RISKAFRICA April / May 2012

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Dear Reader It is a fact that legitimate hunters are by necessity conservationists. Indiscriminate culling would soon lead to fewer and fewer species and eventually their extinction. Nearly every hunter I know has a deep love of the outdoors and respects the environment he (or she) is privileged to be in. I find it an anathema that the anti-hunting lobby can sometimes be so short sighted to the benefits this industry brings to our region.

Hunting attracts millions of dollars into sub-Saharan Africa each year.

THE RISKAFRICA MAGAZINE PUBLISHER CC 10 Old Power Station Building Cnr of Nobel & Armstrong Street Southern Industrial Area Windhoek Namibia Editorial enquiries info@riskafrica.com Advertising and sales Michael Kaufmann | michaelk@riskafrica.com Tel: +2721 555 3577 | Fax: +2721 555 3569 Tel: +264 61 400 717

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Pick n Pay director, Suzanne Ackerman-Berman, has taken a stand against Donald Trump’s children over a hunting trip they undertook to Zimbabwe two years ago. Her knee jerk reaction over the Trumps trophyhunting smacks of ignorance. A ban on hunting would result in huge tracts of unspoiled land being lost to commercial farming as new revenue streams are sought – not to mention the loss of game as sensitive biospheres strain to come to terms with out of control herd numbers. Poaching on the other hand is a diabolical attack on our natural resources and this scourge must be stopped at all costs.

RISKAFRICA (backed by Pro Sano Medical Scheme and Netstar) is raising money and awareness around rhino conservation. In June we’ll be travelling through Namibia, Zambia, Zimbabwe, Malawi and Mozambique spreading the message. I hope you’ll support our efforts (visit www. riskafrica.com) for details and read Hanna Barry’s hunting focus in this issue.

Enjoy the read,

Andy Mark

Andy Mark - publisher Ground floor, Manhattan Tower, Esplanade Road Century City, 7441, Cape Town, South Africa www.comms.co.za Publisher & editor in chief Andy Mark Managing editor Nicky Mark Copy editor Margy Beves-Gibson Feature writers Angelique Ruzicka Bianca Wright Elvorne Palmer Hanna Barry Lize van Coeverden Design and layout Dries van der Westhuizen Gareth Grey

Copyright THE RISKAFRICA MAGAZINE PUBLISHER CC 2012. All rights reserved.

Opinions expressed in this publication are those of the authors and do not necessarily reflect those of the Publisher, Cosa Communications (Pty) Ltd, COSA Media, and or THE RISKAFRICA MAGAZINE PUBLISHER CC. The mention of specific products in articles or advertisements does not imply that they are endorsed or recommended by this journal or its publishers in preference to others of a similar nature, which are not mentioned or advertised.

While every effort is made to ensure accuracy of editorial content, the publishers do not accept responsibility for omissions, errors or any consequences that may arise therefrom. Reliance on any information contained in this publication is at your own risk. The publishers make no representations or warranties, express or implied, as to the correctness or suitability of the information contained and/or the products advertised in this publication. The publishers shall not be liable for any damages or loss, howsoever arising, incurred by readers of this publication or any other person/s. The publishers disclaim all responsibility and liability for any damages, including pure economic loss and any consequential damages, resulting from the use of any service or product advertised in this publication.

Readers of this publication indemnify and hold harmless the publishers of this magazine, its officers, employees and servants for any demand, action, application or other proceedings made by any third party and arising out of or in connection with the use of any services and/or pro-ducts or the reliance of any information contained in this publication.

CONTENTS 04 10 12 14 16 20 22 24 26 28 36

The truth about hunting Is PPP the panacea?

Geared for growth L is for Loyalty Product focus – ExecuMed: Health insurance gets a facelift Insurance – upwardly mobile in Africa Dig deep – finding capital growth in a deflated investment environment Why Africa?

Reinsurance news round-up News Insurance in Uganda riskAFRICA

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• Hunting

“Professional hunters have a keen understanding of the environments in which they hunt and are sensitive to the ecological nuances and needs of these areas.�

Hunters are conservationists and community-builders.

With hunting season well underway in Namibia, a bit of research shows its contribution to the environment and economy to be truly staggering.

On target the truth about hunting

By Hanna Barry

Hunting helps to preserve the fauna and flora of various environments by stabilising fluctuating game numbers and monitoring land use. The industry also brings in significant revenue for local communities and conservation efforts.

Some of the largest and best managed game and trophy hunting ranches are to be found in Namibia, highlighting the vital role that the insurance industry plays in protecting this key industry.

While much of society may view hunting as a gruesome sport in which helpless animals are gunned down by aggressive men with oversized guns, professional hunters and those with a love of the bush paint a different picture entirely.

A fine art Professional hunters have a keen understanding of the environments in which they hunt and are sensitive to the ecological nuances and needs of these areas.

For example, a game farm owner will understand that if there are too many eland, the soetdoring bush will be eaten too quickly for the rooibokke to have their share. This means that killing a certain number of eland will benefit and protect the environment and its dependents. This is just one of many examples of the delicate balances within nature that are understood and kept intact by the professional hunter.

Hunters’ public liability is equally important as it protects those hunting should they become liable for death, injury or damage to property caused to third parties during the course of the hunting activity. One hunter experienced the devastation of accidentally shooting his tracker. The tracker had crouched down in front of the hunter to allow him to take a shot. The first shot only wounded the animal and so the hunter immediately reloaded his gun and took another, by which time the tracker had stood up.

To avoid this type of accident, some hunters simply rule never to shoot when there is a person in front of them – no matter how compelling the shot. In fact, one hunter told us that there are no hunting accidents, only hunters who fail to follow proper procedures, take careful precautions and strictly adhere to the rules of the hunt.

“Potentially the highest risk to a hunting operation is the reputational risk when a hunting accident happens.”

The hunt itself requires absolute focus on the surrounding bush, as the hunter carefully stalks their prey, every rustling bush and crackling leaf amplified. Handling a hunting rifle is no cheap trick and requires proficiency and craftsmanship. A successful shot involves hitting a target the size of a 50 cent coin from approximately 100 metres away, on foot.

Handling dangerous weaponry demands skill.

But should something go wrong, adequate insurance cover is vital, too.

Risky business Wild animals, dangerous weapons and accidents, such as falling off the back of a hunting vehicle, are only some of the risks facing hunters. Wounded animals are particularly dangerous and approaching an animal believed to be dead, when it is not, can prove fatal. For example, wounded gemsbok tend to hide in a bush and play dead, only to skewer their attacker on approach. While a professional hunter should be on hand to ensure that the client doesn’t sustain this type of injury, it is important to have medical travel insurance in place should this type of unexpected event occur.

Nonetheless, medical and liability cover remain crucial. “Potentially the highest risk to a hunting operation is the reputational risk when a hunting accident happens,” said chief operating officer of Marsh, Bennie Visser.

“This is best managed by a combination of the liability cover and emergency evacuation and medical cover for both clients and staff.”

Marsh place specialised emergency evacuation and personal accident covers with Lloyd’s of London. “Our local contracted service providers are Emed Rescue 24, as well as ISOS,” said Visser. “Normal assets and motor insurance are placed in the local insurance market with various underwriters, such as Santam, Mutual & Federal, Hollard and Western National.”

Santam represents specialist liability underwriters, Stalker Hutchison & Associates, which has an industry specific hunters’ liability product.

Additional risks include loss or damage to the assets of the hunting operation or farm, which include fixed assets and game. Examples of these include disease; and loss of grazing for game. Natural disasters such as drought, floods and fires can have devastating effects that may deliver a blow from which the farmer cannot recover. “Almost all hunting operations in Namibia insure the so-called catastrophe cover, which is cover for liability and fire,” said Visser.

Marsh offers a veld cover policy, under which the latter can be insured. The policy is placed with Santam and known as the Fire on Grazing-land Policy. It enables farmers to

“One hunter experienced the devastation of accidentally shooting his tracker.”

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“The biggest risk is cheap premiums that do not suit the risks and underwriters or insurers who do not understand the wildlife industry and the risk factors.”

supply stock feed to their animals and enable the grazing land to recover, following the damaging effects of a fire. Sums insured for grazing are negotiated with farmers beforehand, taking into consideration the number of hectares the farmer wants to insure and the carrying capacity of the area where the farm is located.

The product was launched in Namibia a year or two ago and is still unknown to most farmers.

“Santam is currently busy with a marketing campaign to introduce the product to game and stock farmers and we hope it will take off soon,” said Basjan Rothmann, relationship manager at Santam, “especially in this year, as we had a lot of rain and the risk of veld fires is very high because of high volumes of grass.”

Hunters are also exposed to the over-utilisation of game within the surrounding farming community, but this is usually managed through the formation of conservancies, which have grown in popularity in recent years.

Turning the tide In 1996, the Ministry of Environment and Tourism

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(MET) introduced legislation that gave conditional use rights over wildlife and natural resources to communities in communal areas, leading to the formation of conservancies.

Research released last year by the Namibian Association of CBNRM (community-based natural resource management) Support Organisations (NACSO), entitled Namibia’s Communal Conservancies, reveals that CBNRM promotes sustainable development.

Communal area conservancies are now found in 11 of the 13 regions of the country. The conservancy approach has proven effective as a conservation strategy, as can be seen by the increase in wildlife in many of Namibia’s communal areas. It also represents a successful rural development strategy, generating income for local communities, creating new jobs and developing skills and expertise.

Income from the overall CBNRM programme grew from zero in 1994 to over N$45 million in 2010. Conservancies earned more than N$39.5 million, approximately 86 per cent of the total CBNRM income.

The vision of these conservancies is supported by the Namibia Professional Hunting Association (NAPHA), which promotes ethical and professional trophy hunting in Namibia. According to Visser, with over 400 registered hunting professionals, the NAPHA works closely with the Ministry of Environment and Tourism (MET) to regulate the industry and is committed to sustainable game utilisation. Unfortunately, after repeated attempts to secure comment from the NAPHA, none could be obtained.

Of course, all of this rests on the existence of wildlife, which means that the hunting industry has a vested interest in seeing wildlife preserved.

“Professional trophy hunting has been one of the main conservation drivers in Namibia, however odd that may sound. Namibia is an arid land and its other main agricultural activity has always been livestock farming.

Responsible trophy hunting and cattle

“Santam is currently busy with a marketing campaign to introduce the product to game and stock farmers and we hope it will take off soon.”

farming have co-existed over many years,” said Visser.

Trophy hunting concessions currently provide the second-highest source of income for conservancies, generating N$13.9 million in 2010 or 28.2 per cent of conservancy income. This is second only to joint venture tourism at N$18 682 342 or 47.3 per cent and significantly higher than any other source of income in conservancies.

In 2010, the total income generated from direct wildlife utilisation was N$17 million (43 per cent of all conservancy income), with the key activities being trophy hunting, premium hunting, own use hunting and shoot and sell. Of the total generated, approximately N$4.36 million was in the form of game meat that was distributed among members of conservancies – a key form of benefits for local people.

Visser explained that the hunting industry generates employment

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where it is needed most, in the rural farming communities, as well as communal areas of Namibia. “There is also a major spin-off to other sectors of the tourism industry as hunting clients often combine their hunt with a vacation or safari in Namibia,” he noted.

This is particularly true of foreign clients. In fact, CEO of Aon Namibia, Richard Aston, said that the biggest threat to the hunting industry currently is the economic downturn in Europe and the United States.

