in the long term, Viviers said.

Also on Monday, international short-selling outfit Viceroy Research published a letter containing questions for Capitec’s audit committee.

These relate to alleged changes in Capitec’s provisioning policy and the nature of internal consolidation.

A scathing Viceroy report in February torpedoed the share price and prompted a back-and-forth debate between Capitec and Viceroy.

Capitec CEO Gerrie Fourie said at the time that the Viceroy report was “riddled with inaccuracies”.

The share price did not react to the Viceroy letter on Monday.

Property-related and business interruption losses as a result of fire and weather catastrophes have increased dramatically in South Africa, with 2017 having the highest underwriting losses on record.

Insurers incurred material underwriting losses driven by major natural catastrophes including the Knysna bush fires, the Transnet Rossburgh warehouse fire (the single largest fire loss) in Durban, a large hexane plant fire, a tornado in Gauteng and multiple heavy rainfall, hail and flooding events in Gauteng and KZN.

Reinsurers no longer regard South Africa as a low catastrophe risk region due to the high frequency of large loss events, resulting in adjustments and price increases.

“Given that the principle of insurance is that the losses of the few are paid for by the many, and the losses of the few have been greater than the total premium collected, insurers have had to respond by increasing premiums for all clients – even those with no claims at all,” says Clive Boyd of Aon South Africa, insurance brokers and risk consultants.

Insurers are also reviewing the types of risks they are prepared to take on, paying particular attention to high-hazard industries such as paint, plastics, wood, packaging, refrigeration, recycling and warehousing.

“Insurers are far more stringent when taking on risks, and clients will need to demonstrate their commitment to risk mitigation and prevention. In terms of fire risks, insurers may make the installation of Automatic Sprinkler Inspection Bureau (ASIB) approved sprinkler systems mandatory, and require that, in the event of a fire, the insured must prove that valid electrical and occupancy certificates had been obtained and that the premises was SANS 10400 compliant. In the absence of any of these, a fire-related claim can be rejected in its entirety, so the importance of managing compliance with fire-risk management requirements cannot be emphasised enough,” explains Boyd.

Risk management is another focal point for insurers. In the absence of a demonstrable risk management process, a business could find that an insurer may opt not to renew cover if it believes the risks are uninsurable. In order for a risk to be underwritten, there must be a survey report on file, indicating that the risk meets minimum underwriting guidelines and that the insured has adopted and implemented the risk control recommendations made in the report.

“After a decade of declining rates and profitability for insurers, battered by consecutive years of major losses due to natural catastrophes, it took a particularly bad year in 2017 to trigger the inevitable hardening of rates that 2018 is continuing to experience,” says Boyd.

“In order to remain insurable, risk managers need to review their formal risk management and audit programmes, ensuring that they comply with all national building regulations, installing ASIB approved sprinkler installations where recommended and adhering to risk control requirements as set out in underwriting survey reports. Mitigating fire risks requires close collaboration between insurers, risk managers and brokers to ensure that the current risk management programmes are still compliant with a significantly more stringent underwriting process. Failure to comply with the statutory requirements and codes of practice for fire protection can leave businesses in severe financial crisis and with potential legal ramifications.

Ultimately, reviewing such programmes is a task best undertaken with a professional broker who will work with the client to ensure that the fire prevention strategy is linked to an insurance program that fully addresses the needs of the business. With the assistance of professional partners, Aon assists clients with practical knowledge of building codes, fire codes as promoted by various specialist bodies, as well as knowledge of construction materials, manufacturing processes and storage practices and the relevant hazards involved therein. By linking this to an aligned insurance program that covers virtually all the ‘what if’ scenarios of not only the physical damage but the knock-on implications for business continuity, clients get to experience the real value of a comprehensive fire risk analysis and the support of a professional and experienced broker at their side to guide them through the process.

New app makes insurance easy

StockBox is a new mobile app that allows a user to digitally store all the important information and documents related to their assets. It’s a quick and efficient way of itemising possessions and storing important information like receipts of purchase, guarantees, warranties and item images so they are easily accessible when they are actually needed.

App owner Gary Bannatyne says: “The app was created to solve a basic problem I had when we had a break in. Not only did I not know about everything that was stolen. but I also had to go through a painful process with my insurance company to prove that I owned these items – which, of course, I didn’t have on hand.”

Convenience at your fingertips
The app has a number of unique and useful features. With StockBox users can quickly capture the important details of anything they own, whether new or old. They can categorise their items and information to make it useful for record-keeping and insurance purposes. In the event of a break-in or theft, StockBox will be able to create a detailed report that the user can share with their insurance providers at the click of a button.
If the item has just been purchased, StockBox can create a report for the user to obtain quotes with insurers of their choice.

Another useful feature of the app is the groups. Two or more people can create a group with all co-owned items, which is ideal for families, newlyweds or small businesses to record all their assets.
“We all know what a mission that is when your business has more than just a few little things,” says Bannatyne. “This makes keeping track of assets simple and convenient.”

