RiskSA Magazine August 2014 by COSA Media

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The business of insurance Insurance Conference 2014

Cover your bases

PI for brokers and advisers

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The China opportunity

Chinese investment into Africa

iHealth wearables

what the future holds

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Publisher & editor Andy Mark Managing editor Christy van der Merwe Production editor Nicky Mark

MOST AWARDED BUSINESS M AGA ZINE OF 2013

Copy editor Gemma Redelinghuys

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Proofreader Margy Beves-Gibson Feature writers Anton Pretorius Christy van der Merwe Dominic Uys Laura Owings Luka Vracar Neesa Moodley-Isaacs Sarah Bassett

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Art director Herman Dorfling Design and layout Mariska le Roux

The business of insurance Insurance Conference 2014

Cover your bases

PI for brokers and advisers

The China opportunity

Chinese investment into Africa

iHealth wearables

what the future holds

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9 771812 596005

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Copyright RISKSA (Pty) Ltd 2014. 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 RiskSa (Pty) Ltd. 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.

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contents AUGUST 2014

The business of insurance

The annual Insurance Institute of South Africa (IISA) conference at Sun City continues to grow from strength to strength, with more delegates, more speakers, and more international representaton than ever before.

36 |

short term

36 / Cover your bases: PI for brokers and advisers 46 / The legal cover option 52 / It is about the bike 58 / Playing along 68 / Darkening outlook

76 |

The executive lounge

We chat to some of the top execs whose companies will be exhibiting at the 2014 Insurance Conference exhibition at Sun City, and who will be attending the event.

medical

76 / iHealth & medical wearables – what does the future hold? 82 / How Obamacare compares to SA care

86 |

326 years of Lloyd’s

Lloyds’ deputy chairman Paul Jardine will enlighten delegates at the 2014 Insurance Conference about the Lloyd’s of today and tomorrow, but for those who aren’t familiar with the rich history of this market, it is worth reflecting on.

long term

86 / Covering the key people 88 / Advice in a dichotomous market 92 / A passive aggressive retirement 96 / A lens on life

100 | managing risk

100 / The China opportunity 106 / When everything stops 112 / Fail to prepare 116 / The rise and rise: Sanlam shares insight into Africaâ&#x20AC;&#x2122;s middle class

120 |

career

120 / Contact strategy

124 / FSB refines rules for foreign CIS 136 / Morocco beckons

140 / Time management tips 142 / Picture perfect 146 / News 154 / Events 158 / Guide for first-timers at the RISKSA Regatta

162 |

ASSETS

162 / Shooting for high returns 166 / Chevy Trailblazer 2.8 LTZ 168 / Different talents

172 |

travel

172 / Airport navigation 101: King Shaka Airport 176 / Best online travel sites

Renasaâ&#x20AC;&#x2122;s highly personal service is underpinned by advanced claims and underwriting technology. We give our brokers state of the art tools that provide a sustainable competitive advantage without interfering with 6

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their existing processes and systems, or compromising their independence. Want the best of both worlds? Contact Renasa today on 0860-RENASA or visit www.renasa.co.za. 7

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Dearreader

here is a group of South African scientists based in Stellenbosch who are developing technology so advanced that they have been hailed by tech giants from Asia to the USA.

They are working on next generation wearable technology that can actually predict a potentially catastrophic health event, sometimes days or even weeks in advance. This technology is no simple heart rate monitor or GPS powered distance calculator – although it can incorporate those things. This stuff is more like the sophisticated telematics devices available in some cars today which monitor vehicle speed, acceleration, and cornering forces and which can automatically summon help in the event of an accident. Imagine for instance the saving in healthcare costs if patients were able to get themselves off to a cardiac unit before a heart attack struck. Would you wear a device that could predict infection, stress and potentially malignant cancer cells in advance of any symptoms appearing? Even if it meant the information was being sent back to your insurance company so that they could adjust your premium according to your risk profile? It is a fine line that between our right to privacy and us reaping all the benefits modern technology can offer us. A line we are likely to visit more frequently in this ‘Big Brother’ age we live in. Read Anton Pretorius’s ‘wearable’ story on page 76. It is IISA insurance conference time again. From what I hear, the conference in 2014 is going to be absolutely brilliant. If you can spare the time, do pop in at our stand and come meet our team. We’d love to share some of the exciting things we have planned for 2015 with you. Enjoy the read.

r ance The annual Insurance conference at Sun City continues to grow from strength to strength, with more delegates, more speakers, and more international representation than ever before.

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The

exhibition hall IISA events and communications manager Pat Hunter tells RISKSA that the 2014 Insurance Conference at Sun City has attracted 1 076 attendees, representing 336 companies, and hailing from 24 different countries. There are 47 exhibitors, with 54 different stands and two hospitality suites. RISKSA knows that what readers really want to know is who is giving what away, and whether or not you stand a chance to win yourself some more insurables. RISKSA gives you the lowdown on which exhibitors are doing what, and some of the prizes up for grabs.

Europ Assist SA Centriq The Centriq executives at the conference this year will be CEO Gareth Beaver, executive director Peter Jennett, and executive director Martin Le Roux. Centriq this year hosts the inaugural Centriq Tour de Conférence, and the team says that at the exhibition they will be ‘pedalling’ – you will need to check it out for more details. Competition is the name of the game at this stand, with a whole line-up of prizes, and communications co-ordinator Caryn Talmage urges delegates to bring their ‘cycling legs’ with them. “We’re looking forward to seeing lots of smiles on conference goers faces whilst visiting our stand – and hopefully many queuing up to try their luck!” enthuses Talmage, who assures RISKSA it will be an interactive experience. “Visit every stand, even those companies you know, because they may have something new on offer

16 10 8

– you might just make a new contact, learn something new, or walk away with a big smile on your face,” offers Talmage as a tip to first time conference goers.

DGC Glass DGC director, Darryn Tromp, says that the theme this year for DGC Glass is that the company stands apart as the largest independent Glass fitment network. Delegates passing the DGC exhibit will stand a chance to win prizes such as laptops, iPhones, iPads and more, just for saying hello. The team at the stand this year have a vested interest in the business, and visitors to the stand will meet the owners of each provincial branch. The team hopes to foster as many new business relationships as last year. “Top tip is to do everything. Don’t miss the opportunity to participate in everything that is happening,” says Tromp.

Europ Assistance SA (EASA) will be putting the fun and games back into insurance, with a carnival theme at its exhibition stand. Visitor participation is a major focus this year, combining activities of yesteryear with a high tech social media platform, and a good dose of competitive spirit, delegates at the IISA Conference will keep coming back for more, says the EASA team. Think ‘fairground attraction’ and delegates will find plenty to capture their imagination, and their competitive spirit, adds EASA. The company will launch its various social media platforms, and tells RISKSA that delegates will come back at every opportunity to engage with its imaginative activities that showcase the products in an original way. “The greatest conference experiences can happen during ‘break time’. You are in an environment with plenty of like-minded individuals. Make sure you reach out and make contact to maximise the potential of the event,” says the company.

Guardrisk After the company celebrated its 20th anniversary at the 2013 conference, Guardrisk will this year be marking its first exhibition as a member of MMI Holdings. “We have come of age and joined a powerful insurance group, we’re still at the forefront of innovation in our sector,” says the team, expanding on the theme of its stand this year, which is, ‘Guardrisk, still a builder of new ideas.’ There will be a competition, in keeping with the theme, in which delegates can win prizes and have some fun for the duration of the conference. Delegates can also expect something in their rooms after Monday evening, to take away the message that Guardrisk is still a builder of new ideas, long after the conference. The conference provides our team, which comprises some of the best talent in the business, with the opportunity to network with their peers and strengthen relationships with clients and brokers, says the company. A word to the wise for first time conference goers: “Pace yourself; the conference is quite an intensive experience.”

Lloyd’s Lloyd’s South Africa will this year be hosting ‘Meet the Market’ in the Hall of Treasures at Sun City. This will be a re-creation of the

famous Lloyd’s underwriting room. In addition the Meet the Market room will also feature the Lloyd’s Coffee House, providing delegates with coffee throughout the day. Another special feature of the Meet the Market room will be the Lloyd’s artefacts display, featuring a selection of artefacts including The Beatles policies, Napolean Bonaparte’s policy, and The Claret Jug. At the Lloyd’s desk, delegates will be able to participate in the Lloyd’s competition via iPads. The main prize is a trip to Lloyd’s UK, including accommodation, airfares and transfers. Lloyd’s hopes to generate increased knowledge within the insurance community and the public of the composition of the Lloyd’s market and its operational model, and a better understanding of how to access the Lloyd’s market. Passing through Meet the Market will give delegates networking opportunities and exposure to Lloyd’s brokers and underwriters specialising in African business, and to a market that is wellknown for insuring the unusual or complex.

Mixtelematics - Matrix Matrix says it will demonstrate what being a leader in the tracking industry is about. The brand advocates leadership in technology and innovation and brings this statement to life at its highly interactive stand.

The brand says it will make things personal and competitive in an engaging way, fulfilling its promise to be ‘right by your side’. The brand will issue a fictional flag to one competing delegate and track the movements of all contenders, via an interactive Bluetooth tracking app, as they try to claim the flag as their own. At three intervals during the day the current flag holder will be announced as the winner; with three winners chosen each day. Matrix hopes to display its technological capabilities in a tangible and exciting way. The brand understands the importance of the journey and hopes to inspire this knowledge into those bold enough to explore. “The Matrix experience at this year’s conference is unparalleled and unforgettable,” reiterates the team.

Mutual & Federal Executives attending the conference this year are CEO Raimund Snyders; brand, customer and transformation executive Nangula

17 11

Profida Profida will allow visitors to login from their own mobile device to access policyholder and broker data without any prior installation or integrations. Most insurance policy administration and underwriting software require that users first subscribe and install an application on their mobile devices before they can login to access policy and broker data. “Bring your own device, be it a smartphone, laptop, or tablet to our stand. We will provide you with a URL address and a demo login, which allows you to access an example policy and broker data within Profida via your already installed Internet browser. No installation of any application is needed and there is no obligation attached,” says the company. The company will also provide extra services, allowing delegates to charge phones and other devices. “Find somebody you know at the welcome cocktail party and get introduced to the person who happens to be standing next to them,” says Profida.

Road Protect

We see the conference as an opportunity to learn from other leaders in their particular areas of expertise,” says the Oakhurst team.

Kauluma; corporate and niche executive Karen Miller; commercial lines, distribution and rest of Africa executive Mark Weston; personal lines executive Coenraad De Jager; and operations executive Michele Schliesser. The theme of the M&F exhibition this year is ‘invigorating experiences’, and without giving too much away, the team insist that it will have to be experienced. The team is going all out to try and win the most interactive stand award for the third time, and so are promising lots of fun. “Learn, engage, and grow,” is the top tip from M&F for first time conference goers.

Oakhurst Oakhurst will show off its telematics offering, and the medium chosen to present this to the public, is by way of its broker channel. The company’s ‘Good Driver Insurance through Brokers’ programme is aimed at assisting brokers in managing risk, thereby bringing both stability and sustainability to their books of business. “We are looking forward to sharing our excitement and passion for insurance, telematics and service excellence with visitors.

18 12 8

One Loyalty Visitors to the One Loyalty stand will be introduced to new value-added services which complement insurance companies’ products. It will be an interactive, informative experience in the world of using mobile technology to enhance policy holder’s day to day lives. One Loyalty notes that every service provided is customised and managed with personal attention, which is the same approach when building mobile apps. “The first time conference goer should explore each exhibitor’s offering with an open mind,” says the company.

PCBS PCBS will be highlighting the role of short-term insurance in infrastructure development at its stand at the exhibition, and will be making use of a virtual construction game to engage with delegates. “We hope to illustrate the importance of the short-term insurance industry and the role of intermediaries in the process,” says the company, which adds that the PCBS team is innovative, progressive and the only specialist construction underwriting management agent attending the conference.

The company will be showcasing its exclusive Road Protect product range at the exhibition, and CEO Rob Inglis says that Road Protect is launching a new product called ‘PI (Private Investigation) Protect’. Road Protect hopes to build on and consolidate existing conference networks and establish new contacts, as well as use the platform to launch its new product. Inglis says that the company has unique products that no other exhibitor has, for example fines, potholes and licenses, and does not outsource its product servicing. “We do the work ourselves, and we provide proactive benefits,” emphasises Inglis.

Santam Santam will set up an artisan chocolate stand with a chocolatier serving a variety of decadent chocolates and other treats. “Our chocolates are the real deal. And you can expect nothing less from our insurance,” says the company that is looking to spread awareness of the brand and its offering of ‘insurance good and proper’. “The sessions at the conference are very insightful and informative. Be sure to attend as many as possible. Use the opportunity to visit the exhibitions and create many new network opportunities,” advise these seasoned conference goers.

SSP The SSP stand at the exhibition this year will focus on digital insurance and the digital revolution. The company will have competitions

to win three iPad Minis, and a view of its new insurance user experience platform. It will be an opportunity for SSP to enhance brand visibility, hear what the industry has to say, and most importantly provide networking opportunities. SSP asserts that its knowledge, talent and technology will set them apart. “Just enjoy the event. It is a very professional and well run event, with lots of good content, speakers and exhibitors – and it can be great fun,” advises the SSP team.

Tracker The theme for this year’s exhibition is ‘Tracker, so much more than a Tracker’, and the team says that their innovative and pioneering spirit will set them apart. After last year’s crash simulation wall, the team once again promises exciting and engaging activities to ensure visitors are provided with all the information they need through the use of technology and entertainment. “The exhibition and conference offer amazing opportunities to meet our customers as well as prospective customers. This annual gathering of critical thinkers is an unparalleled opportunity for uninterrupted time to discuss matters of interest with industry peers from around the world. The line-up of speakers, presenters and

entertainers is world class,” says the Tracker team. “Energise yourself – the days before your trip, make sure you get plenty of sleep and eat well. You’re going to need that energy for the #TRACKERTHEMEPARTY,” says Tracker marketing and brand manager Gugu Sithole.

– you won’t regret it,” says TransUnion to first time conference goers.

TransUnion

Tru-Trade

TransUnion will have 10 company representatives from three divisions – Credit Bureau, Auto Information Solutions and Africa Division, at the conference.

This year, Tru-Trade is partnering with Quote Engine (QE), and the stand will focus on the role data plays in the insurance industry, and will continue procuring vehicle data to enhance its auto synopsis report.

The theme of the TransUnion stand at the exhibition this year is ‘From Chaos to Clarity – Complex Data, Sophisticated Tools, Clear Insights’. The company is giving away a Go-Pro, and personal credit reports. “It is all about networking. Attend everything

Tru-Trade and QE jointly manage vehicle solutions in the automotive space, and decided to converge and combine various data assets to deliver an automotive solution that adds value, and is differentiated in terms of product features and benefits. QE is an independent quoting platform supplying the insurance sector with fast accurate insurance quotes.

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19 13

THE JARGON

The importance of social media in growing your business is often repeated, and RISKSA provides you with a simple introductory guide to Twitter, so that you can join in the conversation. The beauty of Twitter is that you choose who you want to get updates from. It’s immediate, short, sharp and to the point. Whether it is business news, sports, weather, traffic updates or comedy, you are sure to find it on Twitter. Don't underestimate the power of Twitter when it comes to using it as a business tool. Savvy financial advisers and intermediaries are using this platform to find new clients, and interact with existing clients.

GETTING STARTED

Joining Twitter is best done on your computer, and once you have signed up for an account, be sure to download the app to your smartphone or tablet. Because of the immediacy of Twitter, it is often best to tweet from your phone or tablet, particularly when you would like to add a photo.

Start following the companies, individuals, media providers, sports stars, or pop stars that you have an interest in. A good way to find interesting sources to follow is to have a look at who some of your favourite sources are following.

Start building your voice, and include other people in your content to get the interaction started. Mentioning other people will draw more eyes to your content. The notifications tab lets you view interactions, mentions, recent follows and retweets.

Remember, don't share information that you might regret making public.

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Handle: This is your Twitter name, for example @RISKSA. It’s how people will find you if they are searching for you, so when choosing a handle, try not to make it something obscure, and avoid using punctuation in your username. Hashtag (#): Hashtags categorise tweets and make them searchable, like a search engine. Adding a hashtag onto a word, will allow you to click on it, and see tweets from everyone who might be tweeting about that, not only the people you follow. Events, for example #InsuranceConference2014, will create a hashtag, that, when clicked on, will show you a stream of what everyone has to say about the event. (Don’t #over #tag a #single #tweet – the most important word is enough.) Follow: To follow someone on Twitter is to subscribe to their tweets or updates on the Twitter site. Lists: These are curated groups of other Twitter users, used to tie specific individuals into a group on your Twitter account. So, for example, if you just want to look at sports news, you can create a list of people and organisations that tweet about sport.

WHO TO FOLLOW Following these accounts mean that their tweets will appear in your home feed. Here are some of our favourites: Insurance: @RISKSA @IISA_ins @RISKAFRICA_Mag @IICoGH @SAIA01 @TheILAcademy @FIA_ORG_ZA

General: @LandRoverAfrica @MaxduPreez @brucebusiness @nytimes @LiabilityGuy @hanna_barry @christellefouri @chrishartZA @TrafficSA @BloombergNews

Join the conversation! Follow @RISKSA and @IISA_ins for updates from the #InsuranceConference2014

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Todd. He notes that previously, relationships with the regulator have been strained but that there is now a healthy level of trust between the industry and the regulator growing. “We need to keep in mind the important role that insurance plays in the economy. It is a sector that generates employment not only in the insurance sector but in numerous downstream industries,” says Todd.

Q&A with Peter Todd, 2013/14 IISA President What are you most looking forward to at this year’s conference? Some lively debate. Because the levels of trust among industry stakeholders and the regulator have improved so much, this means we can talk openly and honestly at this forum. What has been the highlight for you in your year as IISA president?

Proudly

insuring Christy van der Merwe

RISKSA caught up with outgoing Insurance Institute of South Africa (IISA) president, Peter Todd, who gives insight on the conference this year, as well as his time as president at the helm of the organisation.

his year’s theme ‘the business of insurance is insurance’ is a prompt to focus on the basics, clear the clutter and tackle the here-and-now issues affecting the industry, rather than getting distracted by the fads that come and go, maintains Todd.

The conference gives people an incredible opportunity to gain insight from great speakers, but there is also a chance for debate and question and answer sessions, because speakers are willing to interact openly with delegates. And, of course, the networking element of the conference is just as important.

The industry is grappling with numerous challenges including regulation, climate change, skills development and transformation, and the conference gives speakers and delegates the chance to engage on these issues and develop solutions. “So often when we are working in our particular niche we get bogged down by the everyday intricacies. This conference allows people the chance to lift their heads and get input and perspective from various industry role-players. This kind of engagement can be extremely beneficial,” Todd emphasises.

The growth of the conference itself is a testament to some of the good news in the industry in South Africa, adds Todd. There is no denying that the insurance industry has been experiencing tough times, with continued reports of added regulatory pressure, the soft market and increasing claims, but Todd says that the market is coming out of a big dip.

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The short-term insurance Ombudsman has also noted improvements in the industry, and the collaboration with regulators and industry stakeholders has certainly improved, adds

The progress we have made on Continuous Professional Development (CPD) has been great. IISA is now recognised as the professional body that can provide CPD accreditation. All of that is now online and people can track their hours in real time. Members are seeing the value in this and realise that it is important, and know that the FSB will soon announce a date for when CPD will become mandatory. It has been tremendous to see the significance of the IISA, and the organisation’s role in education in the industry growing. The engagement with the regulator has also been encouraging, and the credibility of the IISA is growing from strength to strength. Any areas that you feel need strengthening? I think there is more focus required on transformation in the industry, and IISA needs to pin down the role that it plays in that regard. It is a broader issue and it’s something that we need to think about more, because it fits in with education and skills development in the industry. The Hyde Park Accord, between IISA, SAIA and the FIA is an example of a step in the right direction, which I hope we see more of.

Pan Cla Ass A

Any words of wisdom for the industry? Take pride in our industry, and keep promoting a positive image. Insurance plays a pivotal role in the economy and society, because we protect people from financial ruin. We often get bogged down by negativity, but we have a lot to be positive about and proud of. The new IISA president for 2014/15 will be announced at the IISA conference gala dinner on Tuesday 29 July.

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Executive Lounge Christy van der Merwe

Welcome to the RISKSA executive lounge. We chatted to some of the top execs whose companies will be exhibiting at the 2014 Insurance Conference exhibition at Sun City, and who will be attending the event. Here is what they had to say.

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Growth in an evolving industry

Lloyd’s deputy chairman, Paul Jardine

Christy van der Merwe

In line with its ambition to be able to access all major overseas territories, including emerging markets, through its global licence network, specialist risk insurance market Lloyd’s continues to extend its reach through its Vision 2025 strategy.

e are making good progress in developing our international licence network, including applying to open a branch office in Beijing, increasing our representation in Latin America and opening a representative office in Dubai later this year,” Lloyd’s deputy chairman Paul Jardine tells RISKSA. Jardine emphasises that the insurance industry is highly competitive – there is a strong supply of capital to the market and rates across many classes of business remain low. “In this environment, it is important to maintain underwriting discipline while continuing to invest for long-term profitable growth in developing insurance markets,” he reiterates. In a market experiencing numerous changes and challenges, Jardine explains that the biggest innovation from a Lloyd’s perspective is modernising the way the market operates and how claims through the market are paid. The company has recently launched a new central processing facility for service companies operating on its Singapore platform, while the claims transformation

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programme (CTP) continues to make good progress, improving the way the market handles claims. This programme has led to a 53 per cent improvement in the speed at which parties agree to a claim transaction, bringing the average time down from 25 days to less than 12 days. Lloyd’s started its CTP journey in 2008, and this considers brokers’ and customers’ requirements, the opportunities presented by electronic trading, options for shared claims services and the skill sets needed by managing agents to meet the challenges of a changing market. The performance management claims team facilitates change and enhances claims performance across the market. These improvements mean that Lloyd’s can continue to play a pivotal role in providing specialist insurance and reinsurance cover in Africa to facilitate investments that support the programme of regional and continental infrastructure development sponsored by African leaders. With regard to South Africa specifically and

the tightening of regulation with particular reference to Solvency and Asset Management (SAM), the South African market is likely to see its fair share of consolidation and merger and acquisition activity. Comparable to Solvency II regulation in the UK, SAM is forcing companies to review their operational models and this will in turn drive mergers and acquisitions. “Lloyd’s is ready to exploit any opportunities that may arise by expanding its cover holder footprint in South Africa,” he adds. Of course, the constant change is what keeps the industry interesting as well, and since Lloyd’s is well known for insuring the unusual or complex, the challenges posed by emerging risks are seen more as an opportunity. Cyber risk, for example, is a dynamic and growing class of business at Lloyd’s. “Be it the first unmanned vehicle, space, political risk or cyber policies, Lloyd’s underwriters have been at the forefront, responding to the new and unusual, and enabling industry innovation and progress for more than 300 years,” concludes Jardine.