In light of the important role that professional hunting plays in conservation and economic development, the role of the insurance industry in ensuring its sustainability is crucial. Insurance cover provides vital risk mitigation strategies to hunting outfitters and professional hunters, protecting assets and business continuity, and in so doing protecting livelihoods. “A major fire loss or a liability claim can potentially ruin the lives and futures of many people, from the professional hunter, the trackers, the skinners, all the way through to the farm kitchen staff,” said Visser.

“Generic products are outdated and do not always suit the African markets.”

Legislation in Namibia requires that hunting outfitters have at least N$2.5 million public and professional hunting liability and N$5 million motor passengers’ liability. In order to obtain a professional hunter (PH) licence, the certificate of insurance must be submitted to the MET. “Most hunters take out only the required limit, which could prove problematic when a claim occurs,” noted Aston.

This is where the advice of a good broker proves invaluable.

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A word for the broker Brokers need to have a clear understanding and knowledge of the potential risks associated with the hunting operation. “If you want to be a broker to this industry, make sure you spend enough time with a professional hunter, to fully understand what they do,” advised Visser.

“The broker should understand liability and negligence and have a good knowledge of common law. When a claim or potential claim arises, brokers must be able to advise the professional hunter on how to manage the emergency correctly.

Admitting negligence can jeopardise the liability insurance cover,” added Visser. “If a broker does not understand the full extent of the hunting operation, some risks may be overlooked – especially when professional hunters work in remote locations and even in other countries.”

Brokers explain uninsured risks to farmers and professional hunters. “Insurers generally do not cover unroadworthy vehicles. However, most hunting outfits make use of unroadworthy vehicles while driving on the farm. Brokers recognise this gap in cover and negotiate appropriate cover with insurers,” explained Aston.

One area in which the value of the advice given by a broker is underscored is in the insurance of exotic game species. Marsh places this insurance with Etana, through Hollard Insurance Namibia. Head of Etana Wildlife and Tourism, Joan Jackson, said that brokers selling these products need training and expertise.

“This is a totally different industry to the normal agri market, whether with livestock or commercial business,” said Jackson.

She explained that insurance products need to grow with the wildlife industry. “Generic products are outdated and do not always suit the African markets.”

Animals have become very expensive, leaving the insurance industry to find capacity, with affordable rates and underwriting criteria

Wild claims Etana had a claim where the buyer paid R350 000 for a golden gemsbok and lost the animal due to the capture procedures by the seller in Namibia. The animal died while in transit to the buyer’s location.

The seller claimed the buyer had received the animal in good health, but the stress factors manifested hours later. Etana paid the claim and paid for the pre-loss vet fees incurred to try and save the animal.

that benefits the farmer but also secures the sustainability of the insurance industry. “The biggest risk is cheap premiums that do not suit the risks and underwriters or insurers who do not understand the wildlife industry and the risk factors. This is not a quick buck industry. This is a niche market and only players that are there to protect and support the industry should be allowed to operate.”

With an industry that has as much positive impact as this one, we tend to agree.

• Insuring farmers

By Angelique Ruzicka

Is PPP the panacea?

Farmers are underinsuring or forgoing insurance all together when it comes to certain risks in Africa. Insurers are also reluctant to insure certain types of risk. Public private partnerships are often mooted as the answer to this problem but what are the benefits of adopting such schemes and have they worked elsewhere?

In 2009, the Department of Agriculture in Namibia conducted a risk management study where it questioned over 200 commercial and communal cattle farmers, particularly those of the Omaheke and Otjozondjupa regions.

The report cited natural disasters such as floods and bush fires as having a major impact on the management and financial viability of rural properties and on animal welfare. But livestock were also affected by man-made disasters such as theft and arson. In Namibia, cattle farming is the main agricultural production sector, according to the report, with an annual estimated value of N$900 million. In 2006, the total number of cattle was estimated to be around 2.3 million, according to the Meat Board of Namibia. With cattle farming providing such a vital source of income for Namibia, the department tried to investigate the perceptions of risk and risk management as well as the importance of insurance for farmers.

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The study found that 95.2 per cent of commercial and 98.2 per cent of communal farmers in the Omaheke and Otjozondjupa regions had no insurance cover for their livestock. It said that the farmers used non-farm income and diversification of their farm activities as a means of risk management. Riaan Louw, head of Santam agriculture for South Africa, who was formerly the CEO of Santam in Namibia, said he was aware of farmers adopting their own risk management practices to mitigate risk. “Farmers do spread their risk as well.

Some will rent farms in Namibia in different areas and move their flock between the farms so the risk is not so concentrated.”

Of those farmers who took part in the study, 26.2 per cent of commercial farmers revealed that they cannot afford to pay insurance premiums. However, there appeared to be a lack of awareness about the importance of insurance as 27 per cent revealed they did not see the importance of insuring livestock.

When communal farmers were posed the same question, 17.2 per cent said they could not afford the

premiums, while 82.8 per cent said they did not see the importance of insurance.

The report cited a number of reasons for the low takeup of livestock insurance, which included low levels of education, lack of awareness of the insurance schemes, poor rural infrastructure (making communication difficult and limiting access to insurance), affordability, degree of farmers’ risk aversion and the diversification of farm enterprises.

With cost as a contributing factor to the low take-up, the report concludes that insurers need to increase awareness of the role of livestock insurance to farmers and said that a combined effort was needed with governments, civic society organisations and the private sector. But how realistic is this notion?

The cover conundrum The other problem that farmers face is that the cover they require from major players is not always available.

There are a whole host of reasons for this but mainly it’s because the insurer sees the risk as too high and therefore will not provide the cover. Cover for farmers’ assets, such as cars, tractors, homes, sheds, plant and farming equipment, is generally offered but cover for certain types of crop or natural catastrophes is not so readily available.

Louw admitted that there were risks that Santam did not insure. “There are definitely perils that we don’t insure such as bad farming habits. If farmers do not undertake proper maintenance then we do not insure that either,” he said. He added that fruit could also not be insured against insect infestation as this was seen as a risk that farmers could prevent through the use of pesticides.

“We do insure farmers against acts of God but there are ways a farmer can manage insect infestation.”

Seeking a solution Farmers argue that the obvious solution is for insurers to lower their premiums. Meanwhile, insurers are reluctant to do so unless they get more take-up from farmers. But even if insurers were to suddenly reduce their premiums, the problem is that there are still some risks that they are unwilling or unable to cover for fear of losing business or going bust under the strain of paying hefty claims.

Public private partnerships (PPP) are often mooted as a solution to the problem of affordability and adequate risk cover. However, when approached on the subject, insurers are protective over the business that they already do well in and provide general cover for. “On asset insurance the market is well developed and is affordable. It’s actually cheaper than a personal or individual policy,” said Louw.

“If crop insurance were partly subsidised by governments here in Africa not only will it make insurance more affordable, but it would make the farming of crops more sustainable.”

Insurance cover is priced on historical data and what insurers predict will happen in the future. But some markets are too small to offer certain types of cover.

While insurers do provide cover in countries such as Namibia others, like South Africa, get offered more variety as the market is bigger. According to Santam there are around 3 500 commercial farmers in Namibia, which is small fry compared to the 36 000 in South Africa. “We will price it [insurance product] to make a profit or some return.

Farmers are spread out in Namibia and the risk for the farmers differ. Farmers in the south tend sheep and they want theft cover. They do not want lightning insurance as it seldom rains there.

However, that’s expensive and we don’t provide it. So the need and what is available do not always correlate,” said Louw.

Louw added that in South Africa only 25 per cent of farmers insure their crop. “There are a combination of reasons: they don’t believe in insurance; they don't consider it a risk for them; or they are financially sound to take the risk on themselves, or the cost of it,” he explained.

Others point out that a one-size-fits-all PPP scheme would not work for Africa as a whole. “There is not a single answer to it. You need to look at the risk on a case-by-case basis. We have an agency that specialises in insuring the farmer’s assets but not the crop. At the same time we are involved in reinsuring crop business. There are lots of factors that go into it and I think each territory has to work out its own solution,” said Achim Klennert, managing director of Hannover Re Group Africa.

Areas where insurers are taking all the risk should also be reviewed, said Klennert: “There is a lot more space for PPP in general and not just in crop. The earthquake in Haiti was devastating for that country but it was almost a non-event for reinsurers. On the other hand, the Japanese earthquake was a major loss for every reinsurer in the world. So I think this is where partnerships could play a bigger role than what they are doing at the moment.”

Louw argues that farmers would benefit more from PPP in areas where it is desperately needed such as insuring crop. He points out that PPP schemes are already in place in Europe and South America and working well. Some insurers and reinsurers have already engaged heavily with governments in Europe and Asia to get PPP initiatives up and running. Swiss Re has reported that China has entered into a PPP scheme for its crop farmers.

The reinsurer is working with the Beijing Municipal Government to provide reinsurance coverage for catastrophe risks under China’s government-funded agricultural insurance scheme.

Similar projects are also being promoted by the reinsurer in Europe. In November last year, Swiss Re, in co-operation with the Swiss Embassy to Ukraine, held a seminar in Kiev to discuss the advantages of PPP. The insurer said on its website that the country is considered the potential breadbasket of Europe and that 71 per cent of the

country’s total surface is agricultural land. Swiss Re argued that the country could remarkably increase its agricultural production and that its current yield per hectare is still substantially below the average yield in the EU. It is arguments such as these that form the main reason behind PPP schemes. It creates more investment in the agricultural sector and more certainty of sustainability in the practice. However, there are plenty of obstacles and red tape to overcome before most of Africa adopts PPP strategies that work.

“On asset insurance the market is well developed and is affordable.

It’s actually cheaper than a personal or individual policy”

But the benefits appear to outweigh the disadvantages and trouble of putting it all in place.

“If crop insurance were partly subsidised by governments here in Africa not only will it make insurance more affordable, but it would make the farming of crops more sustainable. We have a lot of farmers who leave the industry as they are not financially capable of farming any more after a drought or hail storm. It will secure food security if the country will help upcoming farmers to survive the bad seasons,” said Louw.

With more foreign direct investment ploughing into Africa, particularly from Asia, the continent would do well to investigate the benefits of PPP to increase production and attract investors even further. “Africa is the next best thing and countries like China and Japan are buying up vast pieces of land. There are different schemes being set up and they will need insurance to make those sustainable. I think Africa will show the fastest growth with regard to crop insurance in the future,” said Louw.

He argued that Africa could enjoy similar if not the same success that China has enjoyed. He pointed out that two years ago China was number 17 in the world when it came to raking in premium income from crop insurance. But now the country stands at number two. “I think Africa will head the same way.

There is a lot of good farmland not being used for farming, but this will all depend on the skills and the investments in the countries to make it sustainable,” said Louw. If lessons in Europe and Asia are anything to go by, it looks like a little push from the insurance industry will go a long way to ensuring that such initiatives take flight.

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• Covering construction

for growth “If we do not have a license in a particular country, we are able to facilitate that business through our network of partners and joint ventures across the continent.”

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construction boom is sweeping the continent of Africa. Despite a global economic downturn, most of the top growing economies are African; and sub-Saharan Africa comes second only to emerging Asia for economic growth prospects from 2011 to 2020.

This focus on infrastructure gives rise to the need for insurance solutions that will help protect and nurture the African growth story. There has never been a more critical time for brokers and insurers to be innovative and deliver knowledgeable guidance and advice for contemporary Africa.