A host of benefits
Life happens. Possessions are lost, stolen or broken. With StockBox, users can capture valuable information about personal items for future use. They no longer need to file slips and warranties. They won’t need to turn the house upside down or dig through the File 13 drawer when the vacuum cleaner breaks or an item of jewellery is stolen.
All the information is digitally stored in the cloud and easily accessible from any device supporting the app.
“We see StockBox creating a substantial influence in the insurance space by supporting users with the ability to store all their assets without the pressures of insurance products. We aim to develop relationships with users to provide options for them to access a digital world of insurance, where they are able to have control of their choices in an easy and transparent manner,” says Bannatyne.
“We just want to give a user a product that works and a product that adds value to their lives. If we can create that experience for the user, the economic opportunities will definitely follow.”

See your business through 2017

The beginning of the year is the perfect opportunity to give your business insurance portfolio a good review and clean-up. When you’re in the thick of running your business, and tending to day-to-day work responsibilities, it’s easy to leave aspects such as insurance simply to ‘tick’ over, but that could leave you compromised as your business evolves and its needs and exposures change.

Here are 10 important considerations to help get your insurance cover into top shape to take on any challenge that may happen along its path during 2017:

Get cyber savvy
Cybercrime is a very real threat to any business or institution, regardless of size or nature of business. If your business has a network, an internet connection and holds sensitive or personally identifiable data, then your business is at risk. Talk to your professional broker about how to protect your business against cyber hacks.

Vehicle insurance
Whether you run a handful of cars or a fleet network, make sure your vehicle insurance is fit for purpose with sufficient liability cover. From an asset replacement perspective, your business vehicles should be insured at no less than retail value, which is what a car dealer would sell it for taking into consideration age, mileage and condition. Don’t forget to add extras such as tracking systems, tow bars and so on. The inclusion of car hire can also be beneficial.

Business interruption
If your business premises burned down, your assets cover will take care of replacing the lost items, but what happens if you are unable to trade for weeks, even months and your income stops coming in as a result? Business interruption insurance is vitally important to tide your business over in terms of lost income as a result of physical damage, until your business is back to operating as usual. Talk to your broker about this very important cover.

Directors and officers insurance
The main purpose of a D&O policy is to offer financial protection for company executives in addition to providing legal coverage in the event of a claim. The cover that a D&O liability insurance policy provides is an absolute necessity when it comes to the protection of the personal interests of directors, officers and other employees that are charged with supervisory and managerial responsibilities, and who can be held liable for wrongful acts which may occur in their day to day management activities.

White collar fraud
In the current tough economic environment, fraudsters are becoming ever more creative and syndicates are also at play, which means companies are facing ever increasing risk from white collar crimes in areas such as credit payments, EFT transfers, debtors, petty cash abuse, cash theft, international transfers, payroll fraud (ghost employees) and stock theft. The fundamental solution is a commercial crime framework, incorporating indemnity for losses resulting from employee dishonesty, forgery or alternation, fraudulent transfer instructions and third party computer crime. Talk to your professional Aon broker to tailor covers according to the potential of fraud exposures in your business.

Check your sums insured
Check that the sums insured on your building and contents are sufficient. Have you made alterations to the building and bought new assets such as laptops or machinery that adds to the value you need under the sum insured? Don’t forget to factor in the impact of inflation and the falling Rand exchange rate. Businesses that procure equipment or supplies from international markets are at risk of significant losses if you have not reviewed the impact of the falling Rand on the insured value of property and assets.

Fire insurance
Despite the risk to business continuity, financial security and brand reputation, many business owners remain indifferent to the domino effect that a fire poses to their business sustainability. Make sure you have enough cover to protect you in a worst case scenario in terms of contents, building, business interruption and any liability that may arise due to injuries or loss of life.

Insurance for keys and locks
Advances in technology and security have seen us graduate from standard metal keys to smarter devices, many complete with transponders and programmed microchips. Loss or theft of such keys can cost a lot more than your business bargained for. Check to see whether the sums allowed for replacement of locks and keys is sufficient.

Trade credit
Trade credit insurance indemnifies a seller against losses from non-payment of trade debt arising from insolvency of or delayed/slow payment by a buyer.
It offers protection of accounts receivables against non-payment due to slow pay, insolvency or foreign non-transfer risk. Coverage is designed to prevent disruptive losses, reduce risk of key account concentration levels, and provide risk transfer of bad debt issues. With trade credit in place, companies can also enhance their bank financing in terms of improving the lending relationship, enhance their balance sheet and gain access to more capital at reduced rates.

Employee benefits
Talent retention remains a key objective for South African companies and the best approach is to increase the attractiveness of a position by implementing a comprehensive compensation and benefits solution that is properly communicated to the employee. The support of a professional consultant or broker with experience across the spectrum of benefits will prove invaluable in formalising the benefits program for your business and delivering a structured benefits communications program suited to various levels of employees.

Regardless of size or status, there is no one size fits all approach to business risk insurance. It all depends on the size of the company, nature of its business and its unique levels of exposure. Consulting with a professional Aon risk advisor is an invaluable exercise in protecting your business, reputation, clients, colleagues and bottom line.

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My Office News Ⓒ 2017 - Designed by A Collective


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