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326 years of

Lloyd’s Christy van der Merwe

loyd’s South Africa will be hosting ‘Meet the Market’ in the Hall of Treasures at Sun City. Giving delegates the chance to experience a recreation of the famous Lloyd’s underwriting room, and an artefacts display of treasures, including features like The Beatles policies, and Napolean Bonaparte’s policy. Cast your mind back 326 years, to 1688 – this was where it all started, at a coffee house in Tower street in London. It was one of about 80 coffee houses in the city, where entrepreneurs and merchants gathered for business. This one, owned by Edward Lloyd, became the place where sailors, merchants and ship owners

The Lutine Bell

would gather to get reliable shipping news, and started trading risk.

Weighing 106 pounds and measuring 18 inches in diameter, the bell was traditionally rung to herald important announcements – one stroke for bad news and two for good. The bell is from the 1799 shipwreck of the La Lutine, which was insured by Lloyds underwriters for one million pounds at the time. After being salvaged from the wreck in 1859, the bell was hung in Lloyd’s Underwriting Room at the Royal Exchange and was rung when news of overdue ships arrived.

In 1691, the coffee shop relocated to Lombard street, and the shipping community continued to gather there to discuss insurance deals among themselves. Lloyd died in 1713, but merchants continued to gather and discuss insurance matters at his coffee house. In 1750, the first concrete details of actual underwriting were recorded. While there are still no records of how the market was organised at this time, a Quaker businessman’s journal states that in 1757 he went to Lloyd’s coffee house and ‘subscribed the book at two guineas a year’.

Whenever a vessel became overdue, underwriters would ask a specialist broker to reinsure some of their liability based on the possibility of the ship becoming a total loss. When reliable information became available the ringing of the bell ensured that everyone with an interest in the risk became aware of the news simultaneously. The bell is still in the Lloyd’s building today, but is no longer rung as the result of a vessel becoming overdue. Today, the ringing of the Lutine bell is limited to ceremonial occasions, although in rare instances exceptions are made.

Years of profits in the early 1760s, thanks largely to war, came to an end, and marine premiums returned to a lower level. By 1768, Lloyd’s had gained a reputation as a gambling den, with underwriters putting their names to other kinds of risks, including highway robbery and death by gin drinking. In 1769, a ‘new’ Lloyd’s coffee house was established at Popes Head alley, by a breakaway group of professional underwriters keen to disassociate themselves from the degeneration of the Lombard street gamblers. Between 1775 and 1815, the American Revolution and Napoleonic Wars raged over four decades, and by 1794, Lloyds’ intelligence of shipping movements had become better than the Navy’s. A mutually useful relationship between Lloyd’s and the Admiralty was established, whereby Lloyd’s provided information and the Admiralty, protection. In 1799, the French frigate, La Lutine, which was surrendered to the British in 1793, was sent to deliver a vast sum of gold and silver, collected by the City of London merchants, to the German port of Hamburg, which was on the brink of collapse. The ship sank off the Dutch coast. The cargo, then valued at around £1 million, was insured by Lloyd’s underwriters, who paid the claim in full. The Lutine bell was

salvaged from the wreck in 1859, and can still be found in the Lloyds’ building today. Around 1824, Lloyd’s entered a difficult period. A Bill was finally passed ending the company monopolies and restrictions on insurance, which had favoured Lloyd’s. This prompted Nathan Rothschild to found his rival insurance firm, the Alliance Assurance Company (now RSA Insurance group). Subscribers at Lloyd’s began to fall away. From 1851, financial security was taken much more seriously at Lloyd’s, and members were forced to resign if they became bankrupt. By the 1860s most new candidates were required to put up a deposit or guarantee to support their underwriting. By 1865, Lloyd’s was said to be ‘lacking a

certain spark’ having lost its zestful, pioneer spirit, and the average age of underwriters was higher than it had ever been. This changed in the 1870s, with new blood rising up through the ranks, and in 1871, the first Lloyd’s Act was passed in Parliament making it illegal for anyone not a recognised Lloyd’s underwriting member to sign his name to a Lloyd’s policy. In 1877, non-marine policies were introduced to Lloyd’s by Cuthbert Heath, one of Lloyd’s most famous and illustrious members, who forged an adventurous new path for Lloyd’s. By the 1890s, intrepid young brokers including Thomas Frost, Charles Gould and Henry Lyons targeted the US market, changing the face of

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broking from a mundane to a dynamic role. All of this was before the start of the 1900s, and the next 100 years were no less exciting. From the introduction to risk based pricing, a number of financial failures and the introduction of auditing, catastrophes and new geographies, and two World Wars, to the soaring new towers at One Lime Street, designed by Richard Rogers, and officially opened by Her Majesty the Queen in 1986. Some of the highlights were: in 1965, when Lloyd’s accepted the first space risk; in 1984, when Lloyd’ sent a salvage shuttle and five astronauts into orbit; in 1971, when Lloyd’s provided the first political risk cover; when Lloyd’s insured celebrity body parts, including Bruce Springsteen’s voice, for £3.5 million; and in the 1990s when Lloyd’s offered the first cyber insurance. The 1980s and 90s were the most turbulent and traumatic times in Lloyd’s history. Some types of cover offered at Lloyd’s were very risky. Equally, being an underwriter at Lloyd’s involved unlimited liability for the risks they underwrote – and that meant putting everything they had at risk. Huge losses were experienced when suddenly, unexpectedly large legal awards made in US courts on asbestos, pollution and health hazard claims, some dating back 40 years, resulted in huge losses. These were compounded by a series of oil, wind and fire claims, with costs in the billions.

The Underwriting Room Lloyd’s is not a company, but a market. The underwriting room is more like a trading floor than an office, where underwriters compete for risks. Known as ‘the room’ it is a buzz of activity, and is home to some of the historical artefacts from Lloyd’s 326 year history, including the loss books. These date back to when Lloyd’s was concerned only with marine risks, and similar books were used to record any ships or cargoes that were lost at sea. The tradition stands to this day, right down to using a quill pen, to record marine losses.

In 1993, David Rowland was appointed as the first full-time remunerated chairman of Lloyd’s, initiating sweeping reforms to save Lloyd’s after the catastrophes that had threatened its collapse. In 2001, the chairman’s strategy group tackled a number of root and branch challenges: heavy market losses, a stark disparity between the performance of syndicates and an opaque, outdated operating structure that made it difficult for investors to compare Lloyd’s performance with that of its peers. Today, Lloyd’s is driven by its ‘Vision 2025’, and central to this is the need for Lloyd’s to be larger than today, so that it can target profitable growth from developing and developed economies. The aim is to ensure that Lloyd’s remains the global centre for specialist insurance and reinsurance.

First female broker Liliana Archibald became the first female Lloyd’s broker, in 1973. After her first day in the underwriting room at Lloyd’s, she passed the building on her way home and observed, the roof is still on.

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Cover your bases

PI for brokers and advisers Sarah Bassett

With regulatory reform coming in from every corner, itâ&#x20AC;&#x2122;s not just your clients who are facing increased risk. With claims against brokers and intermediaries on the rise, RISKSA takes a look at professional indemnity cover for brokers and advisers and how else to mitigate your risk.

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cross the board, underwriters canvassed by RISKSA, reported that cases and claims against brokers and advisers are on the increase. “This is as a direct consequence of more stringent regulations in the insurance intermediary sector; new legislation (such as the Consumer Protection Act, the new Companies Act and binder regulations); as well as fee regulations and the growing frequency with which matters are brought before the ombud," explains Nicky Stokes, manager of professional indemnity and medical malpractice at Hollard Specialist Liabilities. “What’s more, ombud findings against brokers are becoming a lot more frequent, and we are seeing increased activity in notification of PI claims against brokers. Not only the number of claims but the severity in quantum as well,” she continues. “The increase in claims is directly attributable to legislative changes that have created new liabilities and seen South Africans become far more accustomed to litigation,” agrees Ana Mullins, director for financial and professional lines at Camargue Underwriting Managers. “The Consumer Protection Act (CPA) is a case in point and provides a wider scope for liability. Even though this particular piece of legislation may not directly relate to insurance brokering services, South Africans know that they have a right to access accurate and professional advice, and will seek to obtain reimbursement in the event of a loss.” Improvements in global communication through social media platforms will continue to increase the public’s awareness of their rights and drive the volume of litigation, Mullins suggests, along with the increased drive from lawyers seeking alternative sources of income.

Regulation and risk “Besides the legislation that relates specifically to the broker, the broker should be watching for legislation changes or amendments relating to their clients,” warns Stokes. “For example, the Protection of Personal Information Act (POPI) which has just come in: this means brokers who have clients that hold customer information need to be advising their clients of the new risks and compliance issues involved. Also, that if they fail to comply with the requirements of this new act, they will be held accountable. All brokers, therefore, need to be aware of the new act itself and new insurance

device requirement on motor policy, for instance, or where a client phones in to add an asset to a policy, and perhaps due to the nature of the day, the addition never gets made,” says Sinclair. “The result of these types of oversights is that the claim is rejected by the insurance company, and the third party automatically holds the broker responsible,” says Stokes. Even more concerning, however, say underwriters, is the lack of paper trails in a lot of cases. “When a broker verbally informs their clients of certain things without recording it or doing a full needs analysis, problems result,” says Stokes. “A disagreement becomes a, ‘he said, she said’ argument because important exchanges weren’t confirmed in writing. Another trend is appearing with brokers who hold binding authorities for insurers but then breach their mandates. If an insurer rejects the claim the broker’s PI policy is triggered. Sinclair confirms that this is a frequent concern, emphasising that accurate record keeping is a Financial Advisory and Intermediary Services Act (FAIS) requirement which the ombud will expect to be able to review in any case. “In many cases, the broker’s defence is that a client may be underinsured, for example because the client was unwilling to pay for the full cover required. Without a full record of this, this is impossible to prove.”

How much is enough? PI insurance is there to protect the professional’s practice against the large claim that could spell financial disaster. It provides cover against both the cost of remedying physical damage and the consequential losses that can arise, notes Mullins. So, how much is enough? products that address these new issues so that they can keep their clients protected and wellinformed. If a broker isn’t on top of his game in advising his affected client of risks – and how to manage them – he/she could be held responsible,” she explains. “Given the wave of recent and ongoing regulatory change, it is critical that advisers stay up to date and understand how the changes impact both their own professional liability in addition to the changing nature of their client’s liability and are advising them accordingly,” confirms underwriter at professional indemnity specialists, Leppard Underwriting, Stuart Sinclair. According to Stokes, the challenge of staying informed is not to be underestimated. “Insurance intermediaries and financial advisers face the huge challenge of keeping fully aware of all products available in the market, as well as their relevance and appropriateness for

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their clients.” Brokers have to keep current to ensure that they cover all potential gaps when doing their clients’ risk and needs analyses. And, when necessary, explain to those in charge of budgets the importance of having cover. “For instance, forgetting to address cover for directors and officers, or employment practice liability breaches, could leave the insurance broker exposed should the client experience a claim in these lines,” she emphasises.

Risk trends Key risks for brokers and advisers still lie predominantly in the area of the advice they have given and instructions they have received, Stokes explains. Frequent issues include: a broker forgetting to add insured items to policies or forgetting to advise clients of special provisos in their policies. “A common one is when a broker neglects to inform the client of a telematics

While larger brokerages do often take large limits on their PI policies, underwriters suggest that many smaller brokerages and independents stick to the Financial Services Board’s (FSB) minimum cover requirements as outlined in FAIS (between R1 million and R5 million depending on the broker’s licence category), which may leave them with considerable exposure. “R1 million doesn’t go very far these days, particularly when you consider that the include needs to cover legal costs,” Sinclair points out. “We consider the current minimum legislated limit of R1 million, for Category I and IV registered FSPs, to be inadequate. This opinion is informed by the fact that this limit has, for a number of years, not catered for inflation, increased awards being offered by our courts, or the increased cost of a suitable defence,” notes Mullins.

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“When you have commercial clients owning factories or fleets, or doing business across borders, the minimum cover is inadequate,” Stokes confirms. “In many cases the limit is eroded by legal costs and there is little or nothing left for the damages payment. This could easily put a small brokerage out of business, and we try to ensure that our network of brokers has adequate PI cover.” But calculating how much cover is required is not so straight forward. “There is no scientific formula to calculate the required limit for PI. This is why a broker should be calling on an experienced objective risk adviser to assist with the process. Many brokers think that they can broker their own PI, but this is a huge mistake as there is no objectivity involved,” Stokes warns. “I think this is a time for any broker, no matter how experienced, to involve the services of a totally objective and experienced risk assessor. You can’t allow personal bias to influence your PI cover in the times we find ourselves today.” “A professional assessor will help you to avoid relying on guestimates or historical assumptions like: buy as much as you can afford or calculate twice your fee income. An objective professional would help you to examine relevant details such as the nature of your portfolios; categories of your clients; and/

or the type and size of the investments you are advising on. They could help you accurately calculate ‘worst case scenarios’. Only then would you have the accurate foundation for calculating your individualistic risk exposure and the level of cover that would keep your business protected at the level that is appropriate for the nature of your business,” Stokes explains. “Our advice is: try and buy as much cover as you can afford and take a higher excess to reduce the premium,” says Sinclair. “It is a catastrophe cover. You may never use it, but when you do use it, it’s going to save your business. So, take a higher excess, but take a limit that will prevent you from being shut down,” he advises. “If your business is predominantly personal lines and your biggest insured asset was R10 million, then technically that is the amount of cover you need,” he continues. “But the problem comes in when you have a business interruption policy of R30 million or R40 million; it’s not economical to buy that kind of limit, so that is why we advise as much as you can afford approach. PI insurance provides peace of mind, and, therefore, the highest limit that is affordable should always be recommended,” Mullins agrees. “The professional in conjunction with

his/her broker, must therefore constantly assess the nature of the work undertaken, both in respect of value and risk, and then determine whether his/her practice is adequately insured.” “When selecting an appropriate level of insurance there are a number of factors to consider. The size and nature of your portfolio, the basis of cover on which you are purchasing your indemnity insurance and any contractual requirements, among others. If a limitation of liability exists under a terms of business agreement, that will also provide a benchmark of where policy limits should be set,” adds Jonathan Healy, Divisional Executive of FINPRO at Marsh Africa.

Check your cover As a consequence of increased claims, a further consideration is that cover is not as readily available as it once was. “There have been many negative changes which have impacted the extent of the coverage offered, as well as the number of markets able to insure this type of business,” says Mullins. “In the Lloyd’s market, for example, very few insurers syndicates offer cover to independent financial advisers (IFA), and if they do, terms are generally punitive,” she continues. “Additional exclusions have been applied – in some

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instances a combination of narrower coverage and higher premiums. Extensions which were historically offered for no additional premium are now being charged for, and underwriters are more selective about the risks that they are willing to consider.” Healy advises brokers and advisers to pay particular attention to the basis of insurance they have as the various products on the market provide cover on either an aggregated or per claim basis. This will impact how you calculate the level of cover required. An aggregated limit of indemnity allows for the limit selected as a total limit for all claims during the period of insurance. Per claim cover allows for the limit of indemnity selected to be available for every claim that may occur during the period with no limits on the amount of claims. If you are covered on a per claim basis, you have that R5 million for every claim that you incur. So, a lot comes down to those technical wordings in the policy too, and that will affect what the limits on the policy should be too.”

Managing your risk Of course, as any insurance professional is well aware, correct insurance coverage, though crucial, is only one part of a full approach to managing risk. First and foremost, brokers and advisers need to ensure that everyone in their business keeps an audit trail of all advice given and instructions received. “It is imperative to keep a log of everything you say and do and send and receive. The burden of proof of negligence is on the aggrieved party, however, if you cannot show due process was followed, a court will find it hard to find in your favour no matter how perfectly you may have served your client,” Stokes emphasises. “Mitigation of risk in an increasingly regulated environment comes down to education around the requirements of the relevant regulation and ensuring the implementation,“ says Healy. It is easy to get caught up on the burden of compliance associated with FAIS, but it can also be seen as a very useful guideline for a complete and thorough approach to risk management,” notes Sinclair, adding that brokers should not be afraid to ask questions and seek advice from the underwriting managers they partner with. “Camargue offers a number of risk management services to its broking clients, which contribute towards minimising and mitigating their risks. These include the vetting of contracts, such as supplier agreements, standard trading agreements, disclaimers and indemnities, legal telephonic and face to face advice, as well as private arbitration services for any commercial disputes, or resolution of negligence based disputes,” notes Mullins.

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Nicky Stokes’s top 20 tips for managing your liability risk (inspired by the National Ethics Association) 1. Sell straight (be honest and transparent – no misrepresentation). 2. Do a needs analysis – in depth! Then recommend accordingly. 3. Advise your clients. Educate them on the policies they have bought, what is covered and what isn’t, including costs, fees, etc. 4. Stick to what you know. Don’t dabble. Rather point them in right direction for advice you cannot give. 5. Write it down. Document everything in writing. 6. Especially when they say NO. If you offer them a product and they decline, document it. 7. Check out the service providers you recommend or use. 8. Know the fine print. 9. Be transparent. When in doubt, disclose.

10. Hedge ratings. Check over a number of rating agencies, not just one. 11. Verify. Ensure the products you sell have track records. 12. Get serious about risk. Ensure both you and your client are clear about the amount of risk they are willing to take. 13. Be honest. 14. Manage expectations. Ensure your client’s expectations are realistic. 15. Stick to the facts. 16. Be authentic. 17. Verify your online content (on your own website). Keep it current and compliant. 18. Embrace transparency. Disclose your licenses and experience. Substance of character over flash of credentials. 19. Take your time. Make sure you do a thorough job. 20. Never lie.

Giving top execs peace of mind:

a broking opportunity and shakers also need your insurance advice is an under-explored opportunity. The secret lies in convincing these owners of the benefits to their company of removing the risk of intense worry and distraction which comes from ineffective insurance.” he says. Warwick Bloom, head of communications at Hollard Insurance

ntermediaries with business insurance clients could realise a great deal of benefit by ensuring that the senior management of those clients are also effectively protected from a personal perspective, through comprehensive insurance of their private possessions, that is stress free at claims time. “There is a real risk to business efficiency when the private assets of senior management are incorrectly insured – their energy could be seriously deflected from their business responsibilities if a personal insurance claim is badly handled or even rejected,” says Warwick Bloom, head of communications at Hollard Insurance. “Many executives have extensive personal assets and complicated insurance needs. While brokers have traditionally been good at looking after business owners, they should be casting the net a little wider in terms of looking after the rest of the management team. “Convincing business owners that their movers

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Explaining advantages Of course, there are challenges for brokers seeking to deliver a holistic offering which covers both business insurance and personal lines insurance to a company’s personnel. The most obvious is convincing decision makers that brokers can really reduce distractions and stress to their management personnel through individualised service and expertise – and a single broker call at claims time – which will benefit company productivity. Bloom says, “Doing everything possible to help key employees to protect their assets efficiently is meant to provide peace of mind; so we’ve made a list for you to use when needed.” EXPERTISE: Brokers deliver broad expert

knowledge, including risk scenarios and independent knowledge of all competitive products. This means that they reduce the risk of employees buying complex financial products, without fully understanding them; buying insurance that is not suited to their individual needs or of exposure to financial loss through an oversight. Brokers have the tools and expertise to access various product providers and, if necessary,

craft an insurance policy with a perfect fit for an individual – just as they do for businesses. LEGAL OBLIGATIONS: Buyers of all kinds of

insurance can be assured that their broker is legally obliged to advise them fairly and diligently, according to the Financial Advisory and Intermediary Services (FAIS) Act. Legitimate intermediaries are legally obliged to provide customers with the right insurance, at the right price. LEVERAGE WITH INSURERS: Brokers also build

relationships and leverage with insurers and can fight for their clients when dealing with ‘grey areas’ at claim time or even at quotation stage. FOCUS ON CUSTOMER NEEDS: In partnership with underwriters, brokers are empowered to deliver the best for their clients. In fact, brokers’ very value proposition is based on responding to their customers’ specific needs, delivering competitively priced, tailor-made solutions.

Bloom concludes “At Hollard we’re convinced that providing an holistic service which includes both business cover and personal lines insurance to employees is a way for brokers to increase customer satisfaction and loyalty. “As the winner of the FIA Personal Lines Insurer of the Year award for two years running, we knosw that our brokers can approach businesses with confidence in the way we have suggested.”

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46 44 8

Legal

Cover

Option Luka Vracar

Is legal expense insurance all it is cracked up to be? With tariffs for attorney services rising, many cannot afford legal cover. Legal insurance offers an affordable alternative, yet brokers need to help their clients understand exactly what they are getting.

n October 2013, Deputy Justice Minister, John Jeffery, told the Sunday Times newspaper that litigation was out of reach for the poor and middle class. To emphasise this point Jeffery said that it would cost a domestic worker two days’ salary to see a lawyer for 15 minutes, and that a raise in tariffs last year meant that access to a lawyer was only for affluent South Africans. Legal expense insurance has grown from a niche market into a legitimate alternative service to traditional legal advice, and claims to provide valuable advice and representation to its policy holders. When a 15 minute telephone consultation with an attorney for a high court matter costs up to R235, or even R940

according to the increased tariffs, clients can significantly benefit from having an insurance policy which offers 24 hour legal assistance via phone, as is offered by most insurers, for less than R100 a month. “Legal disputes are often costly and stressful to pursue or defend. The financial risk and uncertainty of the outcome deters many people from taking legal action. This is where legal insurance can help,” says Johlene Wasserman, manager: legal advice and claims, for LEXCorp. “Unlike conventional insurance, Legal Access [LEXCorp’s flagship brand] does not make a direct payment for a claim. Instead, the

insurance covers the legal costs involved in pursuing or defending a legal dispute or claim. Legal expense insurance includes the appointment of attorneys or advocates and the entire process of litigation is monitored and managed from start to finish,” adds Wasserman. However, RISKSA spoke to a partner from a high-end law firm who explained that his experience with legal insurance has not been favourable. He warns that legal insurance is a “you get what you pay for” service. In fact, there have been questions raised of the quality of the legal representatives from legal insurance providers, as well as the fact that monthly premiums only buy clients a limited amount of cover.