Knowledge for now “The advice we and our brokers give to clients in the specialist fields of engineering and construction could mean the difference to that company’s very survival.

We need to help spot and insure against risks that are often not identified by inexperienced insurers or brokers and at the same time develop relationships built on trust,” said Jim Connolly, managing director of engineering specialist, Scintilla.

Scintilla is a partner of Hollard, which has established a footprint in the SADC region over the past 10 years, with the vision to develop local licenses and businesses in Africa. The insurer has developed local players in Namibia, Botswana, Mozambique and Zambia.

These businesses are built on the premise of building local expertise and capabilities and developing key, long-term partnerships in these local markets.

In partnership with Scintilla, Hollard has tapped into the growing infrastructure and construction sector in these developing economies. “Hollard offers significant capacity and expertise in the construction

space. Together with Scintilla, our unique model allows us to offer a one-stop shop and seamless solution for all engineering and related business – whether you are in Johannesburg or Namibia,” said Johan Barnard, CEO of Hollard Namibia. “If we do not have a license in a particular country, we are able to facilitate that business through our network of partners and joint ventures across the continent.”

Africa is often referred to as not for sissies and the continent certainly presents some unique challenges, from transport difficulties to traditions and customs that need to be carefully navigated. “We have to be dynamic and nimble in the way we deal with challenges in Africa, some of which are totally different from any experienced in First World countries,” noted Connolly.

Not to mention the challenges connected to insuring construction projects themselves. This is one sector in which you should expect the unexpected.

Scintilla experienced a recent claim in South Africa where very high winds toppled a crane into one of the country’s stadiums. This damaged the crane as well as the surrounding construction work. This type of high risk environment stresses the need for a good broker and tailored insurance policy.

Consider the contract Contractors’ plant insurance provides indemnity in respect of accidental, physical loss or damage to the insured item. Some of the risks that can be insured against include accident damage, fire damage and theft.

According to Connolly, under-insurance is one of the most common disputes that arise within contractors’ plant insurance losses. “It is the plant owner’s responsibility to provide the insurance

broker with the correct sum insured when purchasing the cover. The pricing is based on either the new replacement value or market value,” said Connolly.

“Unlike motor insurance, it is not an easy exercise to obtain the correct values for the sum insured and this often leads to disputes at claim settlement stage.” This leaves the insured feeling frustrated and short-changed. “Obtaining the correct values can be cumbersome, but most original equipment manufacturers will be able to assist with the correct values, or alternatively, loss adjusters can be appointed at an additional cost.”

Crucially, discounts received at the time of purchase must be worked back into the sum insured, so that the purchase price reflects the listed price from the original equipment manufacturer, free of all discounts.

The fluctuation in the exchange rate is something else to consider. “A prudent plant owner and insurance broker will periodically adjust the values of the sum insured, especially when there is movement in the exchange rate,” said Connolly. The cost to import the item, including freight duties, custom duties and any other additional taxes must be included in the sum insured, as well as the erection cost of the item.

When the insurance policy is renewed, this exercise must be repeated in order to provide the most accurate details.

Connolly advised discussing various claims scenarios with your client in order to ascertain if the correct insurance cover is in place.

With infrastructure projects growing at the rate they are in Africa, there is no better time for a good broker to show his true colours.

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•Broker loyalty

L is for Loyalty

The relationship between broker and insurer is necessarily mutually beneficial. Insurers want commitment and the certainty that you’ll still be there selling their products tomorrow.

You, as broker, want to know that you’re taken care of and can count on your insurer.

RISKAFRICA goes in search of the answer to how broker loyalty can be fostered and speaks to Santam Namibia’s CEO, Franco Feris, for his thoughts on the matter.

“Our brand position of Insurance, good and proper also resonates well with both brokers and clients.”

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A good broker is one of the most valuable assets for any insurer.

With a market share of approximately 30 per cent, Santam is the biggest short-term insurer in South Africa and Namibia.

Active for more than 50 years in Namibia and more than 80 years in South Africa, one may be tempted to say that the company has perfected the broker-based insurance model. With 95 per cent of its business coming from brokers, Santam has ensured that it has a network of more than 60 offices in South Africa and Namibia to support approximately 7 500 intermediaries. For the past four consecutive years, Santam Namibia received the PMR award for the best short-term insurer in Namibia, which is based on market surveys among business partners and brokers. In March, Santam Namibia held its annual Broker Awards ceremony (read more about the winners on page …), which rewards and acknowledges brokers who excel.

A good broker is one of the most valuable assets for any insurer, but the nature of the work dictates that a broker could work for anyone, anywhere, and as such it is very easy for a broker to jump ship in search of better incentives elsewhere. So what do insurers think are the key to keeping brokers happy and in their camp and how successful is this recipe?

RA = RISKAFRICA FF = Franco Feris, CEO, Santam Namibia RA: How many brokers does Santam have in Namibia?

FF: Currently, we have 68 brokers and 44 agents doing business with us in Namibia.

RA: What is your strategy to maintain broker loyalty? Do you offer incentives, an attractive commission structure, exclusivity or a combination of these elements?

FF: To retain and strengthen broker loyalty, Santam Namibia provides our brokers with the following: • A good commission structure in terms of legislation. Santam promotes compliance at all times.

• Ongoing training and forums. We provide product and wording training on a continuous basis to empower our brokers.

• Comprehensive marketing.

Santam Namibia’s channel of operation is almost exclusively via the brokers, so in all our marketing efforts we promote the broker value chain.

• Great service. Santam promotes

and strives to maintain an open door policy and quick services.

• Good claims service. Our reputation for and promotion of fair claims settlement goes a long way to improving broker loyalty.

• Broker Awards. We recognise and appreciate the value our brokers add to our business.

RA: What do you think gives Santam the advantage over your competitors when it comes to maintaining broker loyalty?

FF: There are two main factors that are currently giving Santam Namibia a competitive advantage. Our dedication to training our brokers and providing a forum environment for discussion empowers our brokers to provide improved service to clients. The strength of our brand, skills within the group and the underwriting agencies that are connected to the brand are also a strong drawcard.

RA: What role do your Broker Awards play in encouraging Santam’s brokers to perform and remain loyal to the company?

FF: The awards act as a motivator to channel growth while underwriting

risk profitably. It gives brokers and groups in different areas the opportunity to compete within their business enviroment, which means that they are exposed to different ways of doing business and putting customers first.

Roles are fluid in Namibia. Your client may be a bank manager by day and a wildlife trophy hunter and guide by night. In this environment, keeping up with legislation, developments in the industry and providing support to brokers is a key factor to fostering happy broker relationships and creating brand loyalty. For a broker it is more valuable in the long run to get the deal every time than having limited success at a higher commission rate. Creating a sense of pride and appreciation of the work that brokers do is another important aspect of bringing out the best in brokers, and Santam’s Broker Awards show an understanding of this principle, too.

of increasing their market share.

Santam’s long-standing success in South Africa and Namibia can be attributed to its innovative approach to its market. For Santam Namibia, the future holds a shift in focus from traditional markets to products that also serve niche markets and lower income groups, to ensure the company can maintain its crown as Namibia’s leading insurer and can realise its growth potential even during times of global economic downturn.

Herein lies the key to fostering and maintaining broker loyalty. Perhaps it is time that your insurer takes a few feathers out of this hat to improve broker retention and also in the hope

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• New medical products

Product focus ExecuMed

N$2 million (R2 million) per life for hospitalisation a year and N$40 000 (R40 000) per family for day-to-day medical costs, Prosperity has designed a product rich in benefits that has enjoyed good uptake in the niche market it is targeting.

Health insurance gets a facelift You’ve heard of short-term insurance cover for the property and vehicles of high net worth individuals, but what about a new kind of medical cover targeting this niche? In 2008, Namibia’s Prosperity Lifecare Insurance launched the ExecuMed product range as a health insurance product rather than a traditional medical aid. According to managing director of the Prosperity Group, Kobus Struwig, the ExecuMed products have performed well over the past three years and recently underwent some changes to be even more relevant to the market it serves.

Although the Prosperity Group has strategic partnerships and activities in numerous African countries (including Botswana, Lesotho and South Africa), ExecuMed is available only in Namibia. Its target market, since inception, has been affluent individuals and their families in search of cover for their medical needs that is progressive and unlimited in the traditional sense in which conventional medical aid cover is limited. With no tariff restrictions, no co-payments or levies, no sub-limits on associate benefits, N$2 million (R2 million) per life for hospitalisation a year and N$40 000 (R40 000) per family for dayto-day medical costs, Prosperity has designed a product rich in benefits that has enjoyed good uptake in the niche market it is targeting. A unique feature of the ExecuMed line is cover for cosmetic surgery, procedures that have never been covered by even the most progressive and expensive medical aids.

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Experience the new ExecuMed The most striking feature of the ExecuMed range is its simplicity in offering a healthcare plan that provides all the cover of medical insurance without the hassle of co-payments, levies limitations or sub-limit-constraints.

Apart from the impressive core benefits i.e hospital benefits and out of hospital cove, ExecuMed further provides additional peace of mind features through the Rescue Me Medical Evacuation Plan and the Travel Care Assistance programme.

This programme provides financial assistance for travel expenses such as flight costs, hotel accommodation, fuel expenses, rentals and food - in - curred to obtain medical treatment not available within the town of residence.

Benefit Snapshot • • • • • • •

N$ 2 million per life for hospitalisation per annum N$ 40 000 per family for day-to-day / out of hospital medical cost per annum No co-payments or levies on medical services No sub-limits on associate benefits.

Pay at maximum cost with no tariff restriction Gym rebate, Rescue Me Emergency Evacuation and Travel Care Cosmetic Surgery

To experience ExecuMed, call 061 2999 393 or visit www.execumed.com.na

Struwig explained, “Prosperity has been looking at the trends of healthcare in Namibia and the needs of the market for years, and noticed that there was a growing need for coverage of cosmetic surgery due to the modern lifestyle of specifically high-income groups.” ExecuMed has now been developed and adapted to address that need. A 12month waiting period does apply in order to claim for cosmetic surgery*, after which 95 per cent of the cost of a procedure costing up to N$5 000 is covered, or 75 per cent, if the cost of the procedure is in excess of N$5 000.

Although the ExecuMed product is not a medical aid in the classic sense, it shares many features and benefits of medical aid cover that customers have come to know and recognise: • MRI and CT scans in hospital are covered up to 100 per cent of the cost per person.

• GPs, specialists, radiology and pathology services are covered at 100 per cent of cost.

• Direct payment agreements with certain specialists mean that approved procedures are covered in full at lower costs.

• Emergency and planned hospital admissions (subject to authorisation) are covered with an overall limit of N$2 million per person.

• In-hospital medical services (such as hospital accommodation, theatre and ward fees, surgeons and anaesthetists, prosthesis, oncology, caesareans, casualty or outpatient emergency treatment, etc.) have no sub-limits.

• The N$40 000 a year per family day-to-day benefit covers consultations and specialist visits, acute and chronic medication, auxiliary services, outpatient medical services and specialised and conservative dentistry.

Besides the cover for cosmetic surgery, another new feature unique to ExecuMed is an optional Extended Day Cover Savings Plan. This optional extra provides additional cover for routine day-to-day (out of hospital) medical expenses and the level of contributions is determined by the member, with no prescribed limits. Any unused funds are accumulated annually and rolled over to the next benefit year, and similarly to any normal savings account, the funds remain the member’s and will be refunded on termination of membership. Other benefits include a comprehensive range of medical services cover, including: • A travel assistance benefit providing financial assistance for travel

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“The ExecuMed products have performed well over the past three years and recently underwent some changes to be even more relevant to the market it serves.”

expenses if medical treatment is not available in the family’s town of residence in or outside of Namibia.