Representatives One of the biggest criticisms from the attorney we spoke to, was that the panel attorneys associated with the legal insurers are small firms who are prepared to work at the tariffs prescribed by the legal insurers. Furthermore, that the quality of legal advice or service provided, is in most instances not what it should be. Many of the legal expense insurance providers refer to their in-house staff as legal counsellors, legal advisors, or legal representatives, and not as attorneys. LegalWise uses in-house ‘legal counsellors’. LegalWise indicates that their legal counsellors have extensive experience and training and when clients need advice these are the professionals they deal with. However, should the client need representation in court or at an Alternative Dispute Resolution Forum, LegalWise counsellors will refer the client to their panel of attorneys, and they will cover the legal expenses for the matter. Brokers need to make this distinction of the personnel clear to their clients. “All our in-house professional staff are admitted attorneys either with an LLB degree or a Bcom/BA Law degree, with a number of years’ experience acquired from private practice, corporate environment or public service,” says Wasserman. LEXCorp also emphasises that their external panel of attorneys is made up of specialist law firms registered with the Law Society of South Africa, all of whom are admitted in the High Court of South Africa as practicing Attorneys.

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“LEXCorp has over 18 professional staff in its various specialised areas of focus. LEXCorp’s UMA model contracts and manages a panel of 1 200 attorneys country wide as service providers to our policyholders. These qualified attorneys and legal representatives provide a wide range of legal services on an agreed tariff structure. At any given moment there are over 500 law firms serving active claims on the LEXCorp panel of attorneys in all nine provinces of South Africa.” adds Wasserman. Furthermore, most insurers also allow their clients to appoint their own attorneys. In this case, the legal insurance provider will cover the expense based on their own tariffs. The onus is on the client to pay the difference of the balance between the insurer’s tariff and that of their chosen attorney. Clients need to be made aware if this option is available, and the potential costs involved.

Services There are typically several bundle options available when purchasing legal expense insurance, and brokers should keep in mind their client’s requirements as certain packages have extended benefits. For example, LegalWise offers a Gold membership which offers R70 000 cover per matter for R70 per month, and Platinum membership which offers R160 000 cover for R160 per month. The Platinum membership, however, puts the client in a higher tariff, which ensures more specialised representation, as well as cover for an uncontested divorce, which is otherwise excluded. In fact, as a ratio, most legal insurance offers R1000 cover for every R1 premium.

“Our Legal Access Policy for both personal and commercial lines covers legal costs and expenses for civil, criminal and labour disputes as well as family matters, with different cover limits ranging from R35 000 [for personal legal insurance] up to R250 000 [for business legal insurance], depending on the amount of cover the individual or business requires. Taking this into account, as well as the policy limits, the claims which we receive varies from divorces, unjust enrichment, maintenance orders, personal injury claims, property disputes, labour related matters; it depends on the client and the assistance they require,” says Wasserman. There are several exclusions that brokers need to take note of when considering which policy is appropriate for their clients. Typical exclusions are contested divorce, defamation cases, any business related matter, and admission of guilt and traffic fines. Furthermore, clients may also be liable should their expense for their matter exceed their cover. “The cover provided for legal costs in most instances is also capped to a certain amount so you will in any event end up being out of pocket for legal fees in addition to your insurance premium,” says the attorney we spoke to. However, LEXCorp argues that their track record of insuring their 1.5 million policyholders speaks for itself. They back up this claim with examples of recent successful cases, which illustrate that their attorneys are more than qualified to handle both civil and criminal matters. In both cases, their clients only had to pay their premiums. “On one of our client’s criminal matters we recently closed, the client was initially arrested for being in possession of

stolen goods, however the case was withdrawn against our client, and the matter was finalised shortly thereafter,” says Wasserman.

If legal insurance is applicable, brokers need to fully understand the legal insurance policy that they are selling. It is vital to differentiate between legal insurance and personal liability policies, which is the client’s financial liabilities, as well as legal liability, which is the obligation brought on by civil actions. LEXCorp recommends that brokers consider the following:

product but its value has increased in recent years. With the culture of rights and consumer awareness on the increase, most clients would want to know about legal expense cover as an insurance solution to mitigate the financial cost of protecting their rights. • Certain legal insurance products can be sold as an add-on to any existing shortterm policy or as a stand-alone product. • Most small and medium businesses do not have a fully-fledged legal division or HR Department to deal with a myriad of legal issues and disputes that might arise with internal staff or external suppliers and partners. Commercial legal expense Insurance is ideal to protect and cover small businesses against potential expensive litigation suits. • Professional legal advice and assistance secured timeously may prevent unnecessary costs and expensive mistakes in the small business environment.

• Part of their FAIS advice responsibility is to do a needs analysis for the client. Invariably, this should include the financial risk associated with unexpected and unforeseen legal disputes and there are many that can occur. • Legal insurance started off as a niche

While the attorney we spoke to advises that persons and businesses seek the advice of a reputable attorney, who will, on day one, provide an outline of the costs and risks associated with the matter so that the client can make an informed decision, these very costs do not always make traditional counsel an option.

In a recent civil matter, LEXCorp’s attorneys proceeded to issue summons against a service provider for defective workmanship on one of their client’s vehicles, after which the service provider contacted the client, and a settlement was reached between the parties. The turnaround time on this matter was two months.

Brokers

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IT IS ABOUT

THE BIKE Christy van der Merwe

Lance Armstrong may have tried to convince the world it’s not about the bike, but his credibility has gone down the tubes, and anyone who has recently repaired or replaced a bike will tell you – it is very much about the bike.

icycle insurance is becoming ever more popular as the cost of bikes skyrocket, and the popularity of road cycling and mountain biking continue to take hold. Bicycle insurance products have also evolved to keep up with the requirements of these fast-paced adrenalin chasers. “The most expensive bike on our books is R180 000,” says Cyclesure MD, Fred Hennings, putting things into perspective for RISKSA. Chris Willemse Cycles Willowbridge branch manager, Marnitz Aucamp, affirms these figures, noting that in the last week, the store has sold custom built bicycles for R112 000 and R94 000. While the most expensive bike sold recently was R140 000, Aucamp notes that the average cost of bikes sold is about R70 000. "Cycling has become a very popular sport, and it is very popular among financially savvy people – you can see this in the way people negotiate on price – and for this reason most people will insure their bikes," Aucamp adds. Sean Botha, MD of Policy Provider, with its cycle specific insurance product iCycle, tells RISKSA that the most expensive bike it covers is about R150 000. Indeed, these are not prices reserved for professional cyclists, but rather the average businessman, as this is the sport that is seen to be overtaking golf in popularity among business people. The first bicycle specific insurance product on the market in South Africa was from Cyclesure, which opened doors in 1998. Backed by Hollard, Hennings notes that in the last three years the company has seen a tremendous increase in uptake of the product. Sales consultants in stores will often recommend that clients who spend more than R15 000 or R20 000 on bikes make sure that they have insurance. Bicycles can be added on to household insurance policies, which Aucamp

notes is worthwhile because the majority of insurance related quotes received by this cycling store are to replace stolen bikes. “In the past, having bikes insured under household policies was not an ideal way to do things, but I think the insurance industry has become a lot more clued up on cycling, and they have stepped up to the plate. I have been very impressed,” says Aucamp. Most insurers, including the likes of Santam, Mutual & Federal, Momentum, Discovery, Auto & General and so on, will cover bicycles, but this would have to be alongside a home and contents policy for example. Previously, damage sustained in events or in transit were not covered, however this is fast changing as insurance providers understand that without this they will not have a competitive product. Direct insurers in the space include Outsurance and Telesure’s MiWay. It is worthwhile to advise clients to adequately appraise the bike, particularly if it has been modified and upgraded because often insurers will limit the value of the bike to no more than R70 000. Aucamp notes that if issues arise during the claims process, they are most often with direct insurers. “Generally we find that if a broker is handling the insurance, they fight the fight for the client, and will take it to the Ombud if need be.” Brokers will also know that cycle specific insurance offers wider cover than general household insurance. If claims from cycling occur more often, this can also negatively impact the client’s ratio, and have a bad influence on the overall household premium. While complaints against insurers seem to prevail no matter what asset is being covered, Aucamp also notes that a lot of the time, the problem is that cyclists try to make unethical requests and take advantage of insurers either by underinsuring or asking for inflated quotes. “This is frustrating as a retailer, because it is simply unethical,” states Aucamp.

Blaze of glory Getting bikes from around the country to Cape Town in time for the Argus cycle race is known to be quite a task, but for some cyclists headed to the race this year, it turned out to be a disaster. Henning explains that a truck loaded with bikes specifically to be transported to Cape Town for the Argus caught fire on route. The entire cargo was destroyed. Cyclesure insured six of the bikes on that truck, and Henning notes that all six cyclists were able to replace their bikes before the Argus and were able to ride in the race. Unfortunately, not all of the owners of burned bikes were that lucky. In another transit to Argus story, Henning explains that four cyclists

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Cycle specific were travelling to the race together, and the trailer opened on the road at high speed and all four bikes went tumbling out onto the road. Two of those bikes were insured with Cyclesure, and those riders were able to replace their bikes and ride the Argus. Henning notes that during the Argus, Cyclesure has agreements with nearby dealers to be on standby 24 hours a day for potential claims. The same goes for other big races nationally, including the 94.7 challenge in Johannesburg, and the Amashova in KwaZulu-Natal. Cyclesure also has agreements with cycle dealers internationally and can arrange for repairs or replacements overseas as well, if need be.

While general short-term insurers continue to improve their offerings in this space, avid cyclists, and brokers canvassed by RISKSA, agree that cycle-specific insurance particularly for custom bikes is worthwhile. It is an arena where insurers and brokers have little room for error, because this is a tech-savvy and well-educated market, with active online communities making recommendations, and posting warnings about brands and products. Cyclesure is the well established brand on the market, and will cover for events, in training, theft or damage in transit while at home or if staying away from home at a guest house for example. The company also provides liability

cover, in the event of a cyclist causing an accident, as well as special accident and death or disability cover. Cyclesure also provides trauma cover for cases of violent theft or hijacking of bikes. There is also the Cyclesure ER24 SweatSafe emergency medical protection benefit, which allows for emergency evacuation, and medical expenses coverage. The company also provides event liability cover for race organisers. Cyclesure is looking at ways to enhance its products, and prides itself on its 24 hour claims turnaround once paperwork has been received. “Our service is what differentiates us, we are all cyclists, so we understand how important it is to get back on the bike and not interrupt training,” says Henning. All Cyclesure staff go on mechanics courses, so that they know exactly how to underwrite properly because they understand how the bikes work, exactly what components are important and what they cost. This is also useful in the claims department. A newcomer to the market is i-Cycle Insurance, a product from UMA Policy Provider, which is underwritten by Genric Insurance. Operational for two years now, Policy Provider MD Sean Botha, says that the growth over this period, albeit off a small base, has been phenomenal.

Weekends

Away

He reiterates that iCycle truly understands cycling, and builds this into policies, for example, where sets and pairs may not be understood in regular domestic insurance, leaving the client with two different rims, because they are only willing to replace the one that is damaged. Botha notes that iCycle is also building in a number of product enhancements such as a no claims cashback bonus, and excess buyback, and, at this stage will cover bikes stolen with no signs of forcible entry. The company is also in discussions to align the product with a medical aid wellness programme, which could deliver mutual benefits.

Criminal minds Henning says that there was a spike in violent cycling related crimes about six years ago. However, in the last 18 months, these seem to be increasing again. The expensive bikes are usually taken out of the country, to Mozambique or Zimbabwe, for example, because using them in South Africa would likely attract attention, and no reputable cycle dealer would buy a stolen bike. Despite the increasing cost of bikes, it is interesting to note that there is not much of an increase in use of tracking devices on bicycles, largely because the cost of

The

Great Outdoors

Freedom

recovery, and deploying helicopters and so on to recover the bikes would outweigh the cost of the bike. The issue of where to put a tracker on the bike, as well as the fact that if it is easily viewed, and could be easily removed, also mean that this is not a very viable option.

Tips for brokers Riccardo Stermin, accounts executive at Phoenix Risk Solutions, which promotes insurance for cyclists through Pedalcycle Insurance, says that it is worthwhile going with a cycle specific insurance product, because they understand the market. “Make sure your clients know about the restrictions, so that they will know where they stand when it comes to claims. It is worth reminding them to make sure transport is extra secure, and never leave the unattended bikes unchained, that way there are no surprises at claims stage,” he concludes. As with most things, keep proof of purchase and get the bike appraised.

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Top dollar cycles Premiums differ according to the prices of the bikes, and road bikes are more expensive. While mountain bikers may take more falls, these bikes are built to withstand a bit more rough and tumble. If you thought R180 000 was a lot of money for a bike, wait till you see what the most expensive bicycles in the world have fetched:

Trek Butterfly Madone – $500 000 This bike was designed by British artist Damien Hirst and contained real butterfly wings that were placed on the frame and the rims. It was ridden by Lance Armstrong in the 2009 Tour de France, and was later sold at a Sotheby’s auction raising money for Armstrong’s Livestrong charity.

Trek Yoshitomo Nara – $200 000 This Speed Concept bike by Trek has a carbon fibre frame and was custom built to celebrate the revival of Lance Armstrong’s post-cancer career in 2009. It was decorated by artist Yoshimoto Nara, and presented at an event for cancer awareness. It was sold at the same auction as the Butterfly Madone.

Kaws – Trek Madone -$160 000 Another Lance Armstrong bike sold at the same auction, the Kaws has chomping teeth designed into its rims and frame, by graffiti artist Brian Donnelley. It was ridden by Armstrong during the Vuelta Leon y Castilla Race, and sold at the same auction as the previous two bikes.

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PLAYING ALONG Luka Vracar

Musical instruments are expensive. Any parent with kids studying the piano or violin will quickly attest to that. Add in the cost of amplifiers, stands and microphones for those students who actually make it to playing a real gig, and the numbers climb remarkably quickly. There is an opportunity here for an astute broker or UMA to educate and cater for this growing potential market. But it will require a bit of work. And maybe earplugs. RISKSA’s Luka Vracar investigates.

n August of last year, South African charttopping band ISO had a trailer packed with over R100 000 worth of musical and stage equipment stolen from a ‘secure’ parking lot at one of the country’s leading music festivals, Oppikoppi. However, as is usual for bands playing at events like this, none of the instruments and equipment within the trailer were insured. The month prior to the incident, another renowned South African band, Mr Cat & The Jackal, had their tour van broken into as it was parked outside the home of one of its members after they had returned from a tour. Within two minutes, the band had their entire inventory of musical instruments stolen. No instruments also means no income. Both of these bands achieve relative success in the South African music industry, receiving regular airplay on national radio stations. ISO is a constant favourite on commercial radio stations like 5FM, have been on a ten arena tour in Germany, and are regular headliners at local music festivals. However, in a developing South African music industry, popularity does

not transpose to high income. On the contrary, Richard Brokensha of ISO emphasises that affordability is one of the reasons his instruments were not covered; lack of awareness of insurance products being the other. “As musicians we struggle to make any extra profit for things like insurance, even though this is such an important thing to have as a touring band,” admits Brokensha. “I am not aware of a specific insurance policy that is targeted towards musicians or equipment. I suppose there are policies that sound and effects companies use, because their gear goes into the millions,” adds Brokensha. There is clearly a gap in the market for an astute insurer willing to educate this country’s growing live music proponents. Heck, maybe one of our readers is even a frustrated rock star who has stumbled into an insurance career by accident, and who would be well placed to design purpose-built policies for this market.

Short-term Insurance providers like KEU and REISSA, do provide specialist insurance cover for the entertainment industry. This includes cover for

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events, the film industry, and all-risk cover for equipment. Cover is specialised and tailored to each client and situation, depending on their needs and the value of the equipment. Chummy Munks, manager of underwriting at KEU, indicates that for their all-risk equipment insurance policy, the film industry is significantly their largest clientele. However, performing artists such as musicians and DJs need to be made aware that they can also cover their equipment under these policies. “We can provide cover for tour bands and DJs, the film industry, stage construction and event hosting. Whatever equipment they have, they need to take out an annual equipment all-risk policy, and that will cover all of the equipment they have. Equipment may include anything from a generator to lighting. Whatever they have, we will cover it,” says Munks. “The all-risk equipment policy is an annual policy that can be paid monthly. There is a difference between some of the insurers who bring you a pure monthly policy, which means that it is technically a new policy every month – so each time you pay your premium you buy your policy for the month. We give you an annual policy, and you get financed by one of the finance houses like Fulcrum or Epic. They then pay us the premium in full and collect it from the client on a monthly basis,” adds Munks.

Even if musicians wish to take their equipment overseas, they can be advised that their all-risk equipment policy will allow them to use their instruments abroad. However, brokers need to inform their clients that even though the cover is worldwide, insurers may object to certain countries and this should be discussed beforehand, in case it leads to exclusion. “There are a few exclusions, obviously. We are very strict about theft from unattended vehicles. You cannot just leave a thing on the seat of the car and leave, because it will be stolen,” says Munks. Other specific exceptions include damage as a result of cleaning or similar processes; preexisting damage or wear and tear; confiscation by authorities; mechanical problems, or delivery challenges.

Security & safety Theft is the biggest risk when musical, film, or any other equipment that is usually used at an event is concerned. In the case of ISO, their equipment was stolen from a secure car park when their trailer was stolen. However, a secure car park is not always secure. Under the KEU all-risk equipment insurance, ISO would have been covered. “The problem with security and security companies is that they are some of the lowest paid individuals in the country. Often guards don’t work overnight, they do not have

weapons, and they are not properly trained. So it is important that what they are guarding is covered,” warns Munks. Clients need to provide all the information of their tour or event to their insurer beforehand. Equipment insurers look at each case individually, and they will be glad to cover a client if they are aware of the risks. Brokers, therefore, need to inform their clients exactly what the parameters of the equipment insurance policy are. “Accidental damage happens; a client can drop a camera and that is not a problem. There is a standard excess for all materials damaged by rain, or motor accident, and everything else, but if it is from accidental damaged by the client caused himself, or if it is stolen, there is a higher excess. The standard excess is 10 per cent of the claim, whereas the higher excess is 20 per cent of the claim,” explains Munks

“We are currently insuring the Cape Town Orchestra that is going overseas to tour Europe. If somebody has a violin worth R120 000, that violin is important to them; it is something they bought and have been playing, and they really look after that instrument because it is their life. You can’t just buy another violin that will play like that, so we will insure it for them,” says Munks Affordability

So it pays to be careful and, according to Munks, clients usually are. It is not surprising since gear like camera equipment and musical instruments are usually very expensive. For a lot of musicians instruments are investments; either they are more expensive than their owner can actually afford, are rare, or they might be custom made. Of the instruments that Mr Cat & 18007 Matrix fleet half pg.pdf 1 The Jackal had stolen, one was newly-imported Greek bouzouki and the other an autoharp. In cases such as these, the items cannot be easily replaced.

“We are one of the few insurers who can provide cover for a day, a week, or a year. Some clients are happy with the security they have at home. They keep their equipment locked up behind alarms, but when they want to use that equipment for a weekend at a music festival, or a film shoot, and they want to insure it for that period, we will insure it,” says Munks.

2014/04/15

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Damaged and stolen equipment significantly affects the livelihoods of performance artists as it leaves them without the tools to apply their trade.

ISO was able to continue touring at the end of last year after their incident was reported by national media and they received support from their sponsors, musical instrument retailer, Music Connection, as well as from family and fans. However, the incident may show that there is an opportunity for brokers and insurers to make this cover more visible, specifically for musicians. The fact that the timeframe of the policy can be tailored is extremely useful for brokers when negotiating equipment cover for equipment insurance, particularly in the case of performing artists. Touring musicians often tour for smaller periods of time; while international artists can tour for up to a year, thus local artists might only have their equipment on the road for a few months, or in the case of a music festival, for a weekend at a time. This can work out to be more affordable for the client.

RISK Segmentation cash reserves. In fact, I believe that every policyholder pays for funding insurance fraud. It is accordingly essential for an internal/ external verification partner to be able to adapt to the latest trends in terms of claims processing, without losing the edge of eliminating fraud, dishonesty and corruption. Whilst it is crucial to understand the importance of quick delivery at claims stage, a proper protection programme will assist underwriters in reducing undue claims cost leakage. Servaas du Plessis Censeo

nsurance companies are continually looking at ways to make it easier to engage and interact with clients to enhance the customer experience. Over the past few years, we have seen great strides made by underwriters to change conventional methods in terms of insurance applications. Convenient options via web or call centres to process applications and policy alterations are now readily available with most underwriters in both the short-term and life insurance industries in South Africa. Traditional claims registration and processing have also seen great advancements. Immediate resolution and straightforward claims processing, amongst others, allow underwriters to finalise claims with the clientâ&#x20AC;&#x2122;s verbal signature without any delays. Unfortunately, fraud remains one of the biggest challenges for any underwriter. This phenomenon is not unique to South Africa. Insurance fraud estimations are as high as 15 to 20 per cent of gross written premium. Contrary to popular belief, insurance fraud is not a victimless crime committed against a big corporate with huge

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Employing, or partnering service specialists to enhance fraud detection capabilities are becoming more crucial with the ever-evolving activities of opportunists and syndicates targeting underwriters for quick and easy cash withdrawals. Predictive analytics is widely recognised as an early warning solution detecting possible deviance from the norm in data. Flagging claims as potentially high-risk, is, however, not solving the risk of claims cost leakage in South Africa. Censeo processed more than 50,000 high-risk claims over the past four years. After years of extensive work to mature predictive analytic systems and business rules of our clients, we still received a high rate of false positive referrals (between 60 and 70 per cent of high-risk matters segmented via predictive analytics). Censeo acquired and utilises the (LVAi & LVA 6.50) layered voice analysis in a preassessment phase. We use this proven and unique 21st century â&#x20AC;&#x2DC;truthâ&#x20AC;&#x2122; technology to verify the accuracy of matters flagged as high-risk by analysing the content of claims statements and risks associated with those statements. The tool is non-intrusive, language independent and identifies truthfulness as well as deception. The pre-assessment allows us to segment claims to the correct processing channels. The results

of the test (similar to a polygraph), cannot determine the outcome of the matter. It does however allow the underwriter to channel the matter to the correct specialist and/or fast track processing claims channel. In the USA alone, more than 75 law enforcement, as well as several financial institutions, utilise the tool. It is also utilised by law enforcement agencies and insurance companies in South Africa, to enhance their risk mitigation. Censeo recently launched the pre-assessment claims support centre with experienced claims handlers to ensure that underwriters, intermediaries and clients get the support they need during claims processing. Since employing the technology to ensure accurate risk segmentation, we have managed to improve accuracy in terms of risk mitigation for clients, but more importantly, 65 per cent of claims formerly processed via a full verification process are now settled without delay. Although the application of the technology is extensive, Censeo utilises it in the process of the identification and segmentation of various risks. Once a high-risk matter is referred, the risks associated are determined during the pre-assessment stage and segmented into different risk exposure categories. Each of the categories has appropriate directed risk mitigating actions in order to improve both the speed of service delivery, as well as reducing residual risk exposure in terms of undue claims cost leakage. In the continuous drive to improve customer experience, especially the fast-tracking of claims, the utilisation of alternative tools like layered voice analysis technology can only improve client experience whilst reducing fraud risk.

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BALANCE

Having worked hard to establish procedures to assist underwriters in understanding and accepting risk, Emerald Risk Transfer feels that this involves a greater degree of peer collaboration and adherence to protocol. “We are mindful that we need to keep a balance between strict adherence and individual flexibility, but I believe we have found that balance,” Bernie Ray, CEO of Emerald Risk Transfer tells RISKSA. Christy van der Merwe

n many ways, the Emerald story is one of striking a balance that triggers growth and success.

Santam acquired the corporate property and affiliated engineering underwriter in 2010, and Ray maintains it has been four and a half years of honeymoon since the partnership began. “From the time the deal was first mooted, Santam has been incredibly supportive, but at the same time has allowed Emerald to act independently. Emerald has evolved and grown as a company, in part due to access to the Santam financial strength and brand. Through

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consistently applying the business models and values that have made us so successful, we have remained profitable. I’m sure that this goes a long way to extending the honeymoon period,” enthuses Ray. Another balance being sought is the growth of business beyond South African borders. Ray notes that Emerald has extensive dealings outside of South Africa. About 17 per cent of Emerald’s gross written premium now comes from outside of South Africa. “We currently underwrite business in 17 countries in Africa with locations as diverse as Mauritania, the Democratic Republic of Congo and Zimbabwe.

Sanlam Emerging Markets has established businesses in 23 countries worldwide, many of which are on the African continent,” says Ray. As part of the wider Sanlam group, Emerald aims to offer technical underwriting assistance and access to capacity to the general insurance businesses in the group. Much of the growth in Africa comes from mining, energy and infrastructure builds, and these are all areas of specialisation within Emerald. No matter where in the world the company is working, understanding the risk is key, emphasises Ray adding that this is an everevolving process. “That is why we place emphasis on creating long-term relationships with brokers and policyholders. Some policies have been with us since the start of Emerald and many more have been with us for several years.” Emerald has an internal risk engineering capability that it regularly shares with its brokers and, where it can, also with policyholders. The most successful relationships are those where we can obtain as much information as possible about a risk and the policyholder’s risk management. This is simply because then our underwriters will be more comfortable with accepting risk, and in return, policyholders receive a better product in terms of cover and price. Reiterating this, Ray stresses that proper risk management has to start and end with the correct understanding and measurement of the risk. This is especially important, considering that prospects for meaningful growth in the economy are weak in the short-to mediumterm and underwriters will remain under extreme pressure to maintain profitable underwriting results. “There are some indications that premium rates will creep up, but generalised rates increases will be difficult to sustain, especially in the highly competitive personal and commercial lines space. So underwriters will have to concentrate their efforts on management of the risk pool. Those underwriters that get it right will

be profitable, and those that don’t, won’t be,” states Ray. For policyholders the incentive to practice proactive risk management is that they will receive the best product and price and will be assured that when disaster strikes, their claims will be paid, he adds. This prudent understanding and measurement of the risk, is also beneficial for brokers in this increasingly competitive market where intermediaries are vying for good business in the corporate property space. “For me, the key behaviour for success is for the broker to develop a thorough knowledge about the risk and the client’s risk management profile, and to share this knowledge with the underwriter. This is where long-term relationships play a pivotal role,” Ray says. A major concern is that in an economy that is sluggish, corporates come under pressure to grow and remain profitable, and the risk exists that expenses are reduced, leading to spending cuts on risk management.

Product enhancements at Emerald take place with relation to terms of covers and geographic expansion, and geographical scope now includes India, Southeast Asia and other Asian territories. Ray also explains that over the last few years the demand for riot and strike cover has gained momentum and Emerald now has an exclusive facility at Lloyds of London, giving it the ability to offer these covers as part of an assets programme, or stand alone. Looking ahead, Emerald is also currently looking at expanding its offering to include petrochemical risks across Africa, to cater for what it perceives to be an increasing demand for cover for these risks. In addition, Emerald is involved in a multi-class product for major infrastructure projects, which is offered by a combination of underwriting managers in the Santam specialist business division.

This often only manifests itself after some time, and in the interim underwriters are potentially faced with a sub-standard risk pool. Once again, the importance of the correct understanding and measurement of the risk cannot be overemphasised.

Balancing the basics While ensuring that the deliverables are sound, striking a balance in the office is also of great benefit. Not just celebrating women’s month this August, Ray notes that across Emerald, 63 per cent of the staff complement is female. “It was never a deliberate strategy to appoint women to senior positions, rather the women in our environment had the right attributes and skills required at the right time. Having said that, I’m delighted that it turned out that way because I think women bring a different dynamic and energy to the team. They help to create a balance that otherwise might not be there.”

South Africa’s growing population of high-net worth individuals require greater protection for their assets

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BACKGROUND A recent study by research agency New World Wealth has revealed that SouthisAfrica is Africa’s millionaire hubtargeting with morethe than 35 000 Echelon a niche short-term insurer LSM 10+ millionaires. Unsurprisingly, Johannesburg tops the list of African market in South Africa. Our average growth rate of 101% cities most is millionaires, accounting for 70% of broker South over with threetheyears underpinned by independent Africa’s economic heavyweights.

support, our knowledge of personal asset risk solutions and an understanding of the insurance needs of professionals, High-net worth individuals are those who own over R9.5 million business owners and executives. ($1m) in assets, excluding their primary residence. Assets include anything from yachts and cars to properties.

Echelon has a three pronged value proposition:

• Solvency – backed by have South Africa’s largest inshort-term Insurance industry watchers seen an expansion the highinsurer AAA-ratedmarket, Santamrequiring Ltd. net worth andand professional tailored insurance benefits with the capacity to cater for varying client needs. Offering • Solutions – including insurance and safety benefits. appropriate plans that these individuals is Echelon • Serviceinsurance – with skilled staffsuit using unique technologies to Private Clientprivate Solutions, a niche short-term insurance deliver bank styled insurance service underwriter “at another and alevel”. member of the Santam group. CUSTOMISED SOLUTIONS

Echelon follows a lifestyle underwriting philosophy aimed at

With more certainty South Africans investing in Clients classic are andindividually high-end achieving and sustainability. automobiles, some of Echelon’s customised insurance covers rated according to a range of lifestyle factors, thus eliminating include bespoke solutions. For example, Echelon’s “three year new cross-subsidisation and creating space to offer a benefit “fit” for old” benefit is popular among clients who purchase new luxury while remaining competitive in a price-sensitive market. vehicles. At the same time, flexible pricing and terms for collectible cars can be accommodated all under one policy.

Echelon underwrites all risks cover for motor, buildings,

contents, pleasure aircraftneeds. as well specified “Our business modelcraft, catersprivate to our clients’ Weas understand andtheir unspecified assets, necessitates together with personal accident and that financial position a different approach when it comes to insurance they all have their own unique requirements. personal liability as solutions – all under one policy contract They expect financial protection for their expensive assets together for convenience. with safety services whether in the car, at home or while pursuing sports or outdoor activities,” says Mark Marinus, CEO at Echelon CONTACT Private Client US Solutions. The 2012/13 national crime statistics suggest JOHANNESBURG CAPE TOWNthat South Africa’s millionaires and their assets are exposed Block E – 2nd Floor 3rd Floorto significant risks. In The Pivotonline crime statistics surveys Sunclare addition, haveBuilding revealed an increase Casino 21 Dreyer Street, inMonte incidence and severity of residential burglaries and vehicle theft Claremont inFourways recent times. 2191 7708 Tel: 011 023 2214/5/6/7/8 Tel: 021 657 1100/1/2/4/8/9/10/11 The so-called ‘wealthy’ areas of Gauteng and the Western Cape Fax: 021 683 5441 are usually identified as vulnerable to crime. “As this market continues to expand, asset accumulation is also expanding within our 66 client base, but so too the risk of loss. This is why they need an 8 4 insurance provider that understands this environment very well,” says Marinus. ADV 4178.indd 1 Echelon

Private Client Solutions was established in late 2009 and has enjoyed a remarkable 81% year-on-year growth following two

Insuring your lifestyle “This robust growth is attributed to two factors – firstly, our accredited intermediaries trust the brand and its value proposition. Secondly, South Africa’s economic elite is growing,” says Marinus.

An Echelon contract offers financial protection and peace of mind, with solutions for risks as diverse as: FOCUSING ON THE INDIVIDUAL AND THEIR ACTIVITIES

During the course of October, Echelon introduced two new safety • The depreciation in value of new vehicles. services: Emergency Medical and Home James. These services • Financial shortfalls following amendments to the Road break away from the traditional approach as they aim to rather focusAccident Fund Act. on safety solutions linked to the activities of high-net worth • Unexpected costs due to cyber and identity theft. individuals.

• Liabilities associated with lawsuits and third party claims.

• Accidental damage and power surge to household Emergency Medical offers benefits such as a medical response contents up to full sum insured. vehicle to a scene of the an emergency and emergency transportation, while Home James is a home-drive assistance service in the event • Exposure relative to business contents cover at home. of client being unable to drive. • theHassle-free unspecified all risks. “It is in our DNA to meet our client’s changing needs. We have Risk benefits are enhanced with safety solutions for roadside realised that the lifestyles and activities of our clients are as and home emergencies, as well as access to emergency particular as their assets. We have therefore introduced solutions medical services for the family while pursuing sports activities to provide more comprehensive cover for not only physical assets andalso hobbies away from home. but our clients’ personal safety,” says Marinus.

Echelon relies on that select for theunique distribution of not its “Our analysis shows ourbrokers target market’s needs do products, and endorses intermediary expertise in client risk exist solely in what they possess but also in what they do. We want to management independent professional advice. help our clientsand to reduce risk at home, on the road and while taking part in physically activities such as cycling, mountain biking, hiking or boating,” adds Marinus. With a personalised service and a benefit structure that caters to client needs, Echelon represents a first in private client

INTERMEDIARY SUPPORT insurance in South Africa.IS KEY

Echelon Private Client Solutions endorses the value of an experienced intermediary in client risk management and advocates the importance of their representation of policyholder interests. Echelon’s products are distributed through a very select intermediary network of about 340 professionals countrywide, who PRETORIA themselves to crafting individualised DURBAN take a proactive approach Brooklyn Bridge Office Park solutions for their clients. Unit 20 The Business Centre 3rd Floor Steven House 2 Ncondo Place 570 Fehrsen Street Ridge Sideworth individuals do not always “High-net have a lot of time on their Umhlanga Ridge hands; but they still need to take careBrooklyn of their insurance needs. This is4319 where the intermediary comes into0181 play as they act on the client’s Tel: 031 830 5057 behalf, ensuring they receive the Tel: 012 433 6300 best professional advice and Fax: 012 433 6301 Fax: 031 571 0760 representation throughout the client’s relationship with Echelon. We trust our accredited intermediaries to guide our policyholders from the time of contracting, to when there is a claim, and over the life of the policy contract,” concludes Marinus.

Contact Echelon Private Client Solutions on 011 023 2214 or 021 657 1100

17/06/2014 03:36:07 PM

SA obesity

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Seven out of 10 women and four out of 10 men in South Africa have significantly more body fat than is considered healthy, shows a new study published in the medical journal, the Lancet. These results position South Africa with the highest overweight and obesity rate in sub-Saharan Africa.

eighbouring countries such as Namibia (19.8 per cent), Lesotho (24.1 per cent) and Zimbabwe (33.5 per cent) have significantly smaller proportions of obese women than South Africa.

from as early as 25 years, as a possible result of being overweight or obese.

The study found that men in developed countries had higher rates of overweight and obesity while women in developing countries exhibited higher rates.

Research has shown that the risk for developing cardiovascular disease, cancer, diabetes, osteoarthritis and chronic kidney disease increase when a person’s weight-to-height ratio, also called a body mass index (BMI), exceeds 23.

Rates are on the rise among children and adolescents in the developing world, where nearly 13 per cent of boys and more than 13 per cent of girls were found to be overweight or obese. In South Africa, these rates are significantly higher: a fifth of boys and a quarter of girls have unhealthy amounts of fat in their bodies. These results correlate with a 2011 health survey conducted by pharmaceutical company GlaxoSmithKline that pronounced South Africa the ‘third-fattest nation in the world’ and a Medical Research Council study, which found that 61 per cent of the South African population is overweight or obese. This is almost double the global rate of nearly 30 per cent, according to the Lancet study. The Medical Research Council study also found that South Africans were developing diseases from a younger age with diabetes, high blood pressure and cholesterol starting to peak

Risk factor for disease and claims

The World Health Organisation predicts that in the next 20 years, obesity-driven diabetes across sub-Saharan Africa will double. Stephen van Niekerk, head of Momentum Myriad states that there is a strong connection between BMI and life expectancy and therefore insurance companies often charge an extra premium for clients with a BMI level that is above a certain limit.

“Generally, BMI is perceived as the most appropriate measure to determine if an individual is at a healthy weight. The application of BMI is popular since it is simple, quick, objective and applies to adult men and women as well as children. Even though BMI is not a preventative measure of illness, it does provide guidelines that could ensure a balanced lifestyle. Furthermore, one does not have to be of an exact weight or measurement to be considered ‘normal’. There is a range within each classification that allows for different body types and shapes,” he explains. Researchers suggest that increasingly Westernised and urbanised lifestyles in South Africa is a key reason underpinning these statistics, with people leading less active lifestyles and consuming more processed and fast food, which has extremely high salt, sugar and fat content. In response, Momentum launched Momentum Interactive, an approach to underwriting that rewards clients if they follow a healthy lifestyle based on factors such as BMI, cholesterol and blood pressure. Van Niekerk states that, “the rewards include guaranteed discounts for life.” “Although BMI is not an exact science, our experience has shown that it does influence our clients’ claims experiences significantly. For us, it is not about life insurance; it is rather about insuring our clients’ financial wellness,” he concludes.

Darkening Six months into 2014, bond credit rating agency, Moodyâ&#x20AC;&#x2122;s Investor Services published its industry outlook for reinsurance. In the report, the company downgraded its global reinsurance outlook from stable to negative. An industry that started the year under pressure from a softening market, may well face more than it bargained for in the months to follow. Dominic Uys

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g outlook A

ccording to Kevin Lee, senior credit officer at Moody’s, the company’s change in outlook midway through the year, was prompted by a number of factors that are expected to put increased stress on reinsurers in the coming 12 to 18 months. While many of these influences have been developing over the course of recent years, Lee indicates that the industry is now reaching a turning point. The influx of alternative reinsurance vehicles in the form of insurance-linked securities and traditional catastrophe bonds is of particular concern to the entire reinsurance market in the developed world. “Traditionally reinsurers have relied on their catastrophe lines to cross-subsidise their other, less profitable lines. A smaller cat market will mean that reinsurers need to start looking at other means of supporting these lines,” Lee says. The effect on developing markets is much the same as the supply of reinsurance capacity entering the developed world, and as a result, begins to outstrip demand. According to Lee, the softening global market for reinsurance shows similarities to the state

of the market around twenty years ago. Barring a major event like the September 11 attacks, this could indicate difficult times ahead for reinsurers.

market has motivated insurers to seek methods of reducing their reinsurance spend.

History repeating

Lee states that there are a number of factors that can swing the outlook for the reinsurance market in either direction. However, even if some of these swing factors occur, they could still push the reinsurance market in either direction.

Lee notes that the current reinsurance market cycle bears a striking resemblance to the state of the industry in the late 1990’s. “There is an overabundance of supply at the moment. We have traditional reinsurance offerings competing with several alternative vehicles such as insurance-linked securities. Pricing has declined noticeably year on year and the power of buyers to bargain for reduced pricing, has grown,” Lee says. The conditions may be similar but, according to Lee, the drivers behind these similarities are quite different from the ones in the past. Previously high interest rates and a strong stock market resulted in loose underwriting by insurers. Less stringent constraints on insurers also allowed for more aggressive underwriting leverage. Today’s conditions are the exact opposite but the result is the same. More stringent legislation around insurance has resulted in much more careful underwriting and the depressed stock

Tipping the scales

Lee tells RISKSA that the drastic price decrease in reinsurance products over recent years is expected to slow significantly. However, a further 15 to 20 per cent drop in catastrophe prices over the next year is not an impossible scenario. This would bring prices down to below 2001 levels and some reinsurers may need to revamp their capital structures if they want to continue earning their cost of capital. Secondly, a rise in interest rates would provide more clarity on how much of the non-traditional capital that has flowed into the market will have any staying power. “Our working assumption is that many of these investors are equally motivated by diversification and therefore would likely stay when interest rates rise. Higher interest rates would boost reinsurers’ investment income, which would be credit positive, but

may also encourage some reinsurers to sell products at below cost to hang onto market share,” Lee reports. One factor that could shift the market into a hardening cycle is a sizeable catastrophe event. According to Lee a major loss, particularly in Florida could scare off some non-traditional capital, especially if the loss undermines confidence in the cat models. The opposite may also occur and the prospect of higher prices could trigger an inflow of new money “Our working assumption is that many investors would not walk away after one bad year given the good historical performance of cat bonds and ILS funds. ILS funds are coming off their fourth best year since 2006, having delivered a 7.67 per cent return last year, net of fees, according to the Eurekahedge/ILS Advisers Index,” Lee states A large catastrophe event would test the ability and willingness of non-traditional providers to honour their obligations in a manner that meets buyers’ expectations. A large loss would also test their contract provisions, including collateral release mechanisms. Such a test could either legitimise non-traditional capacity as a reliable counterparty or raise doubts about its value proposition.

The year to come “With buyers bundling higher volumes of risks in their reinsurance programmes and consolidating panels, reinsurers that can provide substantial capacity have an advantage over small reinsurers”

In spite of the negative rating, Lee says that the reinsurance may well see some limited positive upswing in the coming year. “It is unlikely that we will see reinsurers going under in the coming year, but we could see a noticeable reduction in the capacity of many,” Lee says. Lee believes that the reinsurers who will best be able to cope with these challenges of the coming 18 months will have a number of traits. Firstly, relevant size will be an important factor. “With buyers bundling higher volumes of risks in their reinsurance programmes and consolidating panels, reinsurers that can provide substantial capacity have an advantage over small reinsurers. Going forward, a reinsurer may need at least US$ 3-4 billion of capital (including the capital it manages via sidecars and other investment vehicles) to be viewed by buyers and brokers as long-term strategic partners,” Lee states in his report. Reinsurers with proven track records, having already paid their dues with clients are also better placed. According to Lee, current market conditions favour reinsurers that have already established themselves as strategic partners with clients and demonstrated their value through additional services like data quality assessments and model teardowns. Similarly, reinsurers with a track record of

paying claims promptly, managing collateral release mechanisms fairly, providing cash advances to clients voluntarily, and resolving coverage issues reasonably are more likely to differentiate themselves from non-traditional capital providers. The growing trend among insurers is to reduce their reinsurance spend by consolidating lines or bundling their insurance risks. Reinsurers that have expertise in multiple products and multiple geographies have a better chance of differentiating themselves from competitors with more limited product sets. Similarly, this flexibility will also set the reinsurers apart from non-traditional service providers.

African perspective Junior Ngulube, CEO of Munich Re of Africa tells RISKSA that the year has so far gone according to the company’s expectations. “It is quite early to comment but so far we have been making some good strides in reaching the goals we set out at the start of this year,” he starts. In January of this year, Ngulube explained to RISKSA that Munich Re of Africa would take measures to make up for the anaemic performance of the previous year. Among these was a renewed focus on infrastructure projects on the African continent. “So far we’ve seen a lot of movement on transport and power infrastructure projects, and we are quite optimistic about development in Africa,” he says. “We also see quite a few insurers working to reduce some of their reinsurance spend but it is to be expected in a market that is making efforts to become more efficient. As reinsurers we should adapt to support this market,” he adds. As far as the movement of reinsurance capacity into the developing market of Africa goes, Ngulube tells RISKSA that change is still slow. “Even though booming economies like Nigeria and Kenya do offer new opportunities, South Africa remains the largest market for both insurance and reinsurance. This probably will not change very soon,” he states. Extreme weather events like the ones that hit Gauteng at the end of last year are still in the back of everyone’s mind, and Ngulube says that the industry should expect more to come. The rest of 2014 has been relatively quiet however. “The year isn’t over and we can still see some serious weather later on,” he adds. Ngulube admits that the market is still some way away from making a full recovery but he adds that Munich Re of Africa remains optimistic about what the rest of 2014 will bring for the company.