• A gym rebate programme that reimburses members 100 per cent of the cost of participating at gyms that are part of the programme, including Virgin Active, Curves, Power Zone Gym, and others.

• A 24-hour emergency and health support line providing advice and support in times of need.

• A SADC emergency benefit that provides emergency evacuation and repatriation in Namibia and from SADC countries to Namibia or South Africa when necessary. This benefit also includes guaranteed admission to a private hospital in the event of an emergency when travelling or working outside of Namibia and transportation of mortal remains from place of death to the place of burial in Namibia.

• International medical emergency cover of up to N$10 million per person.

• A contribution protector benefit which ensures continuation of contribution payments for three months after death to ensure that his or her dependents are taken care of in a time of transition.

• The Hospicash benefit which provides financial assistance of up to N$12 500 a person when hospitalised at specific daily rates.

Prosperity markets ExecuMed as “a new benchmark in healthcare” and it marks a significant departure from the way medical aid programmes usually function. It is a common misconception that affluent individuals do not care about value for money and a commitment to designing creative and simple solutions that are flexible enough to meet the needs of its target market is an attitude which has stood Prosperity in good stead in recent years, based on the reception ExecuMed has received. This product offers comprehensive medical cover for your high net worth clients and their families with numerous value-added features to ensure that your customers know their needs will be met from one day to the next and in times of crisis. *For specified cosmetic surgery (defined procedures subject to approval), a member must have been on the ExecuMed product for one year and must remain on this product for another year after the surgery. Only qualified and accredited cosmetic service providers may be used and a procedure contract must be signed with the insurer. For detailed terms and conditions, please contact a Prosperity branch or visit www.execumed.com.na.

Is distributing insurance products via mobile phone the future of insurance in Africa? From the westernised point of view it seems hard to imagine anyone buying anything – not to mention a complex financial product – via their mobile phone. But then again, in Africa, the rules just don’t seem to apply.

Africa has over a billion potential consumers, most of whom don’t have access to services and goods. And apparently, there is a demand for insurance products; it’s simply a case of not being able to purchase it through the traditional channels. Most businesses will find it costly and time consuming – though worthwhile – to gain access to this growing market in coming years as African economies boom and development spreads rapidly. Mobile technology in recent years proved to be a very effective means of opening up the African market. While less than 10 per cent of Africans have access to the Internet, more than half – and counting – have a mobile phone.

Mobile phones have been used to successfully sell and administrate banking and other financial products. So it was simply a matter of time before someone started selling insurance using mobile phone technology.

There are several large case studies in Africa and other developing regions of the world. Some are very successful, others less so. Which is why when RISKAFRICA heard Trustco Group International (TGI) was launching a micro insurance product via mobile phone locally, we had to find out about the nuts

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and bolts of the service. We asked Herman Smit, a research associate at non-profit financial services and microfinance think tank, the Centre for Financial Regulation and Inclusion (Cenfri), to shed some light on the subject of distributing insurance through mobile technology.

“There are various business models, but most of them involve an insurer or distributor partner initiating contact with the client,” Smit said. “Popular forms of insurance products are those embedded into other products or services and those that are actively sold.

Those that are sold are typically available through unstructured supplementary service data (USSD), technology that collects premium from airtime, or a type scratch card that is purchased to allow one to register for the product or service.”

Metropolitan, in South Africa’s recent endeavour to sell personal accident and travel cover to the lower income market provide an example of using USSD technology to initiate contact, as well as administrate and manage policy details. It involved an SMS-based marketing campaign inviting customers to reply via SMS to buy cover and manage their policy details, while premiums were collected from their airtime.

“A completely different example is the MaxDJ micro health initiative piloted in India. It saw agents with mobile devices actively market health insurance to the public. The agents would capture customers’ details on the GSM (Global System for Mobile Communications) device and sign policies there and then,” Smit said.

“MTN and Tigo (Millicom International) has had success selling embedded products in Ghana, but

most people would be more familiar with Kilimo Salama in Kenya. The globally publicised initiative is a form of agricultural input insurance. When a farmer purchases fertiliser, the dealer captures their details via a mobile phone provided by Safaricom (a partner in the initiative) and scans the barcode of the purchased product. Weather stations determine when there is a drought and affected farmers get an immediate payment into their accounts from insurer UAP Insurance. There’s no claims process, everything is automated.”

Smit maintained that these initiatives are aimed at the lower income market, but that the scale and uptake of the product is what makes or breaks the project.

For this reason, compulsory or embedded insurance products (often created with affinity agreements between insurers and other industry) generally fare better than those that are actively sold.

We spoke to TGI’s public relations and media manager for Namibia, Jaco Klynsmith.

Why do you believe distributing through mobile is the way forward for micro insurance in Africa?

Micro insurance features little or no premiums and, in some cases, low caps and coverage. Micro refers to the small financial transaction that each policy

generates. For micro insurance to be truly successful, a large number of people need to be insured. As a result of this large base, the risk of adverse selection is greatly diminished, allowing you to offer the product at a lower price. The African Mobile Factbook by HASH stated that mobile penetration in Africa was already at over 30 per cent in 2007, with projections of up to 100 per cent in certain territories by the year 2012. So looking at these stats, it’s obvious to see that the best and swiftest way to reach the mass market on our continent is through mobile phones.

Just what is selling insurance through mobile technology?

Selling/purchasing insurance through a mobile device is simpler, faster and mostly paperless. Details such as change of beneficiary can easily be updated via the insured person’s mobile phone. The premiums may be paid by the mobile operator who subtracts it from the customer’s airtime and pays it to the underwriting company. Another method of payment is through a mobile money/banking platform. Trustco Mobile is proud to say that we can offer this platform to our clients.

You’ve launched similar products elsewhere, why do you think this distribution channel worked there?

The life insurance penetration in two other African countries was minimal, while most of the population owned a mobile phone. In one of these, large portions of the population lost their life savings due

22118_NAMIBIA "Good And Proper" 130x175.indd 1

to hyper-inflation. They needed a way to provide for their dependants, should they pass away. Since our product was offered at no charge, mobile subscribers gave in to that little economist lurking in all of us and attempted to obtain the highest level of cover.

Is the situation similar in Namibia, i.e. do you think your product will work for the same reasons, or for a different reason?

The only similarity between Namibia and some other African nations is the ratio of insurance and mobile phone penetration. The Namibian economy is currently stable and there is no prediction of circumstances which would cause hyper-inflation in the near future. The success of this product depends on how the service is offered to consumers. Where Trustco Mobile has the edge on its competitors is that we have managed to come up with a model which offers life insurance to the subscribers of the mobile operator at no additional cost. In simple terms, we offer the operator’s clients something for nothing.

How is your target client different from the traditional insurance consumer?

Traditional insurance products rely on timeous fixed premium collections, while clients in turn need a relatively high fixed income to be able to afford the payments. Penetration is also limited to urban areas. The traditional form of insurance is designed for the top half of a populace. The ease, cost and penetration level that results from offering insurance

through mobile phones makes it very easy to reach the majority of the market and therefore includes clients from all walks of life.

What are the advantages and disadvantages of using this method of distribution?

The key advantage of using this method of distribution is the speed at which you are able to communicate your product to the masses. The biggest disadvantage is that there’s no face-to-face interaction, so you need the underwriting capacity and strong fraud detection software to avoid fraudulent claims.

Do you think it is the future of insurance in Africa?

Trustco truly believes that this is the future of insurance – not just in Africa. Fortunately and unfortunately, like any technology, cellphones will one day be replaced by the next big thing. No-one can say whether it’s going to be in the next five or 20 years. But until then, I think there are a few people who would question that the future of marketing and distribution of insurance products is via mobile phones.

2011/10/07 1:49 PM

• Investments

capital. But we wanted a duel-view perspective.

Thus for the South African view, we spoke to Marriot Asset Management, who maintains that focusing on reliable income streams when constructing a portfolio will be vital for the remainder of the year.

“In our view, equities remain the preferred asset class in such an environment, although the upside is not huge.”

Eino Emvula, CEO of Namibia Asset Management

What factors are affecting current markets locally and internationally?

Globally, not many countries’ balance sheets are in good shape. Greece is one. Despite having reached a compromise with creditors (mainly banks that will have to write off 53.5 per cent of its debt), austerity measures will be painful and there’s no guarantee they will work. Are European banks lending at the rate at which their economies are being stimulated? Or are these economies starved of capital? Furthermore, the level of commodity prices and their impact on commodity-producing countries is a concern for long-term investors. Rising inflation along with stagnant growth in the world’s major economies is clearly another concern for investors.

Dig deep – finding capital growth in a deflated investment environment

By Elvorne Palmer

Depressed; four months into the year and this is the word most commentators use to describe the investment environment, globally and locally. Europe seems to be on track toward solving the Greek debt issue, while China averted sinking into a recession, but all is not well at the southern tip of Africa.

Business confidence in Namibia declined earlier this year, as did imports due to dwindling demand, while investment remains subdued. Growth is expected to be around 4.4 per cent here though, which is more than can be said for neighbouring South Africa where growth is slowing as inflation threatens to spike in the coming months. It seems that finding meaningful capital appreciation is becoming a tricky game.

RISKAFRICA spoke to the CEO of Namibia’s largest and only NSE listed asset manager, Namibias Asset Management, Eino Emvula, to find out where investors should be placing their

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How do these affect our investment choices?

In a lower growth/high inflation environment, achieving inflation-beating returns is a challenge. In our view, equities remain the preferred asset class in such an environment, although the upside is not huge. Our bias also remains towards global equities due to valuation.

Global equities are attractively priced with many blue chip companies trading on 12-14 PE multiples and three to four per cent dividend yields. The JSE on the other hand is looking fairly priced and not much liquidity is available on the NSX. An inflation-linked bond (ILB) is another asset class in which we see value, given our negative outlook on inflation, but these instruments are not available in Namibia. Perhaps that is another asset class that corporations and the government can look at issuing in the future.

There has been a marked drive to get Namibians to invest locally rather than offshore, is this happening at the moment?

That drive is a bit historic. Over the years (certainly the past two years), the approach has been balanced in terms of increasing the offshore allowance for nondiscretionary savings to a maximum of 35 per cent, with an additional five per cent allocation to Africa.

The minimum investment in the local investment instruments (including primary listed Namibian stocks and dual listed stocks) remains 35 per cent. While the minimum allocation to local instruments is a noble regulation, it has posed some practical challenges to investors which have resulted in banks being cash-flush due to the limited investment opportunities on the local listed space.

In your opinion, what are the pros and cons of investing locally; and offshore?

What are the best options internationally?

The negatives with regard to investing locally are more structural than anything else – too much money chasing after a few investment opportunities, particularly in the listed space. This has the potential to inflate investment assets way beyond their intrinsic values and, as a result, create bubbles. On the flip side this scenario should be encouraging to businesses with growth potential and ambitions as well as those that are in need of capital. We believe there are a few quality Namibian businesses that could be listed, but whether or not they need to list remains a question.

Like all our investment decisions, allocation to international markets is valuation based. We do find good value in some developed market equities. These include companies such as Microsoft, Vodafone and others that trade on undemanding valuations. Emerging market equities in countries such as India and Brazil also offer good value.

There are good reasons to be invested offshore.

A number of global equities have de-rated over the past 10 years and currently offer good value.

In addition, a number of these offshore companies are geographically diversified both from an earnings and currency perspective, resulting in a balanced and stable earnings stream.

“There are good reasons to be invested offshore. A number of global equities have de-rated over the past 10 years and currently offer good value.”

What are the best investment options for someone wanting to invest locally?

In terms of listed investment options, some local equities (seven stocks) present good opportunities. Stocks such as FNB Namibia and Bidvest offer good value. FNB trades on a 6.7 PE multiple and a good dividend yield of 6 per cent.

Bidvest trades on a seven PE multiple and similar dividend yield. Oryx too, offers good value at current levels.

What are the best investment options in Africa?

Companies exposed to the emerging African consumer market are of most interest and some world-class businesses can be bought on very attractive ratings in the brewing, cement, telecoms and food sectors in countries such as Nigeria, Egypt, Kenya and Ghana.

Marriot Asset Management, South Africa

2011 saw household consumption slow while inflation increased, what will we see globally in 2012?

It is set to be another trying year for investors.

Over-indebtedness of many First World economies has forced authorities in these regions to reduce fiscal deficits by lowering spending and increasing taxes (austerity measures). This cutback in spending is expected to be a drag on global economic growth for many years to come. A debt-to-GDP ratio of 60 per cent is often noted as a prudent limit for developed countries. But the US, England and France’s percentage are currently in the 90somethings, while Italy’s debt to GDP remains 128 per cent.

What will the impact be in South Africa?

Despite a slowing economy, local inflation is set to continue rising as South Africa is yet to feel the full impact of a weaker Rand. Almost one-third of South Africa’s expenses consist of imports.

Thus the Rand’s 22 per cent depreciation against the US Dollar during 2011 will exert significant upward pressure on inflation in the months ahead as import costs rise.

An environment characterised by rising inflation and subdued dividend growth suggests that the current low dividend yields of many South African asset classes cannot be justified. Internationally, First World markets are offering investors substantially better value.

Where should we be investing in South Africa in 2012?

Administered prices continue to escalate well ahead of inflation and their impact on property expenses is starting to significantly subdue the income growth prospects of SA listed property.

As a result of subdued property distribution growth prospects, investors should be compensated with higher yields than are currently available in the market.

SA Money Market instruments could be a safe way of preserving capital. Despite rising inflation, cash interest rates during 2011 remained unchanged. The outlook for interest rates for the year ahead is uncertain as it remains unclear to what extent the governor of the Reserve Bank, Gill Marcus, will favour stimulating economic growth over combating inflation.

Then there are SA listed equities. Although dividends generated by South African companies increased by approximately 31 per cent during the course of 2011, the average dividend growth since 2008 has been approximately -1 per cent.

This recovery in dividends, coupled with minimal share price appreciation has resulted in the dividend yields of South African equities increasing from 2.2 per cent at the beginning of 2011 to 2.9 per cent today. Despite this, local equity yields in general remain well below their long-term historic averages. To justify current valuations, South African companies must continue to produce above-average dividend growth, but this appears highly unlikely given slowing global economic growth and a strained SA consumer.

Internationally, real estate continues to offer investors fair yields with inflation-hedged income growth prospects. While First World large cap stocks continue to offer good value.

Dividend yields of some of the largest and most recognisable companies in the world remain well above their long-term historic averages, as well as being higher than international bond yields, cash interest rates and inflation. It should be noted that these First World large cap equities operate globally and derive a substantial portion of their revenues from emerging markets. Take for example, British American Tobacco and Unilever with over 40 per cent emerging market exposure; Proctor & Gamble are at 34 per cent; and Vodafone close behind with 29 per cent.

We continue to favour inflation-linked SA bonds over fixed interest bonds due to their relatively attractive real yields and inflationhedged income. Based on our current medium term inflation estimate of at least seven per cent per annum, the real returns on inflationlinked bonds are higher.

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• Growth in Africa

“Rethinking product design is only one of many elements required to ensure a successful growth strategy in Africa.”

Why Africa?

By Hanna Barry

Africa is alive and well and ready for growth. This was the message at Ernst & Young’s Strategic Growth Forum (SGF) Africa in March. The forum saw business, entrepreneurial and government leaders from around the world gather in Cape Town, South Africa to share ideas and insights on how to unlock value in Africa.

Why all this excitement about Africa’s investment potential?

The bottom line, of course.

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Show me the money

By Hanna Barry

According to the International Monetary Fund (IMF), seven out of the 10 fastest-growing economies for 2011 to 2015 will be African.

With growth rates well above five per cent, countries on the list include Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria. Africa has an everimproving business environment and more people of working capacity than both India and China. The possibilities are enormous.

Yet despite being ripe for investment, Africa presents a complex investment case and the continent faces serious investment challenges.

Overcoming obstacles Five key issues affecting accelerated growth, development and investment attractiveness were consistently raised at the SGF. While presenting barriers to the African growth story, these challenges highlight opportunities, too.

1. Perceptions that Africa is inherently corrupt While corruption remains a key challenge across the continent, governor of the Central Bank of Nigeria, Sanusi L Sanusi, described how endemic corruption in the country’s financial sector has been rooted out. What other government criminally prosecuted CEOs of leading banks in the wake of the global economic crisis?

Nevertheless, simply the perception that Africa is corrupt is enough to squash investor confidence.

2. Regional integration Breaking down barriers to intra-African trade and greater regulatory harmonisation will create larger markets and boost growth and development. South African Deputy President Kgalema Motlanthe spoke of his government’s commitment to the implementation of a tripartite free trade area, combining 26 countries and creating a market of up to 600 million people.

Approaching Africa from a regional perspective will yield greater return on investments and avoid the danger of markets becoming too small and fragmented. For example, while the Kenyan market comprises 40 million consumers, this number increases to 110 million when the whole East Africa region is considered.

3. Africa’s infrastructure deficit A major constraint to doing business, weak infrastructure and the financing needed to tackle it, provide both challenge and opportunity. A study of infrastructure across 24 sub-Saharan countries by the African Development Bank, estimates that US$93 billion (N$708.5 billion) will be needed annually over the next decade to develop the infrastructure required for Africa to realise its true economic potential. This will not be funded by government alone. Donor funds, the private sector, pension funds and private equity players all have a role to play.

“The people who form part of your business ventures are equally vital; both your internal team and external stakeholders.”

4. Unlocking human capital Education, skills development, job creation and poverty reduction remain critical longterm challenges. But there are also shortterm opportunities, such as reconnecting the diaspora and removing barriers to the mobility of African professional talent across the continent.

A strong talent base is vital. Highly successful alcohol beverage company, Brandhouse, takes in graduates every year across its businesses to build a pipeline of young talent into the company. It also looks to the diaspora and managing director, Gerald Mahinda, said that he has quite literally gone to Europe and the United States to find Africans working elsewhere and offer them job opportunities to bring skills back into Africa.

5. Relationship between government and business Finally, businesses are a key partner in enabling sustainable economic and social development

in Africa. African governments are making progress towards creating more businessfriendly environments, but more can be done.

Reported figures reveal that it is up to 40 per cent more expensive to do business in Africa than in other emerging markets. In spite of this, businesses are still making profits.

Nevertheless, red tape and bureaucracy stops the growth of SMMEs, which are the major job creators. With these challenges in mind, companies that have effectively grabbed hold of the opportunities which Africa nonetheless offers shared some insights into their success.

Dressed for success A young and swiftly growing consumer base, coupled with natural resources, rapid urbanisation and a deepening financial services sector, makes Africa good for business.

Managing director of DHL sub-Saharan Africa, Charles Brewer, noted that over 34 years, DHL businesses have consistently delivered solid growth and returns on investment in all 51 African countries. DHL’s success story is one of many. But how exactly have the DHLs, Standard Banks and Shoprites of this world done so well?

General manager of Engen’s international business division, Wayne Hartman, outlined four Ps to investing successfully in Africa: persistence, patience, people and a portfolio approach.

Securing returns on investment in Africa does not happen overnight (you need to be in it for the long haul) and is best done through a broad range of investments over a wider area. The people who form part of your business ventures are equally vital; both your internal team and external stakeholders.

The people in the communities in which you operate are also a crucial part of your business operation. In a panel discussion on the socioeconomic impact of private investment in Africa, CEO of the Investment Climate Facility for Africa, Omar Issa, said that businesses will operate harmoniously if the community they operate in has bought into the vision of the business.

Therefore, it’s important for businesses to find out what the community’s priorities are and take these onboard.

Making social imperatives a core part of your business function, also captured as doing good by doing good business, was a recurring theme at the SGF. For example, sourcing locally not only reduces business costs, but also empowers the local community. In order to have this kind of positive impact while successfully growing a business, investors will need to know their consumers and markets much better than before.

“A strong talent base is vital.

Highly successful alcohol beverage company, Brandhouse, takes in graduates every year across its businesses to build a pipeline of young talent into their business.”

Know the nuances Chief operating officer at Old Mutual African Operations, Grant Pote, highlighted the importance of good market research to understand the particularities of the countries and cultures in which your business is seeking out growth. For example, in some countries it is not acceptable to talk openly about death, which makes selling funeral products very difficult. But people still have a need for formal savings products and financial security in these countries. “It’s about how you package the solution, rather than saying that the consumer doesn’t require that solution,” noted Pote.

He added that often consumers need to be educated about the product, referring specifically to financial services products, before it can be sold to them. But getting to the heart of what people need and want and incorporating this into your product designs and benefits is key.

Ernst & Young consumer products leader for Africa, Derek Engelbrecht, suggested considering the following when designing products for the African market: moving from selling to rental models; developing single products that will have many users and many uses; employing pay-as-you-consume models; and fundamentally addressing affordability by simplifying complex products and unpacking the various elements within them. Rethinking product design is only one of many elements required to ensure a successful growth strategy in Africa.

While the growth potential is staggering, the challenges are real. But one thing is certain: It’s time for Africa.

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• Reinsurance

“We have made a small profit in an unusually difficult year. Some key rates are rising; we are employing some brilliant talent; we have fledgling businesses poised for growth and profit; and our mature businesses have small market shares and enormous opportunities.

Reinsurance news round-up

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Set a premium that will deliver a profit, on average, after both prospective loss costs and operating expenses are covered

QBE to combine its reinsurance operations QBE is making moves to combine its worldwide reinsurance operations under a single management team and unified brand.

The new structure, QBE Re, will bring together Syndicate 566, QBE Re Europe, Secura NV and QBE Re Americas. Gross written premiums will amount to $1.5 billion which will include the property, casualty and speciality lines portfolios. The business will be headed up by European chief of underwriting officer, Jonathan Parry, who will be appointed chief underwriting officer of QBE Re. Scor announces €330 million profit Scor reported a €330 million profit and a rise of 13.6 per cent in gross written premiums to €7.6 billion. Shareholders’ equity was up to €4 410 million at the end of 2011, with book value per share at €23.83. It also reported a 3.7 per cent return on invested assets despite a challenging economic and financial environment. The Group said it was able to seize growth opportunities, both internally driven, due to its strong franchise and expertise and through the acquisition of Transamerica Re. Denis Kessler, chairman and CEO of SCOR, said: “The resilience of SCOR’s business model has once again been proven in 2011 by its capacity to combine profitability, growth and solvency in the context of an exceptional accumulation of natural catastrophes and financial market stresses. Catastrophes such as the Japan earthquake and the Thai floods have shown the efficiency of the robust capital shield policy that the Group has put into place, while our prudent asset allocation has protected us from most of the effects of the turmoil in the markets, and notably from the Eurozone sovereign debt crisis.”