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Stricter

financial crime prevention needed to draw investors

African markets, South Africa included, need to tighten measures to combat financial crime in order to boost investor confidence and avoid migration of crime from stricter nations.

his was the message at the Anti Money Laundering Conference hosted in Johannesburg by professional services firm, Deloitte, and financial data provider, Thomson Reuters. The conference brought together key stakeholders required to combat financial crime, ranging from banks to regulators and government representatives, and demonstrated how companies and governments can tackle financial crime through the use of sophisticated technological solutions. “Financial crime is international and will inevitably migrate to countries where the implementation of anti money laundering regulation is perhaps lagging the rate at which their markets are developing,” said Martin Woods, global head of financial crime for the Regulated Businesses of Thomson Reuters. “As the risk of financial crime increases, so too does the level of regulatory scrutiny, so it is in the interests of both companies and countries to continually improve their efforts to combat such crime,” he continued. It is essential that companies operating in Africa learn from the experience of their international counterparts by migrating from a rules-based approach to financial risk and compliance, which Woods describes as

‘box ticking’, towards a risk-based approach that takes a selective attitude towards client risk assessment. The risk-based approach embraces the ‘know your customer’ guidelines to prevent an organisation from money laundering activity. Marc Anley, risk advisory partner at Deloitte, described the risk-based approach as augmenting a company’s internal rules and compliance processes with an element of common sense towards the assessment of customer risk. Companies can do this by taking into account risk factor elements such as: Geography e.g. private companies headquartered in offshore tax havens generally require far more scrutiny than publically-traded companies, which typically undergo far more public scrutiny in their day to day operations. Inherent customer risk e.g. companies that hide behind layers of legal and jurisdictional complexity are more likely to be trying to hide something. Distribution channels e.g. companies that distribute their goods or services on a faceto-face basis are more likely to be open and

transparent than those that do so at arm’s length. Industry e.g. companies that distribute high risk products associated with terrorism, bribery and corruption, such as arms, may require extra levels of financial scrutiny. “Financial crime is dynamic and ever-changing, so an efficient and effective risk-based approach needs to evolve constantly in order to act as an adequate deterrent,” said Anley. Woods says financial crime needs to be tackled in an integrated manner through close partnerships with local and international regulators as well as the private sector, in order for countries and corporate entities to safeguard against financial risk. “It’s more effective if all the necessary stakeholders in a country present a united front against money laundering and financial crime activity than if they try to act entirely alone,” he emphasised. Financial institutions in particular need to ensure that they have the proper systems, processes and procedures in place to combat financial crime in a cost-effective and sustainable manner that offers both them and their customers a suitable degree of protection.

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iHEALTH

& MEDICAL WEARABLES What does the future hold? Anton Pretorius

The phenomenal rate of development in the smartphone arena is about to yield an unexpected benefit to users and medical insurers alike. A group of South African innovators are in the final stages of developing world-first technology that, like a car’s diagnostic system, can monitor all the vitals of the human body and even warn in advance of a possible heart attack. We ask the question: What impact will this revolutionary tech have on the life and health insurance industries in South Africa?

lobally, healthcare systems are on an unsustainable path as healthcare continues to eat away at the world’s GDP. Locally, the healthcare industry faces tremendous challenges driven by surging costs, changing demographics, increased longevity and a spike in the prevalence of chronic conditions. The healthcare landscape is changing, and we, as a society, must change with it or be left behind. Recently, there has been a lot of activity in the wearable technology space, though most current applications are more focused on wellness and health tracking (think iPods, Misfits and Fitbits. However, according to

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Medical Device and Diagnostic Industry (MDDI) Online, the market will grow to over $5 billion (R52 billion) by 2018. But the technology that’s currently in development from a group of Stellenbosch scientists makes these wearables seem obsolete in comparison. This medical wearable technology provides the user access to information that enables them to personally manage, optimise and troubleshoot their health by measuring the metabolic, renal, hepatic and neurological systems of the human body.

HealthQ on the rise RISKSA recently visited the premises of HealthQ

Technologies, a high-tech start-up focused on combining skills from various disciplines to provide solutions in the digital health and wellness space. Their group is primarily made up from mathematical statisticians, biochemists, systems biologists, electronic, software and industrial engineers – all housed under one roof. At the helm is brainchild, co-founder and CEO, Dr Riaan Conradie (PhD). Conradie is a biochemist and computational systems biologist, and has published several international peer-reviewed research articles and book chapters. By marrying science and entrepreneurship, he came up with a solution that he believes could change the world.

With the help of optical sensors and noninvasive devices (no pricking of the skin or drawing blood), Conradie and his team can measure key physiological metrics with a high degree of accuracy. Using computational systems biology, the device can study the chemical changes that occur in the blood vessels, among other places, and help you understand your body every second of the day. “We’re merely creating an enabling data platform. We’re not building apps. Our partners build the apps. We don’t make wearables, but we provide the technology to do so,” Conradie says. While the development is still classified, HealthQ Technologies has already attracted

interest from 60 international investors, including several influential Fortune 500 families and South African-based Venture Capital fund, 4Di Capital.

Individuals and zero assumptions He explains that where other wearables come up short is the fact that they only measure acceleration. “The information isn’t always accurate and can be off by as much as 50 per cent. The accelerator measures people collectively and here, we believe that each individual is different,” Conradie says. According to him, the information generated from modern day wearables is too

vague and generic and requires significant contextualisation to be meaningful. “It will tell you that if you’re this age, this weight, this gender, this race, then the amount of calories you burn is X over the amount of activity. Even insurers will agree with me that while this might be a representation of the population, it’s not a true reflection of the individual.” He explains that the crux of system biology is to get an accurate description of the individual. Conradie and his team build mathematical models of the body and every process in the body is described, analysed and broken down through accurate math. “We realised that the market is hungry for what

look at your arterial stiffness index – the higher that index, the higher your chances of heart disease.”

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“We can even determine your cardiovascular age. You might be 30, but the system might tell us that you're closer to 40. Thus, it’ll give you an indication of whether your lifestyle matches your age.” Conradie says this technology has captured the imagination of this team and those who come to hear of it. “What if you were issued with an infographic of all your vitals once a week? This infographic that gives you a total breakdown of you, the individual, and can help you manage and troubleshoot your body. Imagine a device that can tell you that the reason for your lack of sleep is because you haven’t exercised in three days. This technology will not only make better athletes, but might also save lives and help you better manage your health,” he says.

Help insurers

Some scenes from the HealthQ Technologies headquarters in Stellenbosch, where biochemists, stastistical mathematicians, biologists and engineers come together to develop world-first medical wearable technology.

we’ve got. We don’t measure the acceleration (motion) of the body; we measure what is actually going on inside the body. We measure vital metrics such as oxygen saturation, heart tempo, heart rate variability, breathing, EPOC [excess post-exercise consumption], blood lactation and more.” Conradie says that the information collected on your body by using mathematical models goes to a central cloud storage model of the individual. “Over time, these parameters will develop the ability to improve itself and become more and more accurate,” he adds. “It’s always about the individual. Personalised wellness tracking is what everything’s about. We’re not just creating something you can wear

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around your arm that makes certain assumptions. We’re developing technology that makes zero assumptions about your body, and instead, provides you with real-time fact and data.” Conradie even believes that this technology might discern competing wearable developers as the core technology doesn’t simply look at how many calories you burn, but also how much of these burnt calories are fats or carbohydrates. “We monitor the human metabolism. Forget calorie burning, we look at several other nutritional and dietary intakes without any manual food logging. On the emotional side, we can monitor stress and frustration levels. We can monitor your ‘plumbing system’ or even

Conradie also believes that this technology might resonate well with health insurers. “We believe the information belongs to the individual. We want to give users the opportunity to either opt-in or out when sharing this information with insurers. But in the same breath, making this data available will enable you to learn so much more about yourself. Now, you have a true reflection of real risks and pay-outs. As a consumer, I want to pay for the service I receive, especially when it comes to my health.” Conradie foresees two types of health insurance in the future: the one where an individual doesn’t want all the tests done and is willing to pay a higher premium. Or one where the individual only pays for what he wants or should be paying for (according to the information on his wearable). “I believe wearable technology will drive the market to make this easier. To pay for what you need. For me, that’s very exciting,” he says. Whether insurers will embrace this product is dependent on each insurer, Conradie believes. He highlights Discovery Health as a prime example. “Discovery is one of the most progressive health insurance companies in the world. Their Vitality plan is viewed by many policyholders throughout the world as a great fitness initiative.” But why are policyholders really using these initiatives? Is it because they’re concerned for their health? Probably. But I also feel it’s because the policyholder wants to see if he or she can save a bit of money with their health insurance. Are insurers teaching policyholders to save money or live healthier?”

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Human diagnostics “As a family, we went on holiday once a year. Before we left, my dad would take the car in for a proper service. But fast forward to today and the game has changed completely. There are all kinds of lights and warnings that come on when your car is in need or due for a service. Now, we can do the same for humans. We can offer real-time diagnostics of the human body,” Conradie says. “We can create a human diagnostic system that warns you three weeks before a massive cardiac event and says: you know what, according to all the overlying data, we feel that it’ll be of great value to you if you see a doctor immediately. Imagine how many lives will be saved?” One of the biggest concerns for healthcare in South Africa is hospitalisation. Conradie says that according to his two in-house medical experts, if you could give emphysema patients warnings 48 hours before an acute episode, you could reduce hospitalisation by more than 20 per cent. This technology will make a massive difference in hospitalisation. It measures the same vitals measured in ICUs. Imagine what difference this product can make in impoverished countries. “In a country like Zambia, you’re sitting with 50 ambulances and one doctor on call. Which arriving ambulance requires the most urgent attention? Strapping a wearable on the patient immediately provides the doctor with vital information. Now, one person can be assigned to watch over 50 patients and make an informed decision,” Conradie adds. But another question is: At what point is too much too much? Conradie says he’s from an older generation and slightly reluctant to divulge personal details. But it would seem that with each generation, it becomes infinitely easier to give information if you’re receiving something back. Data is the new currency. And you pay for a service. Not with money, but with data,” he concludes.

We ask certain role players within the SA health and life insurance industry what they think of this technology: Peter Jordan, principal officer, Fedhealth “In terms of what this product can offer, I think this is really interesting and something we’ve been looking at for quite some time. The problem with something like this is getting the legislation side on board. Medical schemes are so heavily regulated. Just because we can monitor your vitals, doesn’t necessarily mean a policyholder will get an instant discount. From an insurance point of view, it’s different as you can work around it as stipulated in your terms and conditions. We might not be able to discount, but we can offer the policyholder lots of benefits. If we had the necessary preventative intell which will prevent you from any serious medical situations, like diabetes, we can save costs on stuff like treatment, visiting specialists and chronic medications. You can have a cheaper contribution and it could be very beneficial going forward. From a funding point of view, it’ll work as we’ll be able to prevent stuff from happening instead of being caught off-guard.” Dr Ali Hamdulay, general manager: health provider and policy unit, Metropolitan Health “Wearable healthcare devices have the potential to improve healthcare by stimulating awareness of health status in the consumer. We believe a member that is aware of their health status will be more responsive to clinical changes and will support the drive towards preventative health. Wearable devices would facilitate earlier disease detection and better chronic disease monitoring and management, allowing for sooner critical intervention. This tech increases awareness in patients and members through a ‘real-time’ scenario, allowing for better cognisance of health status. For example, it doesn’t tell you to stop smoking because it’s ‘bad for you’ – but instead it shows the real impact in terms of your heart rate – far more convincing. This would create an opportunity for early prevention, swinging the pendulum from the right (hospitalisation), closer to the left. Early detection allows for faster mitigation and ultimately reduces costs and burden on state resources. It’s an extremely exciting innovation – one that we as healthcare providers should support and harness.” Dr Adela Osman, chief medical officer, Momentum “People have an instinctual need for safety, autonomy or being in control. Wearable technology allows them the ability to constantly monitor their health and detect diseases or

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risks at a very early stage and improve their outcomes. Clients who live healthy lifestyles can use the additional data to receive discounts on their insurance products and work toward wellness goals, similar to our current Multiply and Interactive programmes. We could potentially also use these screening tools to improve the speed and accuracy of risk assessment at point of sale. Nonetheless, we need to be cognisant of the potential downfalls of these new initiatives, particularly the privacy and security issues around the data, which are real and even possibly dangerous. The quality and accuracy of the data analysis is of monumental importance and would need to be comparable to methods currently used and tested with clinical trials. Another area of concern is that wearable devices increase a client’s understanding of their own risk profiles which may inadvertently lead to adverse selection as those with increased risk factors are more likely to purchase insurance or alter their benefit types. Wearable technology has the potential to change human behaviour the same way the internet changed the way we communicate. And if we as the insurance industry consider the fact that consumer behaviour is strongly driven by ‘following the norm’ then we will have to accept that our clients’ behaviour is likely to change in the near future.”

Grant Hanafay, head of underwriting, Altrisk “I think it’s very positive in that it empowers the user to be in control of his or her health and proactively manages their risk. Will it improve health or life insurance in South Africa? I believe this technology can add value. For example, we can use accumulated data over a period of time to monitor a client and use this to better manage their premiums. It could be a very cost-effective means of gathering this data too. Any additional

information is always valuable, and in terms of Altrisk’s recently launched Pro-Active range, it’s a very good fit. Obviously, we would need to do some testing and see how it performs. It would be interesting to see how the system performs – especially for diabetics, for example. This could present significant improvements in their monitoring of their condition, and for us, the data would be invaluable. Altrisk would consider embracing such a product. Essentially, it’s a positive step towards being proactive about managing your own risks.”

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Moving Forward

ince it was signed into law by President Barack Obama in 2010, the Affordable Care Act (ACA) has been the centre of debate in the US. Bitterly dividing Democrats from Republicans, the latter termed it ‘Obamacare’ in derision of its proposed expanded coverage for the uninsured opponents interpreted as a socialised medicine scheme. Today, Obamacare has become a nickname used by both opponents and proponents. President Obama himself endorsed it, telling America’s CBS News in 2012, “I have no problem with people saying Obama cares. I do care.” The nickname of this healthcare act, however, has drawn attention away from the policies and practices it aims to achieve. Indeed, the act’s original name, one that is preferred by advocates and supporters today, goes closer to the roots of what this act means, that being to increase the quality and affordability of health insurance, lower the uninsured rate and reduce the overall costs of healthcare. Ambitious goals, and since it was passed, it and its accompanying laws have been regarded as the most significant regulatory overhaul of the US healthcare system since 1965. South Africa follows in this example with its own healthcare reform. Since the publication of the Department of Health’s Green Paper in 2011, South Africa has been in the process of innovating its healthcare system through the introduction of National Health Insurance (NHI). According to the Department of Health, the NHI will introduce major changes in service delivery structures, administrative and

management systems. Currently, NHI is being piloted in 11 districts across the country, where 43 new hospitals and 230 clinics are being planned, with an additional 870 clinics and hospitals to be renovated. As the local system develops, it can in some ways be compared to the Obamacare efforts that preceded it. “Comparing the development of national health systems between the US and South Africa may seem a stretch, but the two are actually somewhat similar,” says Christopher Brennan, a health policy researcher at Tulane University in Louisiana, US. According to Brennan, both countries are implementing systems aligned with World Health Organisation standards for global health policy frameworks. “If you look at the South Africa Green Paper and at their 10-point plan for re-engineering primary healthcare, you will notice that all of the changes being proposed align almost directly with the recommended components of a health system framework,” he says. “The US has also based its systematic alterations on the WHO system framework, but the challenges being faced in the US are very different than those in South Africa. So, the focus is different, but the fundamental goals are the same.” In South Africa, reforms proposed by the NHI are based on preventative primary healthcare. “It will be based on a preventative system rather than a curative one,” explained health minister Aaron Motsoaledi at a press conference in June this year. “There are two reasons for this. Number one, it’s always expensive to wait for people to get sick and try to fix them. Number two, it doesn’t guarantee any success.”

“Regarded as the most significant regulatory overhaul of the US healthcare system since 1965.” 83

The American system too has adopted a preventative approach. Since the ACA went into effect, 71 million Americans with private health insurance gained access to preventive services with no cost sharing such as co-payments, co-insurance and deductibles, according to the US Department of Health. In addition to preventative health services, the ACA also includes regulations that set standards for insurance that were previously unchecked by government. Among these are a ban on the ability to drop policyholders if they become sick, a ban on price discrimination on the basis of preexisting conditions and a measure allowing children and dependants to remain on their parents’ insurance plan until they reach 26 years old. While it is unclear if these specific issues will be addressed in the South African NHI plan, their adoption by the Americans is an example of the biggest similarity between their reforms. Both the US and South Africa have acknowledged the need for policy that extends good coverage to the disadvantaged. “In the US, we have 17 per cent who are uninsured or reliant on charity care, and the large majority has access to good care,” says Brennan. “In South Africa, 68 per cent of the population depends entirely on the grossly underfunded public sector for healthcare.” While critics and supporters would debate the value of the ACA, none can argue against the gains it has made to improve insurance rates. According to a Gallup poll from April this year, the number of Americans who report being uninsured is at its lowest level since 2008, with about 15 per cent of American adults without health insurance in the first quarter of 2014, compared to 18 per cent in the same quarter of 2013. If the NHI could improve uninsured figures in South Africa, that would surely count towards its success. With the medical journal Lancet identifying nations such as Vietnam, Ghana and Nigeria reaching for NHI, it is now becoming a global phenomenon where South Africa could lead by example. As Minister Motsoaledi has emphasised the roll-out of NHI as top of his agenda, healthcare analyst Len Deacon is optimistic. “I believe our laws and the imminent NHI are on the right track,” he says. “It is too often assumed that everything overseas is rosy, especially in the developed nations, but it is sobering to remember that until Obama fought for their rights, 40 million Americans were without any affordable healthcare provision.”

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Covering the

Key people Dominic Uys

It has always been true that the biggest asset to a business is its people. Losing the people who make up the cornerstones of any business can have a devastating effect on the company. While there is still no way of insuring yourself against key persons leaving the company, key person insurance does offer some help when tragedy strikes.

ey person cover is a life insurance that ensures businesses are able to recoup the financial loss to a company after one of its cornerstones unexpectedly passes away. The fact remains that, especially in a country where skills are in short supply, qualified people are difficult to find and employees who contribute specialist skills and knowledge are vital to the profitability of their companies. Recruitment, training and downtime all cost significant amounts of money and there is usually no quick way around it.

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Alternatively, the cover can be used to pay salaries and debts if an irreplaceable member of the company passes away. The loss of a director or a CEO in a small company usually spells the end of the business but company debts and responsibilities to employees does not go away. Product specialist at Altrisk, Andre Froneman tells RISKSA that structurally, key person insurance has been the same for quite some time, but it remains a very important part of any

business structure. “The only thing that changed recently was tax legislation removing CGT from a key person life cover,” he says. “We do not have key man cover in place, as such but in the case of Altrisk, we did put together a number of solutions to take care of this for business. The dilemma that the business sits with is just life insurance because they probably do not have a flush amount of R5 million laying around for replacement costs. The best thing to do is to take out an insurance policy, and the company becomes the policy owner,” he says. “You need a normal life insurance policy to do that. All we do from an insurer’s perspective is attach an endorsement to the policy saying that the policy qualifies for the relevant tax deductions,” Froneman says.

Calculating a client’s cover According to Altrisk, understanding a client’s business dynamics is essential to calculating the amount of cover required. One needs to study the impact that a key person loss would have on the turnover of the company. “What could the cost of recruitment or headhunting be? Remember that, the more specialised and entrenched the person is in the business, the more difficult it will be to find a suitable replacement. To successfully calculate key man cover, discuss the following important points with your client: calculate the actual costs involved in replacing the employee and the cost of a consultant until a replacement is in place; calculate the approximate number of years it would take for a replacement to equal the key person in terms of profitability and knowledge, and consider a multiple of the annual salary of the key employee as a benchmark of what it would cost to replace them with someone of the same calibre,” the company advises. “As the proceeds of a key-man policy are paid to the employer or business partner, it is often assumed by the insured individual that there will be no estate duty implications for them.

While this is often true, there can be exceptions depending on the structure of the arrangement. It is essential to ensure that any estate duty implications are carefully considered and that you manage your client’s expectations in this regard,” Altrisk adds.

The move away from large companies Just like life insurance, there is currently no real way to insure the key positions in the company, only key people. This means that the premiums spent on key people are lost when they leave the company. Chris Kilfoil, financial advisor at Squier Financial Services tells RISKSA that larger organisations are moving away from this kind of insurance for key positions, opting to rather institute buffers within the company and well devised succession plans in the event of death. “Smaller businesses make up the majority of key person insurance sales for us, and they are still very much dependent on this model,” he starts. Though it is a grudge purchase, Kilfoil points out that loans at credit institutions depend on having cover in place and it maintains investor confidence. It needs to be remembered that key person insurance is not an ‘all or nothing’ situation. “One must take into account that death is not the only thing that can interrupt the business in terms of its key people. Sudden disability is also possible and if your key people are still able to function in the business, but at a diminished capacity, having covered for disability would make it much easier to keep them in their roles while still compensating for a measurable loss,” he says. This is however one of the most important factors to remember, according to Kilfoil. “As an advisor, you have to remember that you can only cover your client for measurable damage to the business. Therefore, you have to get to know the business inside and out, and you need to be able to put a monetary value to everything. Concepts like investor confidence

and losses that cannot be definitively linked to the loss, can’t be covered,” he cautions. “We do have some challenges in the area because, in many cases, the director of a small to medium sized company is also somewhat older, which impacts the cost of premiums,” Kilfoil states. He points to one example where a business run by a client in his seventies faced extremely high premiums. There is, unfortunately, no way around this and the only alternative is to put a succession plan in place that will allow for the seamless transference of the business. This does not however solve the problem of applying for loans. It is important to remember that key person cover is meant to cover business costs and Kilfoil points out that many advisers and clients alike often confuse buy-back insurance with key person cover. “Buy-back insurance is life cover that partners in a business take out on one another in order to buy the other’s shares in the event of death. In those cases, there needs to be a provision in the partners’ contract with each other and separate life policies on the life of each partner. Businesses often encounter problems down the line when they treat key person and buy-back as synonymous,” he concludes. Key person cover is unlikely to change much in the coming years and, according to Froneman, will always be a vital part of a business.