Lloyd’s underwriter’s evidence helps to convict Stanford Underwriters from Lloyd’s were able to help prove that Allen Stanford “knowingly committed acts of money laundering” to the

extent that he was unable to claim under his $100 million directors’ and officers’ policy.

A federal jury in Houston convicted Stanford of a $7 billion Ponzi fraud which involved him creating bogus certificates of deposit at his Antigua-based bank. He managed to defraud about 30 000 investors over two decades in 113 countries with this strategy. The jury found Stanford guilty of 13 of the 14 counts against him, including wire and mail fraud and obstructing an investigation by the US Securities Exchange Commission (SEC).

Wise words from the Sage All eyes were once again on Warren Buffett, chairman and CEO of Berkshire Hathaway, and his annual letter to shareholders.

In it he maintained his enthusiasm for insurance business and the “terrific managers running some extraordinary insurance operations” at his business. Berkshire’s insurance businesses provide insurance and reinsurance of property and casualty risks primarily in the United States.

His advice to running a sound insurance operation was the following: • Understand all exposures that may cause a policy to incur losses.

• Conservatively evaluate the likelihood of any exposure causing a loss and the probable cost if it does.

• Set a premium that will deliver a profit, on average, after both prospective loss costs and operating expenses are covered.

• Be willing to walk away if the appropriate premium can’t be agreed upon.

He said the last discipline on this list was one that many insurers flunk. “They simply can’t turn their back on business that their competitors are eagerly writing. That old line ‘The other guy is doing it so we must as well’, spells trouble in any business, but none more so than in insurance,” said Buffett.

Hiscox chairman to step down in 2013 Chairman of Hiscox, Robert Hiscox, is due to step down from the board next year. This announcement was confirmed when the company issued its full year results ending 31 December 2011. The company reported a pre-tax profit of £17.3 million down from the £211.4 million it reported in 2010. Gross written premiums were level at £1 449.2 million for 2011, only slightly up from the £1 432.7 million reported in 2010. Earnings per share were 5.5p. Hiscox London Market achieved a profit of £57.6 million, offsetting catastrophe reinsurance losses with profits in international property, marine and other specialist lines. It said that rates are increasing in reinsurance and slowly increasing in other specialty lines.

Allied makes changes to management team Allied World Assurance Company Holdings announced several changes to its global executive management team in March.

David Bell, chief operating officer, will be leaving the company to pursue interests in Montana but he will remain with the company until 1 May 2012. John McElroy will take over from him as chief operating officer and will be responsible for overseeing Allied World’s operations, administration, information technology, ceded reinsurance and new product development functions on a global basis. McElroy recently held the role of president, professional lines for Allied World US. Meanwhile, Wesley Dupont, executive vice-president, general counsel and corporate secretary has assumed the additional responsibilities of overseeing the claims and human resources functions globally, which were formerly the remit of the chief operating officer. Additionally, John Bender, president and chief operating officer of Allied World Reinsurance Company, has assumed responsibility for Allied World’s global reinsurance operations.

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NEWS Namibia – Marcelina Gaoses is new MD of Mutual AND Federal Namibia Mutual & Federal, a member of the Old Mutual Group, has appointed Marcelina Gaoses to the position of managing director of its business in Namibia.

Having held a number of senior positions in Swaziland, Botswana and Namibia, Gaoses brings a wealth of experience of the Southern African insurance industry to the table. She left her position as director of insurance and pensions at Botswana’s Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and joined Mutual & Federal in March.

“The continent is a core strategic focus for Mutual & Federal as we look to strengthen our existing interests in Namibia, Botswana and Zimbabwe while exploring opportunities in other countries,” said LeRoy Munetsi, executive of Africa and new markets, Mutual & Federal. “We are delighted that Marcelina has agreed to join us and fill this vital position. Namibia is a key business and has consistently produced strong underwriting results. She brings the right mix of experience, skill and focus to the position. She will also play a key role in our broader strategy for the continent at large.”

Shortly after making the announcement, Mutual & Federal in South Africa announced that it is considering entry into Nigeria. The South African company currently has two wholly owned subsidiaries in Namibia and Botswana, as well as stakes in insurers in Zimbabwe and Swaziland.

Munetsi added that Mutual & Federal could consider an acquisition or start a greenfield project in Nigeria, alternatively it could leverage off the distribution channel created by parent company Old Mutual’s entry to Nigeria. Old Mutual is buying Oceanic Life from Oceanic Bank in Nigeria, which itself has been acquired by Ecobank. In addition to Oceanic Life’s distribution channels, Old Mutual will have access to over 600 of Ecobank’s Nigerian outlets through which to sell insurance and investment products for 10 years.

Botswana – John Haenen appointed as CEO of BIHL’s short-term division Recently diversified Botswana Insurance Holding Limited announced the appointment of a CEO for its short-term business. Board members were told recently that John Haenen had been running Heritage Insurance, Tanzania’s biggest insurance company, for six years under the watchful eye of the United Nations Development Programme and brings valuable experience to BIHL. This is the last of BIHL’s divisions to receive a head, likely marking the end of the diversification process. Each of the property, short-term, asset management (Bifm) and life insurance (Botswana Life) divisions has its own CEO, with Gaffar Hassam as Group CEO. BIHL manages over P18 billion worth of assets and has over 295 000 client policies in its life insurance business. Despite having faced several challenges in 2011 (strike action, a harsh economic climate and dwindling household incomes), BILHL Group managed to post 42 per cent profits by 31 December. Hassam noted that 2012 was not likely to be any easier, but that it will build on 2011 and focus on designing new products and bettering service delivery this year.

Chairperson Batsho Dambe-Groth addressed board members at the announcement ceremony, highlighting the radical paradigm shift required to remain financially sustainable. “If we continue doing the same in order to stay profitable, we will just end up having a series of retrenchments to sustain our profitability, which provides an extremely negative short-term solution.

2012 promises to be a challenging year with the possible looming recession. I believe it is incumbent upon all of us to make a difference in counteracting the effects which the recession might bring,” she said.

South Africa – Industry moves to cover carjamming losses Marsh Africa noted an almost industrywide shift toward insurers now covering losses from vehicle break-ins due to car-jamming. The practice of vehiclejamming involves perpetrators using a handheld remote to block the signals from the car’s remote while the owner locks the car doors. Traditionally, insurers could repudiate this based on the fact that there is no evidence of forcible or violent entry to the vehicle, but Andrew Panzera, executive leader operations, commercial practice at Marsh Africa notes that pressure form consumers has forced insurers to reconsider the exclusion.

While most insurers do not cover property lost to jamming, “when this practice first came to our attention in early 2011, our insurer partners received requests to provide automatic conditional cover for theft of property from vehicles unaccompanied by forcible and violent entry”, said Panzera. “Our clients should have some protection for property stolen

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from vehicles irrespective of the manner in which entry was gained – even if the vehicle was not locked.”

While Marsh still encourages their clients to take due care of their assets, negotiations with most insurers were successful and, in March 2011, Panzera and his team were able to confirm the extension of cover subject to insurers being allowed to apply individual corrective action if necessary.

“This set an industry precedent and further notifications followed as other insurers recognised the market imperative to cover loss through jamming.”

While Marsh Africa’s redCarpet cover was the first to include loss arising from jamming, Panzera noted that he knows of a number of other insurers that have followed suit and expects that, going forward, covering loss from jamming will become the norm, not the exception.

Reports are that incidents of vehicle jamming is surging in Namibia, with industry members relaying that at least six occurrences took place since January this year.

Zimbabwe – Zim still unable to feed itself?

Zimbabwe is once again facing a food crisis as Agriculture Minister Joseph Made recently told the media that the state has halted sales from strategic grain reserves. This is due to the loss of some 500 000 hectares of the country’s staple maize crop to prolonged drought. A nationwide assessment showed that a third of the country’s maize crop is a write-off. With farmers having planted significantly less maize than in 2011, harvests were already expected to fall short, pointing toward what could be Zimbabwe’s worst food crisis since it first became unable to feed itself 10 years ago.

The country’s Commercial Farmers Union (CFU), however, said that the weather had nothing to do with the harvest shortfall. “We can’t continue

to blame drought. It’s quite absurd that this is still used as an excuse,” CFU’s president Charles Taffs recently told a local radio station, adding that the reason behind the deficits is that agriculture continues to be undermined.

Taffs maintains that the country has been struggling to feed itself since productive farms were seized from commercial farmers and handed to ZANU PF officials a decade ago. The land grab campaign had been declared unlawful in 2008, but nothing was done to correct the situation that has been starving Zimbabweans.

“There is no funding for agriculture and no security of tenure,” Taffs explained. “You know we actually have no problem with who owns the land. We have a problem with how the land is used,” adding that the there is no reason anymore why Zimbabwe should be relying on food aid or imports to survive.

Rwanda – New insurance initiative to help mortgage applicants Kenya Commercial Bank (KCB) in Rwanda signed an agreement with insurer, Soras, that is touted to give low and middle income earners the ability to apply for and obtain home loans much easier. Dubbed Collateral Replacement Indemnity, the insurance product replaces the collateral so that the client does not have to pay a deposit. The bank purchases the cover to the equivalent of the deposit it would have required and, should the client default and the mortgage property be legally sold at a loss, receives the collateral from the insurer.

"This is really a revolution in the housing industry in Rwanda and I think that people in this country will take advantage of this product," said Marc Rugenera, the managing director of Soras.

At the moment, getting a loan on a property in Rwanda requires the buyer to pay up to 30 per cent of the purchase price upfront. This has been a huge burden for many wishing to purchase or build their own homes.

KCB Rwanda last year introduced a long-term mortgage loan that was still not attainable for much of the populous. “It required only a 10 per cent deposit, but even that was still very difficult,” said Maurice Toroitich, the KCB Rwanda managing director. “With this new product, our clients will no longer have to wait for years to make the deposit.”

To get the mortgage loan, the value of the property should be below 45 000 000 Rwandan Francs and the prospective borrower should not earn more than FRw 1 800 000 per month.

Africa’s largest class action looms over SA gold mining Last year a lawsuit saw a South African man lodge a civil claim against his mining company employer after contracting the lung-disease silicosis. This could have serious ramifications for the South African mining industry. The man died before the Constitutional Court reached its verdict in March, but judges opened the flood-gates for similar claims when it ruled that miners could, for the first time in South Africa, sue employers for damages.

Since January this year, former mineworkers and widows from South Africa and Lesotho have been pouring into the town of Semongkong in Lesotho. They are there to add their thumbprints to those of – so far 7 000 – lung-diseased employees as part of what could well become the largest class action the African continent has ever seen. The man behind it all, lawyer Richard Spoor, is the same man who headed the landmark case last year and is responsible for the current largest settlement from the mining industry in 2003. “We’re signing up 500 people a week at the moment,” Spoor recently told the media.

Silicosis is a disease contracted by constant exposure to silica dust from rocks bearing gold. It causes coughing, chest pains and shortness of breath. And though not fatal in itself, silicosis makes the person highly susceptible to tuberculosis, which does kill.

The disease is recognised by the Miners’ Phthisis Act of 1911 as one that is deserving of compensation.

Analysts believe that a suit of this magnitude will cost the mining industry’s giants AngloGold Ashanti, Gold Fields, Harmony and AngloAmerican billions of US Dollars.

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• Brokers

Santam Broker Awards The Santam Broker Awards was held at the Play House in Windhoek on 7 March. Santam Namibia’s CEO, Franco Feris, detailed future goals and prospects for Santam in 2012 and beyond. Top performing brokers in different regions in Namibia were awarded diamond, gold, silver and bronze awards for their performance.

Santam Namibia salutes the contribution of the intermediary to its success and the important risk management role that the broker fulfils. The company has made a commitment to supporting the intermediary in Namibia and respects the invaluable role that the intermediary plays in the short-term insurance solution. “It is only fitting therefore that we should pay tribute to these partners and reward those who have excelled in many ways through an ongoing process of reinvention,” said Feris.

Santam Broker Award winners: Keetmanshoop branch Diamond: J van Dyk Versekeringsmakelaars Gold: Welwitschia Nammic Insurance Brokers, Mariental Silver: Helene van Zyl Bronze: Welwitschia Nammic Insurance Brokers, Gobabis

Otjiwarongo branch Diamond: Welwitschia Nammic Insurance Brokers, Oshakati Gold: Welwitschia Nammic Insurance Brokers, Tsumeb Silver: Sackey Hekandjo Bronze: Ingo Halberstadt

Walvis Bay branch The criteria for determining the winners are driven by numerous factors, including growth and profitability for the financial year, as well as the performance over a period of three years.

“The grouping between the gold, silver and bronze awards is determined by growth (40 per cent) and profitability (60 per cent).

A rating is then allocated to brokers,” explained Feris. “The regional winner is selected based on all product offerings, collectively. The criteria remains profit and growth; the focus is thus not per branch but overall performance of a brokerage or agent.”

This year’s regional winner was Welwitschia Nammic Insurance Brokers.

Diamond: Welwitschia Nammic Insurance Brokers, Walvis Bay Gold: Estelle Esterhuizen Silver: Marsh, Swakopmund Bronze: FNB Insurance Brokers

Windhoek branch Diamond: Welwitschia Nammic Insurance Brokers, Windhoek Gold: Marsh, Windhoek Silver: FNB Insurance Brokers, Windhoek Bronze: Swanam EDMS BPK Merit: Kerrie Mostert Makelaars Merit: Andre la Cock Versekeringsmakelaars Merit: Prosure Short Term Insurance CC Merit: Namsure Insurance Brokers

Relationship manager for 2011 Marietjie Engelbrecht

Transport division, Namibia Diamond: Namibia Risk Solutions

Niche, Namibia Diamond: Marsh Namibia

Namibia brand ambassador Joko Tjiurutue Hanlie Kesslau

Top left: National Youth Choir of Namibia.

Top right: South African businessman and recently retired chief executive of McCarthy Limited, guest speaker, Brand Pretorius.

Middle left: Franco Feris.

Middle right: Ken Robinson, head: commercial lines, Santam Namibia, with Bennie Visser, COO at Marsh Africa (right). Marsh received the gold award for Santam Windhoek.

Bottom left: The team from Welwitschia Nammic Insurance Brokers, winners of the regional award.

Bottom right: Franco Feris with Riaan Vermeulen, chief executive officer of Welwitschia Nammic Insurance Brokers.

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• Politics

Clem Chambers | CEO of ADVFN

How politics can

damage an industry

I always advise people never to invest in stocks that are political footballs. Politicians are in an order of magnitude more powerful than any business leader because they can change the rules of the game as they see fit.

Prudential may well turn into one of these footballs.

The London-based and LSE-listed insurer has announced that it is considering moving its centre of operation. This follows after news that EU Solvency II regulations are set to be introduced in January 2013.

Politicians can crush things by accident. Destroying whole industries is nothing to the political machine.

From the beginning of time political machines have flattened companies, industries and even countries on what – on reflection – is a whim.

have chosen not to renew contracts with CPP for 2013, and MPs are not putting pressure on RBS to do the same.

While already in a troubled state due to alleged misselling, the case of CPP demonstrates how elected MPs can interfere with the workings of banks.

This can be bad enough when it is just a national government. When you add multinational political organisations, things can get even worse. If Solvency II leads to Prudential leaving London, the UK can say goodbye to jobs and large amounts of tax.

In all of these situations it is essential not to forget the ticker. Prudential opened well in 2012 on the LSE, closing February over 200 points higher than in October at 720. While the company was down on the three-year high achieved in May 2011, Prudential is just 100 points lower than it was before the sovereign debt crisis – and certainly much better than the 210 low it reached in early 2009.

It’s important to remember that Prudential’s main business interests are not focused on the UK or Europe, instead they are in Asia and a move would therefore make sense. But a potential move to offshore status has brought into doubt the firm’s financial health. Solvency II will require firms to meet stricter solvency ratios. A move to a jurisdiction where less stringent ratios are required will cause investors to ask whether they have resources to meet the new requirements.

Solvency II has raised doubts about Prudential but, as the LSE figures show, the market has not deserted it. This is in the context of a positive start for the markets in 2012, with the FTSE Non-life and Life indexes at 1440 and 4440 as February closed. For the Life index this marked a near return to its presummer 2011 crash level, while the Non-life has regained only half of its pre-crash value – the trend has been steadily upwards even as the Greek crisis rumbled on.

British bank RBS was bailed out by the taxpayer following the sovereign debt crisis and is 83 per cent owned by the State. This has given members of parliament, the vast majority with no financial or banking expertise, a lot of power over its future. This power not only affects RBS itself, but companies it works with and contracts services from – such as credit card insurer CPP.

The market feels too high but it will quite likely go higher. I couldn’t resist buying some Aviva; dividends in the seven per cent area and a P/E around seven is just too tempting to resist. If the market is off on a long-term rally, which is a strong possibility, then Aviva will get a double lift. The calming of the Greek crisis has played a strong role in this, but this has come about due only to politicians.

This is where the whole of economics is right now; a playground for politicians. The further away your investments are from the clashing titans of politics, the better.

CPP has formerly been used by RBS to insure against credit fraud and identity theft. Barclays, also partly owned by the British State, and Santander

It’s said that when economics fails, it is the job of politics to step in. After five years of governments’ trying to rectify the credit crunch we are left wondering how things would have fared if no-one had stepped in and all the banks of the West had been left to go to blazes with the market being allowed to pick up the pieces.

All EU insurers face the challenge of meeting Solvency II, so Prudential may well be the first of many London-based insurers weighing up a possible move. As the regulations’ implementation date approaches, market watchers will be paying

“It’s important to remember that Prudential’s main business interests are not focused on the UK or Europe, instead they are in Asia and a move would therefore make sense.”

close attention to see which firms are ready and which are not prepared for the new reality in which politics has placed them.

It’s tempting to think that by now we would be back in a boom like Asia and Russia were in the 1990s. Perhaps there is an end in sight to this ‘great recession’.

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United Kingdom

Motorists can’t afford excess Motor insurer, Axa, has warned motorists not to push up their levels of excess to reduce insurance premiums. It has found that many customers are unable to authorise repairs to their damaged cars due to the lack of cash to pay for the excesses. Last year, the number of people falling into this category climbed by 61 per cent, leaving people with potentially unroadworthy cars or damage that will deteriorate further due to lack of repair. Around 29 per cent of motorists don’t have readily available savings to cover their excesses if required. Many motorists are pushing up excesses to an unaffordable amount and the average voluntary excesses have risen by 10 per cent in two years.

“We appreciate that premiums have risen a lot in the last couple of years and we can understand consumers looking at ways of saving a bit of money. But if this means that they cannot afford their excess, it is a completely false economy. Even if the money can eventually be recovered from a third party, motorists should be careful to have the cash available in order to get their repairs done swiftly and get their cars back on the road,” said Sarah Vaughan from Axa.

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Quit smoking and save on life insurance

servants and police officers. “People working full time on permanent contracts in the public sector, such

cent) start a savings account for their new arrival, fewer (around 18 per cent) take out

Comparison website, Moneysupermarket.com, has worked out that consumers could save around £5 490 if they kicked the habit of smoking on combined illness cover (CIC) and life cover or up to £1 788 on a single life insurance policy. With the average pack of 20 cigarettes costing £6.95, smokers could save themselves an additional £1 880 a year if they quit.

Emma Walker, head of protection at MoneySupermarket said: “Not only can smokers reap the medical benefits of kicking the habit, but they can avoid letting their hardearned cash go up in smoke, too.

With significant savings to be made, those who make the decision to quit should shop around for the best insurance deal to suit their circumstances. Insurers will insist smokers have kicked the habit for a full year in order to be classed as a non-smoker and qualify for savings on their life insurance premium.”

as teachers, get their full salary for up to six months while on long-term sick leave. This would significantly reduce their PPI cover and is something that those selling PPI insurance polices should have checked,” said Michael Pilgrim, founder and director of Randall and Vickers.

life insurance. Only 25 per cent stated they had chosen a guardian for their child if they were to die. Aviva’s data also showed that two-thirds (60 per cent) of families have no form of protection in place and that the average family has only £938 in savings which would last half a month. Louise Colley, head of protection marketing and sales for Aviva said: “Every parent wants to splash out to prepare for the exciting arrival of a baby, so it’s no surprise that the costs can stack up. But within the checklist of essential items, we would urge parents to consider putting a small amount aside each month to protect their family ’s financial future, if something unexpected were to happen to either parent. It should be considered just as much an essential as a buggy or a cot. We don’t think twice about taking steps to protect our children physically within the home, but not enough action is taken to safeguard the financial wellbeing of our families.

While it’s understandable that people want to save for their children’s futures, parents need to ask themselves whether they would have enough money to meet their monthly payment commitments if they were to suddenly lose an income.”

Teachers to be hit by PPI misselling scandal Teachers are the most likely to be affected by payment protection insurance (PPI) misselling on credit cards, loans and mortgages, according to PPI specialist financial claims management company Randall and Vickers. Other professions that are likely to be affected include nurses, civil

Jobs fall but pay increases Figures issued by the Reed job index show that recruitment levels in the general insurance industry have fallen by 13.8 per cent between February 2011 and February 2012. However, advertised salaries have increased by 6.2 per cent. The survey reported that salaries have increased as employee retention has become more important.

The index looks at trends from over 8 000 UK recruiters and provides statistics on overall rises in advertised job opportunities and salaries in Britain over the past year.

Parents underinsure their lives Children’s financial futures are being put at risk as four out of five parents skimp on life cover according to research from Aviva.

The survey of 1 500 recent parents in the UK reveals that while two out of five (40 per

Europe

Allianz could bid for Groupama unit Allianz SE wants to buy Groupama SA’s GAN Eurocourtage unit and the price could be in the high three-digit millions of Euros or more according to Financial Times Deutschland. Other potential suitors include French insurance group Covea and Aviva Plc. QBE Insurance Group is now said to be out of the running.

the time is right to accelerate the actions we are taking. The changes announced to CGU’s operating model today are expected to generate initial cost savings of $25 million pre-tax in the 2013 financial year, increasing to an annual pre-tax benefit of $65 million by the end of the 2015 financial year. This will continue the improving trend in CGU’s financial performance,” said IAG managing director Mike Wilkins.

United States

Unemployment insurance payments on the rise

“We don’t think twice about taking steps to protect our children physically within the home, but not enough action is taken to safeguard the financial wellbeing of our families.”