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Advice in a dichotomous market

Addressing delegates at the 2014 Association for Savings and Investment South Africa (ASISA) Assembly in Cape Town, Robert Kerzner, president and CEO of US-based research organisation LIMRA, reiterated that globally, the advice model is under scrutiny like never before.

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RYNO Killing himself with 30 a day.

e also insisted that face-to-face advice actually does matter and does make a difference. Some 78 per cent of consumers will contribute to a retirement fund if they operate through an adviser, while only 43 per cent of consumers will contribute to a retirement fund without an adviser. Kerzner also noted that while research shows that about 60 per cent of consumers are more likely to investigate and study life insurance products online, the sales of risk products on the Internet have not increased substantially. Seven out of ten Canadians preferred to buy life insurance face to face, while the figures in the US showed 57 per cent of consumers preferred face to face interactions. Purchasing risk products through an adviser was said to inspire an element of confidence among consumers, making them feel more prepared for retirement. Kerzner also touched on the dichotomy of the South African population and market, and the inequalities that exist. In a panel discussion, speakers agreed that there was a great need for consumer awareness and education when it came to financial services, and saving in South Africa.

market needs to be approached with humility and credibility. She affirmed that savings and life product providers could in fact learn from their customers who manage to feed and clothe and educate a family of four on R1 400 a month. Hieckmann added that in the South African market ‘advice’ is a very big word. For some people, it means ‘enable me’, while for some it means ‘just tell me what to do’, and for some it means ‘educate and empower me, while for others it means ‘just give me information, and I can make my own choices’. She urged product providers to stop blaming the complexities of the market for the lack of savings in South Africa, highlighting that it is, in fact, so much easier to get a loan product in South Africa, than it is to take out a savings product.

Stop blaming the market

National Treasury financial inclusion director Roelof Goosen, said that improvements in financial inclusion in South Africa would be underpinned by a reduction in costs (on the provision and consumption side), and behavioural changes, and said that there were a number of developments taking place in that regard from the public and private sectors.

Isaac Ramputa, assistant secretary general at finance union Sasbo, also highlighted that there is a need for innovative schemes to capture the increasing number of South Africans working in the informal sector, who do, in fact, wish to save.

Hieckmann added that the role of product providers and financial advisers is to facilitate, and not to annex, and reminded the audience at the ASISA Assembly not to sit so far away from the people they are trying to serve.

Reiterating the realities of the South African context, Berneice Hieckmann, marketing and product development executive at MMI Metropolitan Retail, said that the South African

Consumer education sometimes works both ways, and the financial services industry can learn a lot from consumers in South Africa, concluded Hieckmann.

No time

to waste Ryan Chegwidden, actuarial executive at Altrisk

f I had a crystal ball nine years ago, I would never have gotten behind the wheel of my car knowing how exhausted I was. I would never have put my life and future financial security in such danger. I would have listened to my parents who pleaded so often with me to rather call a cab to drive me home. I would have taken my dad up on his offer to always fetch me

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no matter what time it was. Most of all, I would have made financial provision for myself and my daughter should something go seriously wrong. Looking back, I walked down the dotted white line of the freeway of life saying ‘hit me, hit me.’ It did exactly that, and I’ll be suffering the consequences of growing up too young, too fast, with too much money and not enough good sense for the rest of my life. So will my family. If I had a crystal ball…things could have been so different.” *Genevieve Clark, 32-year old quadriplegic mom to *Gabriella, age 11. Genevieve’s life fell apart on 4 September 2005 – a consequence of poor judgement on her part, and the awful decision that a good Samaritan was forced to make.

She was 23-years old, had landed a plum job with a record company where she managed some of South Africa’s top music artists. She was also a single mom to two-year old Gabriella, who spent much of her time with her doting grandparents as Genevieve’s work involved unpredictable and long work hours and regular travel. After a concert gig for one of her clients, Genevieve made her way home. She was exhausted after a gruelling event, it was well after 2am and she’d also had a few tipples although she was far from drunk. She knew she ought to call for a cab, but she was in no mood for the hassle or the wait. And she was not about to call her father given the time. She had always been fine before, and it was only a 20-minute drive home. She just wanted to get home and sleep.

Other than a small life policy, Genevieve had very little in place when it came to financial planning. She had medical aid through her employer at the time, but there was no income protection and certainly no comprehensive disability cover. Over and above her physical rehabilitation, she suffered severe, debilitating depression. Her recovery took months and cost a fortune. Her plum job came and went, and she lost pretty much everything, including her independence. As Genevieve candidly puts it, there aren’t exactly many job prospects for quadriplegics. Her townhouse was put on the market and she moved back home with her parents who helped her adjust to her new ‘differently-abled’ life.

RYNO Pays a packet for risk insurance as a smoker.

The modifications to the family home were footed out of her parent’s savings, and the fact that she will be 100 per cent financially dependent on her parents for the rest of her life weighs heavily on her. She also knows that her situation has had devastating consequences for her parent’s retirement plans, both now in their sixties. Not only will they be supporting Genevieve for the rest of her life, but there’s Gabriella’s future to worry about too. This in turn has significant implications for her parents’ financial planning, who now need to ensure that they leave enough money to provide for the specialised care for their daughter when they are gone, and for their granddaughter until she is financially independent. Genevieve’s true life story is the poster child for why financial planning for the young and healthy is one of the most important conversations you will have as a financial adviser. It’s never going to be an easy sell, and our best estimates are that significantly less than 10 per cent of your client book is probably made up by under-25s. And therein lies the real tragedy. Altrisk’s own claims stats** show that a significant number of men and women making disability claims were younger than 30, while the largest percentage were men between the ages of 31 and 40. These are the ‘lucky ones’ who are insured.

On her way home, Genevieve fell asleep behind the wheel and smashed through the road barriers onto the opposite side of the road. Her car rolled several times before coming to a crushing stop against a concrete pillar. With her car in flames, a passing motorist rushed to help her. He had to make a life changing decision of whether to wait for paramedics or risk having the flames engulf the vehicle, and Genevieve. If that happened, there would be no chance of saving her. Although there was a very real risk of head and neck injuries, fate was not kind with the vehicle burning profusely and help too far away to wait. He made the decision to pull Genevieve from the wreckage. As grateful as she was to be spared from burning to death, her spinal cord was severed in the process. Genevieve would spend the rest of her life as a quadriplegic.

So take a good look at your client book, make a note of those who have children entering the world of work, and have a conversation with them about disability cover for the young and healthy. Let them know that the real challenge in surviving a disability is being able to provide a future income to live off, independently and without causing financial hardship for the ones you love. Because when you’re 23 and struck down in the prime of your career like Genevieve was, the rest of your life can be an awfully long time to be reliant on others for your survival. (*This article is based on a true account, although names have been changed in the interest of privacy.) (**Claims stats sample taken between May 2011 – May 2012.)

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A passive aggressive

retirement RISKSA takes a look at South Africaâ&#x20AC;&#x2122;s first exchange traded fund retirement annuity, from 10X Investments, and finds out how it stacks up on fees, risks and possible returns. Melissa Anne Wentzel

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he industry average fee for a retirement product in South Africa is three per cent which, according to the Charges in South African Retirement Funds paper released by the National Treasury in July 2013, is expensive by international standards. The paper suggests that investors may be insensitive to the recurring charges in their retirement funds that may be shifted between ”investment-related fees, performance fees, guarantee charges, platform fees and adviser fees, in order to make the overall level of charges appear more palatable to customers.” 10X points out that long-term investors should expect a real return (above inflation) of approximately five per cent a year. The dilemma here is that every one per cent in cost (as a percentage of assets), equates to 20 per cent of the real return. That means, for the average RA, 60 per cent of the real investment return is going to fees. Enter 10X CEO, Steven Nathan, former managing director of Deutsche Bank in Johannesburg and London, with more than 10 years in equity research and corporate finance. Nathan established 10X in 2008, after identifying a clear need amongst retirement fund administrators for a simple, effective retirement solution. He describes the 10X index fund as a ‘passive’ fund that tracks an index (such as the Top 60 shares of the FTSE JSE All Share Index), and mirrors the performance of the market instead of promising to beat its returns. He adds that this is contrary to the fund manager’s promise but points out that – of every 10 managed funds – only two will beat the market. Jeremy Hawson, managing director at Merely Employee Benefits, has 25 years in the finance industry and states that the index fund will outperform any of the managed funds in the long run. “While the fund manager may ride high for some time, they cannot outperform the market forever,” he says. The one fund manager that is capable of saying otherwise doesn’t. Warren Buffet seems to be a big believer in the low-cost tracker fund. He is quoted in a recent article in The Economist on the commoditisation of fund managers as having instructed Berkshire Hathaway shareholders to handle his personal portfolio after his death, by putting 10 per cent of the cash in short-term government bonds and 90 per cent in a very low-cost S&P index fund.

“There are still times when it might make sense to be in a managed portfolio,” says Gregg Sneddon, founder of The Financial Coach and founding partner of MacConnell Sneddon White Personal Wealth Management. He uses the example of phasing a large lump sum into the market for an older client within a few months. In this instance he says, “It’s easier to handle the client’s emotions in an active fund.” Sneddon thinks the 10X RA is a great product but adds that he doesn’t agree with an either/ or approach. “There’s still space for active and passive funds.”

Cost and risk Nathan says there are two main advantages for taking the passive route. The first is the cost. 10X charges a singular investment management fee on a sliding fee scale per annum as a percentage of the investment value (ex. VAT). This starts at 0.9 per cent on the first R1 million and drops to 0.7 per cent on R4 million, 0.5 per cent on R5 million, and 0.35 per cent on an investment value above R10 million. There are no initial fees or administration fees. This amounts to less than half the industry average and the customer’s increased savings compound over their investment period. According to 10X, this means that over a 40-year period (the average working life) their members can look forward to as much as 60 per cent more than they might with other retirement investments. The second major advantage is the risk factor. Nathan talks about investing as a ‘zero-sum game’. When buying and selling shares, or trading, there has to be a loser for every winner. In other words if Company A buys a share that company B is selling, and that share does well, company B is ultimately the loser. The risk in investing this way is that the investor has to trust the adviser to pick the winning fund manager, and the fund manager to make the right decision. As previously stated, the right decision is only made two out of 10 times.

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So investing in a portfolio that tracks the index protects the investor from making emotional decisions based on past performance or current market trends – like buying high and selling low. But there is a key ingredient in this investment strategy and that is time. The 10X retirement solution removes the

“When buying and selling shares, or trading, there has to be a loser for every winner. ” Altrisk is a division of Hollard Life Assurance, an authorised financial services provider (FSP 17697).

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multitude of choices that increase the chance of making the wrong decision by offering one optimal solution for companies and individuals. 10X calls this Life-Stage Investing and presents the investor with the most risk appropriate investment portfolio that reflects their investment time horizon. Sneddon has one concern with the index fund. “There’s no human interaction,” he says. “When the market corrects, the passive fund corrects.” But he also notes that when it comes to investing, without professional advice, emotions do get in the way. “Most people, if left to their own devices will make bad decisions,” he says.

Keeping active Richard Carter, head of product development at Allan Gray, believes an active fund can offer better risk management than a passive fund. “It absolutely can,” he says, but cautions that not all do. “I can’t defend all fund managers.” He advises that investors choose a fund manager with the right credentials, someone whom they can trust. Leigh Köhler, head of research at Glacier by Sanlam, believes in allowing clients to build a combined portfolio of active and passive components. He says that while a passive fund is less costly from an administration perspective, “An active fund manager is able to tactically asset allocate.” Melvyn Lloyd, investment analyst at Glacier, says that an asset manager can reduce the investor’s exposure to equity when markets go down. With regard to an exclusively passive portfolio he asks, “How do they manage risk in a passive fund?” 10X invests clients’ retirement savings in a

diverse collection of investments to ensure a reduced risk of owning a large quantity of an investment that does poorly. Customers’ savings are invested in well-established companies (shares), property, interest earning investments (bonds), and cash and are spread across more than 1000 different investments. For the same reason, up to 25 per cent of the portfolio is invested offshore. 10X manages six life-stage portfolios, ranging from the 10X High Equity Portfolio (invested mainly in companies and property) to the 10X Defensive Portfolio (invested mainly in cash). To determine which investments are best for the customer, 10X looks at their time-horizon and their retirement savings is automatically invested accordingly. The 10X High Equity Portfolio is suitable for investors with five or more years until retirement and the proportion of an individual’s retirement savings in growth investments decline as they move closer to their retirement date. The 10X Defensive Portfolio is for individuals with approximately one year to retirement.

A pent up demand To explain why this product is needed in addition to existing offerings, Nathan stated, “It’s an appropriate solution over a long period.” He notes that most individuals don’t know whose advice to trust.

10X recently launched their first marketing strategy and Nathan says they’ve had “very good feedback” to their campaign and added, “We’ve been pleasantly surprised.” 10X never incorporated a marketing strategy prior to this as they catered mainly to corporate clients like Macquarie, Deutsche Bank, EOH, TransUnion and Virgin Active (among many others). He interprets this response from individuals as a pent up demand for a simple low-cost solution. When asked whether he thought advisers are using exchange-traded products enough, Nathan states point blank that they are not. He notes that advisers may be threatened by index funds as they believe their value is in picking winning fund managers but [he believes] their true value is in developing sound financial plans – that include tax advantages and is timedriven – and then sticking with that. He says, “The big thing with investing is to get it right at the start.” It is exactly for this reason that Nathan spent two years developing this proven approach to investing retirement savings that is in line with international best practice. Sneddon believes in the value of both a passive and an actively managed portfolio but says, “Asset management fees are still way too high.” “The merits and disadvantages of both need to be understood before making a decision,” Köhler concludes.

“Most people, if left to their own devices will make bad decisions.”

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A lens

on life Christy van der Merwe

Life reinsurer RGA South Africa, in June held a seminar offering insights into the topics of critical illness, and disability termination rates. Held at the Bantry Bay Protea Hotel in Cape Town, the event was well attended and encouraged interesting debate. RISKSA unpacks the highlights. Critical illness trends RGA South Africa chief medical research officer, Dr Nontuthuzelo Thomas affirmed that South African life insurers are abreast with global trends in terms of critical illness cover, and in some cases even leading trends. Market penetration of these products, however, still lags, and Thomas questions why there is less known about critical illness products in South Africa compared to global markets, and why these products are not being taken up by consumers to the degree that they could be. She states that there could be a number of reasons for this, namely: the selling process and priority of products sold (death, then disability and then critical illness); the price and affordability issue; the complexity of the

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products; and the education and awareness of consumers. A broker at the seminar noted that selling a critical illness policy to a client is often much more complex than a relatively straightforward life policy. It was highlighted that critical illness policies require a greater degree of underwriting, and bring in the potential for numerous exclusions on critical illness and existing life policies. The question of how to encourage brokers to sell critical illness policies would require greater collaborative thinking. Thomas also noted that critical illness products are constantly evolving, and are now increasingly covering early-stage critical illness. She highlighted that in Asia, a trend was emerging where product providers were broadening scope to include more minor conditions and niche products. On the other hand, in the UK, for example, insurers were

positioning payouts where it matters instead of adding more niche diseases. They were broadening the scope of inclusion for things like heart attacks and chemotherapy, where a larger number of consumers would experience palpable benefits. Product providers in Europe were also including additional benefits and enhancements, and this is similar for the South African market.

RGA group disability terminations survey results RGA group risk actuary Lynne Molloy reported on some of the results from the Group Disability Income: Terminations study. She highlighted that something more than rating factors seem to be driving termination

Disability claims causes

rates, because since 2008 termination rates have been increasing in South Africa. She notes that insurers are trying to get people back to work, and changing the disability experience, and are also focusing efforts on higher income earners, thus, people are going back to work. “We are seeing massive improvements of group disability claims,” reiterated Molloy, adding that a focus on claims management is driving this major change. Some of the other highlights from the study have shown that recoveries on the HIV and psychiatric side are showing significant improvements in South Africa. However, there are still more death terminations than recovery terminations among cancer patients in South Africa. However, these stats taper to meet and become relatively even

over very long durations. HIV/Aids recoveries now exceed deaths, showing that this has become a more manageable illness rather than a death sentence. Molloy notes that muscoskeletal conditions have lower termination rates, meaning that these are the claims that insurers are likely to be paying the longest. She adds that these generally need to be well managed within the first six months, otherwise terminations are less likely. Exactly how to manage these claimants back to health and back to work is the question that remains. Other interesting findings of the study showed that terminations tend to taper off after five years, and that female claimants tend to recover, or go back to work earlier than their male counterparts.

Muscoskeletal – 20%

Unknown – 11%

Circulatory – 10%

Neurological – 10%

HIV/Aids – 9%

Cancer – 9%

Other – 12%

Respiratory – 7%

Psychiatric – 7%

Infectious – 5%

Terminations by claims cause (Termination rates = when payments to claimants stop, either due to death or recovery) Highest terminations: Cancer and HIV Lowest terminations: Muscoskeletal and neurological

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Refle to com Howe Looki scien but th insur

Underwriting: are we geared for a new dimension? Genetic testing is steadily gaining more and more awareness. A good example is Angelina Jolie who had prophylactic surgery to remove her breasts after discovering that she had the BRCA 1 gene mutation. This is one of the two genetic testers that measure the risk of developing cancer. According to Wikipedia, genetic testing allows for the genetic diagnosis of vulnerabilities to inherited diseases. In the broader sense this includes biochemical tests to determine the possible presence of genetic diseases, or mutant forms of genes associated with increased risk of developing genetic disorders.

Science of a different kind With the drastic advances that are made in the medical field it comes as no surprise to read about scientists that are able to determine, via genetic testing, if an individual has a high probability to develop Huntington Disease. Even more astounding is the fact that scientists in the US can determine, via a simple blood test, if a person is likely to develop dementia within three years from when the test was conducted. According to the US scientists, the differences in a personâ&#x20AC;&#x2122;s blood biomarkers may signify the early stages of Alzheimerâ&#x20AC;&#x2122;s disease â&#x20AC;&#x201C; a condition which affects 35 million people word-wide. In fact, they claim the test has a ninety percent accuracy rate.

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Technology in high gear Genetic testing makes one think very differently about life in general and the quest of designing new ways that can assist with early detection of health disorders has migrated to the field of technology. Hence, young women with a pre-disposition to breast cancer can now benefit from early detection using an imaging scan called the Digital Infrared Thermal Imaging (Diti) method. These cameras are similar to those used at airports to scan travellers although the software used is different. Traditional methods of diagnoses, like mammograms, often detect cancer at a fairly advanced stage. However, this technology can detect most breast disorders at an early stage. Also, Finland has developed an innovative hand-held camera that can detect early stages of skin cancer that are invisible to the naked eye, in just two seconds. The reason for developing this device is the growing rate of skin cancer across the globe as a result of UV damage by excessive exposure to sunlight. Nowadays, when one thinks about technology, one of the first things that come to mind is mobile phones and how they have evolved from a reactive device to a proactive device in our daily lives. In fact, India has developed a smartphone application called ClipOCam-Derma that can detect skin cancer and according to researchers, has a ninety-nine percent accuracy rate.

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life insurance

A rational approach Reflecting on what is available out there makes it difficult to comprehend that these breakthroughs are even possible. However, this is not science fiction but a reality of our time. Looking at all the possibilities that emerge from these scientific and technological developments, one cannot help but think about the impact that this might have on the life insurance industry. Unlike other countries including the USA and Britain, in South Africa, genetic testing is not a component of any insurance company’s current underwriting processes. However, Stephen van Niekerk, Head of Momentum Myriad states that “we do expect clients who have had genetic testing done to disclose this to us and also to divulge the results but we will never request a client to have a genetic test done”. He continues by saying that “it must be remembered that genetic testing is not undertaken lightly and is normally only done after extensive counseling and where a risk for developing a disease exists. This is most often suggested in the client’s family history. Momentum’s normal underwriting practices will scrutinise a client’s family history and the information will be utilised as a proxy to determine the probability of developing any hereditary medical conditions”. With this in mind, various questions arise around the results obtained from genetic testing and other new generation tests and one wonders: “Are these tests performed in a regulated environment?” also, “would one want to know in advance if there was a high probability of contracting some critical illness?” Referring back to the possibilities that mobile applications offer today, it is important to note that the majority of these applications are not regulated in any way. These types of applications can create an environment for anti-selective behaviour. This type of behaviour occurs when an individual intentionally obtains insurance cover with knowledge of the increased risk of an insured event occurring but does not disclose the information to the insurer. The motivation for this type of behaviour includes taking financial advantage of the underwriting process. Stephen responds to this by saying: “Our underwriting philosophy is to pay valid claims; this translates into a sound underwriting practice. Momentum remains consistent in their underwriting approach, with a focus on evidence-based underwriting decisions”. He further emphasises that “Momentum’s underwriting research and development unit, in collaboration with our experienced product development team, is focused on

keeping abreast with changes in the medical/insurance arena and on finding ways to pass the benefit of any learning on to our clients. We will continue to provide our clients with the support they have come to know and expect from us. Also, industry underwriting practices are regulated by the Association for Savings and Investment South Africa (ASISA) and as a result we adhere to their standard”.

From a regulatory perspective During 2009, ASISA released the “ASISA Standard on Genetic Testing”. This stipulated that an insurer is obligated to review the terms of a policy if an applicant provides the results of a predictive genetic test. Furthermore, when assessing an individual’s risk profile, the insurer should take the value of specialist surveillance, medical intervention and successful treatment into consideration. However, the insurer may not request an applicant to undergo a genetic test to support an applicant for insurance whether this is in order to obtain a lower than standard premium rate or to indicate the presence or absence of a suspected genetic condition. Although these standards are not legally binding, support for the various parties is provided through the Long-term Insurance Ombudsman whose role includes mediating disputes between insurers and the insured life. This includes cases where there is a concern of genetic discrimination or adverse selection.