Australia

Insurer slashes 600 jobs Sydney-based insurer, Insurance Australia Group (IAG), has said it will reduce headcount in its CGU sales unit by 16 per cent by the end of 2015 to boost profitability and lower costs. This means that CGU’s workforce will be cut by around 600 jobs to 3 100 positions according to Bloomberg. The reductions will provide the company with annual cost savings of around A$65 million by the end of the 2015 financial year.

“Since resetting its strategy in 2008, CGU’s focus on remediation and rebuilding has improved its underlying performance by around $160 million on an annualised basis. With the work to improve the fundamentals of the business well progressed, we believe

In early March, the number of Americans filing for jobless benefits rose to 362 000 and applications increased by 8 000 in the week ending 3 March according to Bloomberg. But it’s not all doom and gloom and figures show that job creation has strengthened in recent months. In February, employment increased by 216 000 after a 173 000 rise in January according to ADP Employer Services.

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• Put Foot for Africa

PUT FOOT R A

12 LLY 20

R I S K A F R I CA

We have our wheels and we have our team. We’re doing it. Put Foot Rally is Southern Africa’s only social rally and you can bet your bottom dollar that this year’s event will be awesome as Team RISKAFRICA takes on the challenge. Put Foot Rally 2012 is happening from 20 June to 6 July with great publicity and major media coverage, and we will be there to take part in the wildest adventure this side of the equator. Fifty crews, seven countries, seven checkpoints, seven parties, 7 000 kilometres in 17 days … be part of the adventure!

Team RISKAFRICA is backed by Pro Sano medical scheme. We have a cameraman and are running a fully interactive campaign online. Through our website, you, our readers, will be able to set us challenges and decide our route, at the same time helping us put shoes on needy kids feet and creating awareness around rhino poaching; because raising funds for worthy causes is a huge part of what Put Foot Rally is about.

For these great causes Put Foot Rally is all about fun, adventure and coverage, but we endeavour to do some really good work along the way. We will be

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actively raising funds for worthy projects and creating awareness around topical issues. We are supporting a few great charities.

The Put Foot Foundation (official rally charity) We’ve chosen The Put Foot Foundation as the official rally charity, and they’ve kindly agreed to send a team of their Fun-atics on this epic adventure. But what is the organisation’s aim? What are we raising funds for? To shoe kids! No, no, not beat them or chase them off. We mean they’re going to put a pair of brand new school shoes onto the feet of hundreds of African children along the route as we cover Southern Africa from Cape Town to Namibia, through Botswana and Zambia, then Malawi, Mozambique, Swaziland and back to South Africa again.

The Put Foot Foundation mission: To raise enough money for a minimum of 600 pairs of shoes to donate to kids who walk to school barefoot every day. Not only that, but donors and rally participants will also have the opportunity to see and feel first-hand what a life-changing experience it is to give a brand new

pair of school shoes to a young underprivileged child.

“We want to build on the vision started by the Bobs For Good Foundation,” a spokesperson said, “by committing our passion, energy and shared vision of changing young lives by giving them a single pair of brand new school shoes.”

Founded by three aspiring young men, Daryn Hillhouse, Mike Sharman and Dan Nash, the Put Foot Foundation is based in South Africa, but proudly calls itself Southern Africa’s newest adventure charity.

The Put Foot Foundation will act as an umbrella organisation, teaming with other charities; it will take responsibility for the administration, planning and delivery of social development projects, as well as accounting, collection and distribution of donations.

Project Rhino (official cause) There has never been a more pressing time to raise awareness around the truly horrific plague of rhino poaching. 2011 saw a record number of 443 rhinos killed for their horns in neighbouring South Africa alone and, at the time of

writing, around 50 had already been slaughtered in 2012. This is a contained event though, two subspecies of rhino are believed to have gone extinct recently further north in Africa. The point is that the plague of rhino killing will spill over into our borders if we do not take a stand against the senseless killing. Project Rhino, spearheaded by the African Conservation Trust (ACT) is taking the lead in the fight against rhino poaching in Southern Africa, starting in KwaZulu-Natal and then quickly expanding through the rest of Africa.

Our goal is to raise enough funds to sponsor two fully equipped anti-poaching teams to help combat the carnage. Team RISKAFRICA will also endeavour to create awareness around the issue on our epic journey.

Get involved Be part of it all as Team RISKAFRICA and other Put Footers attempt to raise over R330 000 for these worthy 2012 official rally charities and causes. Whether you are signed up or not, you can still make an impact by supporting our campaign.

Go to our blog, www.riskafrica.com/ blog. Here you’ll be able to check our progress, To donate money

to our causes, go to the Put Foot site, www.putfootrally.com and follow the Official Charities tab.

There’s a ‘DONATE’ button that will take you to our GivenGain page, where you can make a contribution. Remember to add our crew name (Team RISKAFRICA) and be part of this great initiative.

Team RISKAFRICA Meet the crew Andy Mark Blake Dyason Michael Kaufmann Our crew is made up of three media-types you know very well, all with a love of the bush and their brand. Always looking for a new mission, the RISKAFRICA

boys are up for (just about) anything on their quest to meet new people and experiences.

Don’t let Andy (the Toppie) fool you – Blake and Mike will have their hands full while on ‘Andy duty’. Michael is a helicopter rescue swimmer in his spare time while Blake … well … let’s just say that the girls should prepare to have their hearts broken.

Disco dancing The crew has selected their vehicle for Put Foot Rally 2012 and she’s a beauty. Our ’95 Land Rover Disco 1 will be on her swansong trip through Southern Africa before heading down to the shop to have her roof removed so she can retire on the farm as a game-viewing vehicle.

This is a true African adventure.

We plan our route with your input and set our budget. There will be no support crews along the way – this is Africa after all.

We are free to choose: we can take dirt roads or stick to the tar.

It’s all up to us. So dirt roads it will be!

• Insurance in Uganda

Ugandan insurance offers industry opportunities, challenges Opportunities abound in Uganda, but there is still a long road towards developing the insurance industry in the country beyond current levels. According to the Uganda Insurers Association (UIA), the insurance market has shown positive growth trends over the past five years, thanks to a favourable investment climate that has encouraged several foreign players to join the market. The industry currently comprises 22 insurance companies, 28 insurance brokerage firms, one reinsurance brokerage firm, 11 loss assessors/adjusters and 610 insurance agents.

The growth of the Ugandan economy, which began in 2008, prompted a change in the insurance sector with the rebranding of the Insurance Regulatory Authority of Uganda (IRA). The aim of the newly rebranded IRA was to make doing business in insurance easier and more efficient, while ensuring that the policyholder is protected. The IRA aims to increase public confidence in insurance.

Insurance penetration in Uganda currently stands at 0.65 per cent. In comparison, the worldwide rate is about 2.7 per cent and Uganda’s neighbours Kenya and Tanzania stand at just over two per cent and 0.8 per cent respectively.

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According to IRA board chairman, Elias Kasozi, in the year ending 31 December 2010, the Ugandan insurance sector recorded “a positive growth of 18.77 per cent in spite of the spill-over effects of the credit crunch and the rising crude oil prices”. The 2010 Annual Insurance Market Report published by the IRA stated that during the year 2010, the gross premium income written in the insurance industry rose to 239.99 billion Ugandan Shillings, in comparison to 202.05 billion in 2009. Non-life insurance business accounted for USH216.34 billion while life insurance accounted for USH23.63 billion of the gross premium income in the industry in 2010. According to the report, the total number of employees in the insurance industry decreased from 1 734 in 2009 to 1 645 in 2010.

In terms of South African involvement in the sector in Uganda, the key players seems to be Sanlam which expanded into Uganda in 2010, and Liberty Life Assurance Uganda, which entered the Ugandan marketplace in 2007.

At the time of the move into Uganda, Johan van Zyl, group chief executive of Sanlam, said that the decision to open a business in Uganda was prompted by the scope for growth in the country’s life insurance industry. “Currently life insurance contributes less than one per cent to GDP. However, a number of factors such as the projected economic growth of three to five per cent in 2009 and 2010, the recent discovery of oil fields and Uganda’s developing democracy mean that the need for a well-insured population is increasing rapidly,” he said. Marguerite de Waal, who had previously been involved in Sanlam Developing Markets (SDM), was appointed chief executive of the new company, Sanlam Life Insurance (U) Limited.

When Liberty Life entered the Ugandan market, there were five insurance companies offering life insurance in Uganda; however, none were specialised life assurance companies. Liberty Life recognised the potential in the market and moved in to fill the gap. The risk seemed to pay off as just one year after launching in Uganda, the company announced that it had written premiums worth over USH2.5 billion ($1.42 million), just a couple of thousand less than top life premiums writers, Insurance Company of East Africa. Liberty Life Assurance Uganda provides life assurance, credit-life business, funeral policies, disability benefit and dread disease cover.

Sanlam’s current Ugandan product portfolio includes both individual production options such as its Dream Builder product, which offers a savings and life cover policy in one, and corporate product options such as group life assurance and health care.

Alexander Forbes and Aon are also both active in the Ugandan market. The regulatory environment in Uganda, once seemingly at a standstill, is developing. In October 2011, the Insurance Regulatory Authority of Uganda increased minimum capital requirements for licensing insurance players. Under the new regulations, insurance companies underwriting life insurance business are required to have minimum capital of USH3 billion while non-life underwriters will need USH4 billion. Reinsurers will require a minimum capital of USH10 billion.

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In late February this year, The Monitor newspaper reported that the Insurance Institute of Uganda has been reinstituted with a view to helping the industry create a more favourable image amongst the public and increase the relevance of insurance to Ugandans.

This has meant a continued reliance on foreign trained professionals rather than local talent; something he felt would change as a result of the reinstatement of the institute and the 2011 Insurance (Amendment) Act which had recently been passed.

According to the report, the institute’s operations have for several years been minimally reduced to co-ordinating short-term specialised courses related to insurance and management with foreign insurance institutions including the Nairobi College of Insurance, the Chartered Insurance Institute of the United Kingdom and the Australian and New Zealand Institute of Insurance and Financial Services.

The act aims to provide for the regulation of health insurance, health membership insurance, micro insurance and bancassurance to provide for the membership of the Insurance Institute of Uganda; to provide for the insurance training levy; to provide for the protection of the authority from liability; to rename the Uganda Insurance Commission as the Insurance Regulatory Authority of Uganda; to provide for arbitration as an additional function of the authority; to provide for the composition of the authority; to provide additional grounds for winding up insurers; to provide for the establishment of the Policyholders’ Compensation Fund; to establish the Insurance Appeals Tribunal; and to provide for an increase in the fines and for related matters.

Interim chairperson Geofrey Kihuguru was quoted as saying that the institute had been dormant as a result of a lack of laws governing the sector, an obstacle that he said had left Uganda as the country with the least trained insurers in East Africa.

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The institute with a student population of about 300 is currently housed in Kololo, Kampala with a co-ordination centre near Christ the King Church in Kampala.

Ethics and professionalism in the sector remain an area that requires development. During 2010, the Uganda Insurers Association (UIA) circulated a revised Code of Conduct to its members. The revised code covered elements such as corporate governance, accounting standards, insurers best practice rules, marketing, undercutting, reinsurance, claims, compliance with the law, dispute resolution, etc.

The industry opinion seems to agree, though, that the biggest obstacle for those in the insurance industry in Uganda is lack of awareness of the need for insurance among the general population. With a penetration rate of less than one per cent, it is clear that there is scope for expansion and growth, but convincing Ugandans of the utility and relevance of insurance remains a challenge.