Conclusion From a consumer perspective, numerous fears crop-up regarding genetic testing and health monitoring via mobile applications once the test results have been disclosed to an insurer. These may include the fear of genetic discrimination that limits access to insurance by ways of medical underwriting, impacting the claims process, sacrificing privacy regarding medical information as well as affecting affordability of cover. Herein lies the dilemma: genetic testing and other newgeneration tests impacts on an ethical, regulatory, social, constitutional and emotional level and leaves us with the burning question: “In this day and age of revolutionary medical testing and technology, how does one find a balance of fairness for both the insured life and the insurer?”

Terms and conditions apply. Momentum, a division of the MMI Group Limited, is an authorised financial services and credit provider. Reg. No. 1904/002186/06.

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China The

OPPORTUNITY Sarah Bassett

China has been Africa’s biggest trade partner since 2009, with Chinese investment into African countries having risen by some 30-fold in the past 10 years alone. Foreign direct investment went from $500 million in 2003 to almost $15 billion by 2012. And last year, China pledged $20 billion in loans for infrastructure development.

hile the resource sectors of oil and mining remain a key focus of these inflows, Chinese investment interests are increasingly diverse. “Beyond resources, we see a lot of activity from China in the infrastructure development, manufacturing and agriculture sectors in particular,” says Yike Shen, manager for Hollard’s southern African China desk.

investors, making significant investments into the sector.

Africa, a number of projects in Nigeria and plans for Malawi-these guys are very active.”

“To give a sense of the scale of investments, consider construction giant Gezhouba. The company is around 3 times as big as the largest South African construction company, and even that may be an underestimation,” says Hollard International managing director, Frans Prinsloo.

Hollard highlights the agriculture sector as a key area for development in Africa in the next years, with China, along with multiple foreign

“Its focus is power and hydropower development, with a massive hydro project in Ethiopia that will provide power across East

Other Chinese-Africa investment giants include the likes of the China Petroleum and Chemical Corporation (Sinopec), the world’s fifth largest company by revenue, as well as large stateowned enterprises, such as the China Railway Construction Corporation, which bring a major competitive advantage: access to subsidised credit from their home government, often enabling them to out-compete for African procurement contracts.

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There is a major opportunity in servicing the insurance and risk management needs of Chinese companies working in Southern Africa – an opportunity Hollard is well positioned to make the most of. Combining its knowledge of the Chinese market, gained through seven years of operation in that market, with its Southern African footprint and local expertise, the Hollard Africa-based China desk was launched in May of this year, with an initial focus on supporting the Hollard insurance operations in Botswana, Mozambique, Namibia and Zambia.

management team with sophisticated tools for assessing and assisting with risk; a service offered to companies entering the market as well as partner insurers.” “The People’s Insurance Company of China (PICC), for example, currently has a client operating in eight African markets. Hollard has been asked to do a risk assessment and provide risk management services to ensure that the risks are thoroughly and correctly understood. We will also provide comment on risk improvement that could benefit the client.”

Risk underestimated Historically, many Chinese investors have used South Africa as a gateway into the rest of the continent. Prinsloo suggests there may be some shift towards hubs such as Kenya and Nigeria, based on a number of factors. “Socio-economic instability, economic instability and various legal compliance issues in the country will be important factors for Chinese investors, who have underestimated such risks in the past,” Shen suggests.

Knowledge of the market In 2007, Hollard was the first South African insurance company to open offices in China. The representative office focused on niche opportunities where Hollard could apply its experience and skills in the Chinese market. “Hollard has always looked at China as a market that it needs to be in if we are serious about global growth ambitions. We’re now doing very good business; not as an insurer, but as a corporate agent,” says Prinsloo. “We partner with Chinese insurers to bring innovative products and distribution techniques to the country.” For the Chinese investor in Africa, Hollard offers in-depth knowledge of the local risks and insurance landscape, along with the ease and comfort of working with a company that can communicate in Mandarin, that understands the corporate relationship between a Chinese parent company and subsidiary operating in Africa, and that understands the Chinese insurance and reinsurance landscape at both underwriting and claims stages. “This is where we have found we can add a lot of value, not only for the company in Africa, but also for the Chinese insurers and reinsurers accepting the risk,” notes Prinsloo. “We also play a role in educating Chinese clients and businesses. The Chinese insurance market is not a mature one and many clients do not have a background understanding of insurance products,” adds Shen. “They may come to us only because there are certain compulsory cover requirements, but without an understanding of their risks and what products are available to offset them. So, we are doing a lot of work to educate clients on what risks they face and what will cover them.” “A key outcome of the recent Hollard / Etana merger is that we have significantly increased our risk management skills and expertise,” Prinsloo adds. “We have a dedicated risk

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“From time to time there is a bit of a shock on entering these markets,” Prinsloo agrees. “As a consequence of the Forum for China Africa Cooperation (FOCAC) intergovernmental initiative, a lot of Chinese companies get charged with an investment commitment that was made at a government level, and companies have entered African markets still underestimating the social and political risks involved. But they are getting better at this, without a doubt.” “The Chinese Government together with the African Development Bank is putting a lot of effort into the education of Chinese investors entering these markets, regarding aspects such as environment issues, socio-economic issues and labour concerns,” adds Shen. “In this regard, we can provide thorough risk management and understanding of the local conditions. We’ve seen risks that have been rated by local Chinese companies without fully understanding the local environment,” says Prinsloo. “In Zambia, for instance, a road contract going through a wetland was awarded to a Chinese contractor. A wetland environment has a major impact on the risk and requires that the work is done outside of the rainy season, which the contractors had entirely underestimated. So, it’s instances like this where the local knowledge adds a lot of value.”

Shifting regulatory sands Regulatory change, complexity and challenge is no stranger for any multinational operation – and it’s no different for Chinese businesses operating in Africa. As African policymakers seek to protect local interests, an incremental trend towards localisation is a notable challenge in the current landscape. “There is a strong focus from governments on supporting local business, and localisation rules are increasingly coming into effect,” says Prinsloo. “Markets like Nigeria, for instance, closely monitor all goods and business leaving the country, as well as contractors and operators coming in. Those without strong local content, or local market participation, are frowned upon, and we’re seeing more fines being issued in these markets. “Understanding is growing that you can’t just bring people in to create infrastructure to extract resources without supporting local markets, and investors are more aware that their businesses have to offer beneficiation to the local market at a broad scale beyond one specific project. Similarly, skills transfer is a key focus area, and a range of regulatory change is coming in around both,” he continues. The recent shift in South African immigration law is a stark example of this trend. “This will certainly make things tougher in South Africa. Chinese companies used to bring in their own labour force, but are now limited in terms of how many people they are allowed to bring in,”

says Prinsloo. While skilled labour will be less affected, this will significantly limit the import of general labour. “This is a growing global trend in response to rising unemployment rates,” notes Shen. “South Africa is now in the spotlight, but many countries worldwide will look to tighten their immigration laws to limit the import of labour, and other African countries will follow suit in time.” “Localisation is playing out in the insurance market, too, with many markets focusing on local retention,” she continues. “Previously, many Chinese businesses brought the risk back to China, but now local markets are tightening on this. Companies must first exhaust local capacity and only then make use of capacity outside the country.” Both Prinsloo and Shen emphasise the positive implications of this shift. “This will add to local regulatory certainty, will build stronger local companies and enable further skills transfer, ensuring that the right skills are developed in each country,” says Prinsloo.

Personal lines, prime opportunity The influx of people connected to Chinese projects presents another opportunity, with many communities opting to stay and open businesses after the completion of a project instead of returning to China. “Initial research shows that there is a significant market for health insurance, life insurance, personal lines and accidental cover for people staying behind in these markets,” says Prinsloo. “If Hollard has assisted on a project, it creates word-of-mouth opportunities for us in motor, health, personal accident and home insurance as well. So, part of the role of the China desk is to make access to these products as easy as possible for Chinese communities in Southern Africa. The focus will be on creating products that can be easily explained and are worded in Mandarin. The China desk will also provide some explanatory notes on traditional insurance policies. As this market grows, we will analyse and understand product trends more specifically for these customers," Prinsloo concludes.

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Risks

25 5

in retail

In today’s globally interdependent marketplace, risks to businesses are no longer isolated by industry or location. Even the most seasoned risk managers find it a challenge to effectively anticipate and respond to the exposures presented in the market place.

liability and failures in technology, through to traditional risks associated with business such as staff retention, and workers compensation. Butler added that retailers need to have a solid business continuity plan, especially in the event of a product recall. This is about taking responsibility for the business and enabling it to stay on course in case of any threats.

John Butler, divisional executive at Marsh Africa

ohn Butler, divisional executive at Marsh Africa, confirms that the same types of risk exist in retailing as in any other business sector, but that the retail industry does find itself challenged by some unique risks of its own. “Understanding the whole supply chain management of the retailer, for example, what happens if there is a loss at the suppliers’ premises - have you insured against this and what contingencies does the retailer have in place to ensure continued supply,” cautions Butler. The potential risks prevalent in the retail sector vary from machinery breakdown, stock theft, distribution or supply chain failure, cyber

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Local conditions are also a key consideration in the kind of insurance solution a company purchases. According to Butler, “There is a cost to doing business in Africa and, if a retailer has stores in Africa, one needs to adhere to local legislation in that country, and allow the assets and liabilities to be insured locally.” Risk managers are crucial in shaping the business as they manage threats to operations and finance. Their responsibility includes making certain that insurance takes into account prospective risks that are in line with the overall objectives of the company. The key is to make sure that the insurance broker and risk manager fully understand the client’s business, ask the right questions from the client and know the insurance market and the various policies, products or services on offer.

The retail industry is one marked by competitive price wars and decreasing profit margins, which means retailers need to holistically manage their risk management and insurance processes, to protect their sustainability and profitability. In 2012, total retail sales in South Africa amounted to R654.1 billion (€62 billion). In 2012, the retail, wholesale, catering and accommodation sector contributed 14.4 per cent to overall GDP and reflected growth of 3.5 per cent over the previous year. The retail and wholesale sectors specifically employ an estimated 2 825 000 people, 22 per cent of the national labour force. This positions the retail industry as an important sector in the overall South African economy. This is according to a 2013 report compiled by Statistics South Africa on the overview of the South African retail market. Though retailers continue to invest in new markets globally, an Ernst and Young and Bureau of Economic Research retail survey indicates that South Africa’s retail sales volumes have been on a downward trend since the first quarter of 2014. This will then see more and more local retailers looking across the border in an effort to increase the company’s market by widening the customer base.

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25 5 0

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stops

When everything Dominic Uys

When a companyâ&#x20AC;&#x2122;s work flow is interrupted because of loss or damage, its effect on turnover could be catastrophic. At the recent Insurance Bootcamp seminar on business interruption, three industry experts had a closer look at what the broker needs to know when advising a client on business interruption.

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business can operate at a financial loss for years before finally going under. But when cash flow stops, a company can fail within a month,” says Charles Lindstrom, 40-year short-term insurance industry veteran and author of the Encyclopaedic Dictionary of Short-Term Insurance. It is for this reason, according to Lindstrom, that brokers need to put business interruption at the top of their list of fears for their clients. The Insurance Bootcamp seminar in June this year hosted three industry experts: Hollard’s head of independent brokers, Justin Naylor; senior loss adjuster at Cunningham Lindsay, John Wattrus; and the aforementioned Charles Lindstrom. The trio covered a range of topics related to business interruption cover, from calculating the client’s sum insured to common mistakes that brokers and clients make. RISKSA had a look at a few of the most interesting points raised by the specialists.

Think about extensions Cover for business interruption insures the client against either a reduction in turnover or an increase in operating cost, owing to damages suffered. It is covered under the fire, buildings or office content sections of the client’s insurance policy and Naylor adds that brokers and clients need to think about including some vital extensions to the policy. “It is important that you consider adding accidental damage and theft policies to your client’s business interruption cover. The theft of copper wire is an especially big problem and has caused damage to quite a few businesses so far,” Naylor says. “Prevention of access cover is also a very important option to consider. Businesses that rely on foot traffic can be severely affected if their customers suddenly have difficulty getting to them. I am reminded of a case that we saw recently where a shopping mall had suffered damage and had to rebuild a section of their premises.

The main entries to the mall and most of the parking lot were blocked off by the construction crew and even shops on the other side off the mall, who hadn’t been affected by the damage initially, were suffering a reduction in their turnover,” Naylor adds. When it comes to claiming for interruption, Naylor states that it is important to remember that an insurer needs time to admit liability. “Insurers deal with big claims all the time and one of the first things they do, especially in the event of a fire, is to bring in a forensic investigator. Sometimes with big claims the insurer may deal with grey areas and need a legal opinion. There are a few other procedures that one might have to follow, and it is not uncommon for a big claim to take up to twelve weeks to be paid out,” Naylor says. The possible delay between loss and pay-out needs to form part of the business’ planning, according to Naylor.

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Calculating indemnity The indemnity period for a business interruption claim begins when the damage to the business first occurs, ending after the period stated in the client’s policy. Lindstrom states that brokers and clients often choose short indemnity periods of around three to six months, in order to keep premiums low. While there is no real answer for the ideal indemnity period, Lindstrom notes that opting for indemnity periods shorter than 12 months often exposes the client to unnecessary risk. One needs to take a hard look at the time it takes to get the business back to speed. “There is no way that any business, no matter how small, can justify indemnity periods shorter than one year. You are not benefiting your client by making it too short,” he stresses. Specialised equipment and finding new business premises all take time and vary according to the company’s needs. Often overlooked are factors like delays due to clean-up or reconstruction, where the tender process for contractors also needs to be taken into the calculation. “Remember that if you opt for an indemnity period longer than 12 months, your client’s insured gross profit needs to be adjusted to reflect future earnings. For periods of 12 months and shorter, insured gross profit

is calculated for a full year. It must not be reduced. Time and again I’ve seen that brokers choose indemnity periods of six months and then cut their insured gross profit calculations by half,” Lindstrom adds. “The twelve month indemnity usually costs the most in terms of premiums. For shorter periods, insurers usually apply a number of discounts that make up for the higher insured gross profit that you calculated. The same is true for longer indemnity periods. The important thing is that the broker doesn’t meddle with the 12 month calculation rule,” Lindstrom concludes.

Secondly, he points out that it is the broker’s duty to understand how to determine and calculate the sums insured under the relevant sections of the business interruption policy. “The broker also has to revisit the policy to make sure that the sum insured stays accurate as the business changes and develops,” he adds. “On that point, it is vital for the broker to maintain an understanding of what is going on in his client’s company. On day one of the policy being signed, all the bases may be covered and everyone is happy, but then you might not look at the policy again.

When taking out cover, Wattrus points to a few matters that the broker always needs to keep in mind. He opines that business interruption is possibly the most misunderstood form of cover in the market. “That may be because of the technicalities that surround it. It is almost impossible for a business to survive a catastrophic loss without some protection,” he says.

But if the company undergoes a significant change three months down the line, such as appointing a new CEO or an increase in turnover, your sum insured may not be adequate anymore. The coverage of the policy may also need to change as different circumstances may now need to be provided for. So it is essential for the broker to stay abreast all the time,” he stresses. The broker needs to make sure that the client stays informed of changes and that the policy may need to be re-evaluated.

Wattrus states that the broker needs to examine the policy wording for business interruption critically. “It is not very often that policy wordings differ but different insurers do, on occasion, have different wordings. It is important for brokers to understand the differentials.”

In the end, one needs to take into account that brokers and clients are in the same boat. A catastrophic loss on the client’s side may result in indemnity claims against their advisers. The cover that is often relegated to the bottom of the checklist, could be the most important item to tick off in the end.

Staying on the pulse

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Creating strategic

Growth in an

powers

Lloyd’s deputy chairman Paul Jardine

Alicia Swart head of risk services for Africa, Turner & Townsend

While not all risk managers may look like superheroes, they can provide a business filter that creates intelligent connections between uncertainties and objectives.

oday’s business platform is vastly different from 50 years ago. The products and services are completely different in composition and appearance. Our client profiles and preferences have also changed. Our technology platforms are incomparable, as is our interpretation of success. In addition, the internal and external environment of organisations is changing faster than ever. This is not all doom and gloom for those of us who are averse to change. Some things remain the same; we still need to grow the business, optimise the cost base and provide shareholder value. This means that executives need to adopt a systemic perspective in order to get to a predetermined goal, without having sight of what the future solution looks like and within an environment that is changing as fast as you allow your mind to comprehend. Simplistically, executives need to know ‘what must happen’ and they need to navigate through ‘what might happen’ at the right time and place. What executives need is high-tech James Bond viewing glasses, which create intelligent links between expected certainty and undefined uncertainty. It should provide an executive summary that indicates viable options to solutions, eliminating the less appropriate ones and suggesting the best way to get there. Essentially, they need super powers. It must

be said, not all risk managers look like James Bond, but we can certainly provide a business filter that, if applied correctly, can create intelligent connections between uncertainties and objectives. ISO 31 000 defines a risk as ‘the effect of uncertainty on objectives.’ This definition implies that there are two key components to risk management: understanding and defining the objectives and core direction of the organisation on the one hand; and understanding uncertainties that matter on the other. I believe that these two elements should be equal partners and an integrated focus should be applied to support today’s executives on their journey to success. My question is: does risk management currently enhance your strategic super powers? This is not the case in most organisations. Risk is not integrated into the strategic process and is often carried out as an afterthought. It gets reported at the correct governance levels and all the correct boxes are checked, but no strategic benefits have been achieved. The solution required to create strategic benefits lies in the ability of executives and risk managers to reframe. Executives should create a platform to leverage from their risk manager’s skills and ensure that he or she is part of the strategic process from day one. If they are part of the

‘what must happen’ conversations, they will be better equipped to evaluate uncertainties that matter and create intelligent links back to the organisation’s direction. Risk managers should evaluate the core principle of why they exist in organisations. Contrary to belief, it is not as an assurance afterthought or to be a very intelligent risk register administrator. We exist to help management make proactive informed decisions. I think that sometimes we lose sight of this principle and get stuck in establishing the risk framework. We hide behind being an assurance provider and do not take up the role as a strategic management partner. As risk managers, we have a unique set of skills to understand and connect uncertainty. Let’s make sure that this ability does not get lost in the columns of a risk register. Push yourself to create executive viewing glasses that add intelligence into a dynamic and uncertain strategic environment. There is a reason why not everyone can be a superhero. I believe that if your organisation strives for a collaborated approach to risk management, you might just develop the super powers needed to create organisational success in an uncertain business environment. I have always liked the concept of Batman and Robin. Having a trusted risk management sidekick is never a bad thing.

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2014/06/10 8:50 AM

Fail to Prepare Luka Vracar

How do you continue operations if your office burns down? A disaster recovery plan ensures that your data is backed up and available in the case of a business interruption, and there are a host of options for South African companies. With the risk of fire, water damage, load shedding, and even recent strike action, all able to disrupt business, can you afford not to be covered?

outh African companies spend on average 10 per cent of their annual IT budget on IT backup and recovery. However, local recovery of data, preventing loss during business interruption, is not as effective as it should be, with 74 per cent of local companies not confident that they can fully recover from a disaster. This is according to a 2013 survey by EMC, which spoke to 250 local IT decision makers. “Disaster recovery is like a medical aid. You can insure a business for a certain amount of revenue loss or profit loss, but the company will get paid out financially. The problem is that the company needs to continue operations, and certain things cannot be bought in short periods of time,” says Greg Comline, general manager of Global Continuity South Africa.

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52 per cent of respondents to the survey indicated their companies had suffered from lost data and systems downtime in the last year, and 38 per cent reported a loss of revenue as a business consequence. Interestingly, the same percentages increased their backup and data recovery spending after a significant disruption. However, if companies have the adequate foresight to backup their data and further install a bespoke recovery plan, the loss could be mitigated. “The results of the survey demonstrate a real need to rethink approaches to backup and recovery across South Africa. Increasingly, electronic information and the systems associated with that data are key assets to the health and success of most organisations, yet this survey shows that many are not fully prepared to recover either their systems or

data in the event of an IT failure or a more extreme situation,” says Servaas Venter, country manager of EMC Southern Africa.

Backup There is a number of ways that a company can back up its data. The most common method, and the oldest, is writing data on tape drives. Currently, 44 per cent of companies are using backup tape drives for recovery in the case of disaster. This is problematic as tapes are largely considered to be outdated and costly. A move to online and disk-based storage is forthcoming, and 82 per cent of respondents to the survey agreed that there should be a move beyond tape drives. Tape drives are a way for businesses to backup large amounts of data and send it to an offsite location to ensure the

safety of the data. The problem with tape drives, where data is recorded on magnetic strips, is that while it can store large amounts of data, it provides sequential access, which means that the tape needs to be physically wound to find the correct data, unlike a disk drive which can access data randomly. This means that data recovery is slow. Tape drives also contain parts that are fragile and susceptible to the same risks such as fire, damage or theft. Recently, replication of data from an in-house server to an offsite one through cloud-based computing has become the most important way to ensure data is available complete and quickly, should a disaster befall a company. Also, restoring from a disk drive is much faster. “At the moment, South Africa is in a migration stage. Clients have been using tape to back

up their systems not only for archiving but also for restoring purposes, and what we are seeing with the expansion of data is that the limits of tape are being pushed for the store and restore component of it. We are seeing far more clients moving to either online or server backups. We have certainly seen an increased appetite of clients using cloud based services,” says Comline. However, Comline goes on to say that tapes are still probably the most economical and reliable way to archive data if a client needs to keep the information for many years. “On one extreme you have tape and the other extreme you have disk-based backup or server backup. The big driver for business is how quickly you want to recover your business, so that is where we look at your recovery time

objectives. If you need to recover your business within four hours, it means that you will probably need to use disk. If you need your business to be available within 10 to 15 minutes, you probably need to use a combination of replication, where you have a site that you can bring up very quickly, and some backup so that you can recover from any data corruption that you might have,” says Comline.

Offsite Disaster recovery companies typically have facilities that are powered up 24/7 with workstations, as well as all of the systems, applications and data that the client needs to do business. Disaster Risk South Africa (DRSA), which claims to run the world’s leading data

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recovery facility, explains that it is possible to continue business operations even after a complete loss, if one is prepared. “In December last year, one of our clients’ premises burnt down. The building was destroyed when a light cable sparked and caught fire. The client declared a disaster. They had seats and servers with us, and were quickly up and running again” says Roelien Jansen van Vuuren of Disaster Recovery South Africa. In this case, the client had live backup servers, and within two hours DRSA was able to have everything set up, and the client could carry on working when they got to DRSA’s premises. Global Continuity SA had a similar example where a client had invoked their DR plan after a fire. The following working day they were able to set up their business at Global Continuity’s facilities and continue their operation. Global Continuity South Africa also provides mobile disaster recovery, which does not include relocating staff and equipment to a recovery facility. Instead, while the client’s own hardware is being repaired or replaced under the relative insurance policy, mobile recovery delivers equipment to the client in the shortest time possible. “If a client has a server that has failed for whatever reason, we have got the backup servers available, and if the client does not have localised backups at their site, we will take the backups we have of their data, restore it onto a server, and deliver it to them. They can then run that server in their server room for however long they need to. It is a fast solution that mitigates the risk of having to quickly sort out new servers and restore the backups,” explains Comline. It is also possible to restore a company’s server environment at the disaster recovery facility. Chances are that the facility will be connected to the client’s network, and the client will be able to access all of the functionality of the backup server through the internet. This allows companies like Global Continuity to provide servers anywhere within national reach.

Risks Extreme situations, such as natural disasters, fires, and water damage are uncommon when compared to the regular IT downtime, brought on by mundane software and hardware malfunction. The loss of power is the biggest culprit for disruption, responsible for the loss of data 56 per cent of the time. Companies do not need to protect themselves against the unexpected or the extraordinary. Instead, organisations are suffering from the impact of routine downtime, and even malicious activity.

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Load shedding is a good example of a business interruption which has companies invoking their disaster recovery plans. Comline indicates that load shedding is also introducing other complications such as increased issues around equipment failing because of power spikes, and an increase in the risk of fire. “The other issue is during strike action: not being able to access your facilities. Especially in some of the Rosebank areas where we had recent strikes, we have seen an increased number of clients not being able to access their sites and data. And when it comes to strike action, we have also seen increased complications when people have to make use of a ghost workforce,” says Comline. A disaster recovery plan requires regular testing and auditing, and it would not do any good if it is outdated. Jansen van Vuuren recommends that a company revisits their contracts and backup systems each year. The should also test their disaster recovery plan and their strategy at least twice a year, to ensure it is current and reliable. It is important for clients to think of the end stage. A company should also maintain detailed records of their employees, hardware, software, and their network equipment. Comline indicates that South African companies are slowly putting more resilient systems in place, and this is decreasing the number of seats that a client requires at a disaster recovery facility. “In the event of a disaster, the company wants to be able to say to the press or to stakeholders that their systems were recovered after a business interruption took place and that the company was able to invoke a tested business recovery plan. Those are the kinds of things that lend confidence to the business. We have seen examples in Europe, whereby clients who have been able to offer a statement like that had an increase in their share price, rather than taking a knock,” concludes Comline. The fact that South African companies are increasing spending only after experiencing a business interruption is alarming, since data is a critical and growing company asset. The use of data is growing exponentially. Insurance over the traditional brick and mortar operations of a business is not expansive enough to ensure adequate business continuity after a significant interruption brought on by disaster. Financial compensation does not enable timely business continuity as the data remains lost. Companies need to be advised that disaster recovery is, therefore, fundamental as a key business driver.

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FSP No iS 274

The rise

& rise

Sanlam shares insight into Africa’s middle class The United Nations estimates that Africa’s population will surpass 1.5 billion by 2030, making it the world’s fastest-growing continent. Couple this with the rising income levels and rapid growth of multiple African markets and the motivation for new investments into the region is clear. For early investors this trend will be a windfall. Margaret Dawes, executive for the rest of Africa, Sanlam Emerging Markets

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Above average GDP growth prospects

First among these is the high growth that emerging markets achieve relative to the developed world. The Africa Development Bank expects gross domestic product (GDP) growth of some 7.4 per cent in West Africa in 2014, with the continent pencilled in for 4.8 per cent. South Africa, meanwhile, looks set to achieve 2.3 per cent GDP growth in 2014. Most of the African markets we have exposure to are reporting GDP growth rates in the high single digits, multiples of what South Africa achieves. High GDP growth fuels the middle class which in turn underpins a burgeoning consumer-led economy, creating a growth spiral that is evidenced by major infrastructure projects and a boom in cross-border air travel throughout Africa. Mobile phone penetration

xcluding Namibia, Sanlam has been active in Africa (outside South Africa) since its acquisition of African Life in late 2005. This experience has given the group key insights into trends in the financial services sectors of the continent and leaves the group well positioned to leverage the growing middle class trend.

More people with more money demand more services. Mobile phone penetration across Africa is a godsend for financial services firms as it acts as an enabler for the rising middle class. Technology, the second mini-trend identified by SEM, assists insurers with two processes that are critical for their success, namely distribution (access to product) and the collection of premiums. Members of the rising middle class often have more than one phone – and the impact of smartphone technology and data have yet to be fully felt. Just about everybody in Africa has access to a mobile phone and SEM has already partnered with a number of cellphone providers to benefit from this trend – technology is a potential game changer. Consumers throughout Africa can buy financial products on their mobile phones as well as pay premiums, lodge claims and receive payouts. Product providers meanwhile can use the technology to run cheaper distribution models and achieve wider access. Certain challenges that go hand in hand with selling insurance policies over a mobile phone must still be addressed. Regulators, for example, must be convinced that financial services firms are treating customers fairly at each stage of the business process; from product development to distribution and on to claims payments. Political and regulatory stability

As Sanlam Emerging Markets (SEM) pursues new partnerships in the diversified financial services sector in order to build on an African presence that already spans 11 countries, we have identified four mini-trends that go hand in hand with the rising Africa middle class and make financial services investment into Africa more attractive than ever.

A third important trend is the shift towards political and regulatory stability exhibited by even the poorest of African economies. Investors have to take political and regulatory uncertainty into consideration before committing capital to a new country. And SEM has noticed improvements in both categories in recent years.

Africa’s rising middle class appears to be broadly supportive of pro-business/proconsumer regulatory interventions. On the political front, high profile examples include Kenya’s 2013 elections, the peaceful, albeit unsuccessful, challenge of Ghana’s election result by that country’s opposition and, most recently, the peaceful resolution of Malawi’s election issues. We have also noticed enhancements to the regulatory regimes in just about all of the countries we operate in. A number of East African countries have taken steps to harmonise financial regulations across the region. It is also encouraging that many sub-Saharan authorities are in contact with South Africa’s Financial Services Board on regulatory matters. Issues that still need to be addressed include regulatory intervention without sufficient stakeholder consultation and the over reliance by regulators on laws that are appropriate for the operating methodologies of European rather than African insurers. Rising trust in insurance products Another factor that is critical for financial services success is that consumers ‘trust’ insurance products more, despite the history of consumer distrust of insurers across Africa. The trust issue informed Sanlam’s decision not to rebrand the African businesses when it bought African Life in 2005. SEM has subsequently found that entering new markets in partnership with an ‘on the ground’ brand is a faster track to success.

By partnering with a strong local brand, we are able to address the trust issues that consumers have as well as benefiting from their understanding of the local environment. Increasing trust among Africa’s rising middle class is a fourth mini-trend that will drive investment into the region. The rising African middle class is integral to the four mini-trends outlined in this article. These forces combine to create a perfect storm for financial services firms to enter Africa. It is up to companies like SEM – alongside their various country partners – to fine-tune their product offerings and ensure maximum penetration as the African consumer matures. Historically we have focused on the lower income market with mostly funeral and simple savings-type products. We have also identified opportunities in the microinsurance space where we expect good results. One of the challenges that remains is to design sophisticated investment products for the mid and upper-income market given the shortage of appropriate local investment assets. Whichever country we operate in – and whichever segment of that economy we market to – our success hinges on our ability to work with our country partners to offer value and financial security across the broad spectrum of financial services to the end consumer.

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您在非洲的金 2014 第13期

融服务平台

5964 ISSN 1812-

非洲消费是增长还是消退？与安联集团讨论能源和基础设施 2014年更新的统一保费调整

监管不力导致金融犯罪的增长让南部非洲跨越式发展针对东非共同体小型农场主的微型保险项目双子峰的传说

增长和机会：行业指标

Sarah Bassett

a new focus RISKAFRICA

Andy Mark

RISKAFRICA magazine, sister publication to RISKSA in the COSA Media stable, has expanded its focus to include risk managers amongst its broker and insurance industry readers. 118 8 4

he broader scope of the magazine means that, in some cases, it will be competing directly with RISKSA, its award-winning sibling you’re holding in your hands right now. The new content focus will, for the first time, address issues of interest to risk managers outside of the financial services industry as well as the insurers that mitigate those risks.

RISKAFRICA is headed up by Sarah Bassett, who explains the strategy as follows: “According to the IMF, seven of the world’s 10 fastest economies are in Africa, the middle class is growing at rapid pace, political stability is increasing, whole new resource reserves are opening up, and beyond resources, Africa’s markets are successfully diversifying and innovating in every direction. Clearly, this is a new era for the continent and the opportunities for business are abundant. But the risks are real. We’ve just seen a near six-month long labour strike in South Africa, an ongoing onslaught of terror attacks in Nigeria and Kenya, contested elections in Malawi, an Ebola outbreak in West Africa – and the list goes on. And the socio-economic and political risks are all exacerbated by lack of information and infrastructure, as well as skills and personnel deficits. As African business analyst, Victor

Kgomoeswana, told me in a recent interview, in these markets, every businessperson is fundamentally in risk management – and so companies switched on to this trend have a critical competitive advantage. Our role is to be the leading source of information for risk managers and professionals on the continent, providing insight on emerging challenges and how industry innovators are responding to prevent, mitigate and insure against these risks, to drive that competitive advantage.” Bassett has just returned from Kenya where she spent time meeting with key decision makers in the insurance and risk management sectors. “Many East African insurance professionals are reaping the benefits of making risk managers central to their offering,” she says. “It is a sector that is growing in

importance in today’s rapidly changing business environment. In South Africa, ACSA (The Airports Company of South Africa) for example, has just formed an entire risk management department, the duties of which were carried out by a single person previously.” RISKAFRICA magazine is published in Africa and is thus perfectly positioned to continue the Afro-positive narrative while promoting greater understanding of the risks involved in doing business on the continent. “Doing business in Africa is risky,” concedes Bassett, “but we’re entering an age where perhaps the biggest risk for companies is in their not doing business on the continent.” With RISKAFRICA soon to launch its Chinese edition in September, the title will undoubtedly find equal favour with Chinese corporates as well as African-based risk managers and insurance professionals.

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Contact strategy Dominic Uys

There is no substitute for an efficiently run contact centre. Bringing oneâ&#x20AC;&#x2122;s own operation up to speed is as simple as following these 10 strategies.

ven though web-based communications appeal to a sizeable portion of the clients and intermediaries who interact with insurers, contact centers are far from being redundant.

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The personal level of communication that the contact center offers still makes it the preferred method of communication for many clients. The challenge is in keeping this personal touch while improving the contact centerâ&#x20AC;&#x2122;s ability to keep up with the demands and expectations of modern clients. Martina Knappe, head of EMEA Marketing at Interactive Intelligence, believes that the right staff and tools are crucial to success. Knappe has compiled a list of strategies to get the most out of both of these faculties.

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Auditing the system

The first thing to do is to look at the current structure and to highlight the shortfalls. “The top factor in improving contact center operations is to start with an audit of the existing system and processes. Contact center management should assess whether the contact center meets the current and future needs of the business, whether systems and processes are fast enough and whether unfixed errors cost in terms of time, efficiency or morale,” Knappe says.

Reviewing recruitment practices

According to Knappe, it is important that the right staff is appointed at the outset, that their induction and training is carried out effectively, and that career and personal growth is supported. “Contact center management needs to ensure that it is fully involved in the recruitment process, asking the right customer service questions at interviews, and ensuring a comprehensive and appropriate induction programme,” she adds.

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“The customer’s experience is the contact center’s most important measure of success, so counting call volumes and simple yes/no customer surveys are no longer enough to gain a full understanding of the customer experience,” Knappe says. She adds that to enhance quality measurement, the contact center needs to define its objectives, and ensure that the staff fully understand what is being measured and why.

Maximising customer feedback

Maximising staff feedback

Improving contact center operations depends to a large degree on getting feedback from the contact center team, and acting on it. “To do so, hold regular review or focus groups with staff and colleagues, where participants are encouraged to share their views, make suggestions, and collaborate in carrying out improvements,” Knappe says.

2583 TheCheeseHasMoved

Contact centers need to understand how, when and why customers interact with them, as well as the client’s experience. “Consider whether your customer survey questions need to be reviewed to more accurately reflect customer views as opposed to addressing cosmetic issues. Assess whether other departments need to be involved in the survey to ensure their needs are covered too, or whether another department should carry out surveys without your input,” Knapp imparts.

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Maximising performance

According to Knappe, contact center performance is in no small part dependent on how well it supports the business’ goals. “Today’s successful contact center needs to benchmark itself against those of other organisations, especially those in different market sectors. It needs to maximise performance through good communication with other departments in the organisation, especially marketing and sales. In addition, the right performance tools need to be in place,” she says.

Acknowledging achievements

“Too often, the critical role of the contact center in growing and retaining the customer base is overlooked. To improve contact center staff job satisfaction, and ensure access to adequate resources, it’s important to ‘bang the drum’ internally, ensuring that the enterprise is made aware of the contact center’s contribution to business, as well as its achievements,” Knappe states.

Developing staff

Career and personal development are crucial to job satisfaction and reduced staff turnover, as well as boosting customer service according to Knappe. Staff training and personal development need to be addressed on an ongoing basis.

Spreading across all channels

“The contact center is not just about voice interaction anymore. You may have excellent voice interaction, but unless you deliver the same level of service via other channels, your contact center is dropping the ball. The consumer of today expects uniform service levels across multiple channels,” Knappe says. She states that the contact center must ensure that phone, web chat, email, text, social media, mobile and letter interactions are equally efficient and integrated. “Breaking down silos and using true all-in-one platforms will support a multi-channel strategy, enhancing the customer experience and simplifying contact center management and CRM,” Knappe adds.

Maintaining morale

“Working by the book is not enough to ensure customer satisfaction – your staff need to be motivated to deliver good service. They need job satisfaction and a positive attitude, which will reflect in their interactions with customers,” Knapp says. “Assess whether you and your staff look forward to coming to work and ask ‘why/why not?' Consider whether you have any silly rules to ‘control’ staff that should be dropped. Ask yourself, does performance vary due to mood over the day/week/month and if so, do you know why? And are any of the ‘fun’ things you do becoming stale?” she continues. The rules for contact centres are universal. Whether in the insurance, or any other industry, it cannot be overlooked that the face of any modern business still consists of the people that clients interact with directly. Adopting a good strategy is not only constructive, it is crucial.

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Become part of our family and grow your business. With our network of partnerships with the top insurance companies who operate both locally and globally, we can oﬀer you insurance cover of just about any kind. We can even tailor make a policy for you. Our areas of specialty include Commercial and Domestic Insurance, Liability Insurance and Tailor made Insurance Products. We have exclusive products aimed at businesses and individuals that you won’t ﬁnd anywhere else.

Why choose us? Our partnerships with insurance companies allows us to offer you affordable cover and personalised service. You are not just a number and there is no ‘one-size-fits-all’ with our products. Our experienced team puts together the products that will offer you the best cover to suit your needs. If the insurance cover doesn’t exist yet, we’ll create a product that’s tailored to your needs.

We work directly with Brokers and the best Brokers work with us. Rodel has specialised in-house systems that allows us to work eﬃciently with you. Our claims process is quick and easy and we promise speedy payouts. Approved brokers will be monitored individually on loss ratios and growth and not as part of a combined scheme. You are covered and awarded on your own merits. We will also give you a dedicated Portfolio Manager and individual attention. Our strategic partnerships with global insurers means we can oﬀer your clients stability and growth. We keep our administration and paperwork low and use technology to do the hard work. Qualifying Brokers can apply to have their own mandates and register their own claims, increase their commission and have more control over their business.

Join us today and grow your portfolio Rodel Insurance Administrators provides an administrative service to insurance brokers in the short term insurance industry. We have many years of experience and we strive to provide our brokers with the most comprehensive insurance products and the best service so that they can make a diﬀerence in their customers’ lives. With our network of partnerships with the top insurance companies who operate both locally and globally, we can oﬀer you insurance cover of just about any kind. Are you a Broker that wants to join our team? For information about us and how we can work together, call us or visit www.rodelsa.co.za.

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FSB refines rules for

foreign CIS Neesa Moodley-Isaacs

Could recent legislative changes mean that we will see more foreign collective investment schemes hit our shores? RISKSA takes a closer look.

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he number of foreign investment schemes directly available to South African investors has decreased dramatically over the last eight years, falling from 366 in 2006 to 308 at the end of March this year. However, changes ushered in by the Financial Services Board (FSB) in January this year have made South Africa more accessible for foreign collective investment schemes, which include foreign exchange traded funds (ETFs) and mutual funds. Good returns from offshore markets, as well as the depreciation of the Rand against major currencies, has boosted the value of foreign assets in Rand-denominated funds. These two factors have driven demand for Randdenominated foreign funds. Foreign exchange controls restrict asset managers to investing a maximum of 35 percent of their retail assets under management in offshore markets. Wehmeyer Ferreira, head of Deutsche Bank X-trackers, which provides exchange traded funds that track major foreign indices, says demand for foreign investments is likely to remain strong, on the back of improved economic growth in the US last year, a reduction in fears that the Eurozone will break up, the under-performance of emerging equity markets in terms of US dollars and uncertainty about the Rand. According to the 2013 annual report of the Association for Savings and Investment South Africa (ASISA), the assets under management for foreign collective investment schemes (CIS) last year was R217 billion.

What are the changes? Peter Blohm, senior policy adviser at the ASISA says the biggest change was probably the addition of a clause that states that foreign collective investment schemes marketed in South Africa must also be available to similar investors under the same or substantially similar requirements in its own domicile. The conditions required by the FSB before foreign CIS will be allowed to solicit investment in South Africa include: • The regulatory environment under which the scheme operates in its domicile must offer investors the same or a similar level of protection to the protection in South Africa. • Foreign schemes have to enter into an association with a local company or open a local office. This will make it easier for investors to interact with the scheme and obtain required documentation such as tax certificates. • The FSB does not directly regulate foreign CIS schemes but is likely to only approve International Organisation of Securities Commissions (IOSCO) schemes, or schemes based in countries where there is a multilateral understanding between our regulator (the FSB) and theirs. • Previously, investment limits were prescribed for foreign funds – to be similar to local funds – in terms of what the portfolio can invest in, for example, equities were capped. • Under the old provisions, foreign Fund of funds was required to invest in five underlying funds. But now the focus has shifted from forcing foreign schemes to look like local schemes. The focus is now on jurisdiction.

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• Previous conditions were very strict. Blohm says having an independent custodian is an arrangement that works well in South Africa in a unit trust structure. “The new conditions do require proper independent oversight but the need for an independent custodian has now fallen away,” he says. • The scheme must have sufficient liquidity to be able to pay investors out if they wish to withdraw from the investment. To this end, the local partner or representative office must have paid-up share capital and reserves of at least R2-million. This money must be invested in assets that can be liquidated within seven days. • Foreign CIS are not allowed to invest in financial instruments that will result in the scheme owning physical commodities. • Foreign funds will have to provide the FSB with a document listing the differences and similarities between the scheme and a local collective investment scheme.

Tax treatment of foreign funds a problem Although the relaxation of rules from the FSB may attract more foreign CIS to our shores, experts say South Africa’s tax treatment of these funds remains a problem.

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Moving Forward

Shayne Krige, a director at Werksmans Attorneys and head of investment funds practice, says international investors tend to set up their holding companies and fund entities in countries that have the lowest tax rates. “South African tax considerations make it difficult for South Africa to compete as a Pan-African investment fund location,” he says. Hiring a South African investment manager has another major tax consequence for foreign funds under the current system: any profits that are deemed to have a South African source are taxable in South Africa. This may be the case if the local manager has discretion to contract on behalf of the foreign fund. “The ‘source risk’ is one that is easier to manage in other jurisdictions, and it is difficult for a South African manager to compete for a discretionary mandate against a manager located in a country that has the exemption,” says Krige. He points to the UK as an example of a country that has created an investment management exemption in terms of which, only the investment management fees paid by a foreign fund to a manager based in the UK are taxable. “What South Africa needs is a regime that allows investment managers to conduct discretionary activities, whether under a contractual mandate or through a particular structured participation, without creating any tax risk for a foreign fund,” he says. How investors can access foreign investments If an investor chooses to invest in a foreign CIS, then he or she needs to obtain approval from the South African Reserve Bank (SARB) to convert their single discretionary allowance or R1 million annual offshore allowance into a foreign currency.

The different types of foreign collective investment schemes There are several different types of foreign CIS: 1. Unit trust funds or collective investment scheme funds – are very similar to local unit trust funds with regards to structure. Investors pool their money and fund managers then invest the money in a range of shares, bonds and other financial instruments. 2. Open Ended Investment Companies (OEICs) – were introduced in May 1997. They are registered mainly in jurisdictions including the Channel Islands, Isle of Man and Ireland, and are regulated by the UK Financial Services Authority. Investors obtain participation rights by buying shares in the company. As new investors buy in, new shares are issued. The company has no predetermined termination or end date, which is why it is an ‘open-ended’ company. 3. SICAVs – these are the same as OEICs but they are typically registered in French speaking countries such as Luxembourg and France. They fall under the European Directive on UCITS (Undertaking for a Collective Investment in Transferable Securities). 4. Mutual funds – are offered in the United States and have the same structure as an OEIC. 5. Feeder funds – allow investors to invest into an underlying fund through another fund. For example, the Allan Gray-Orbis Global Equity Feeder Fund invests only in the Orbis Global Equity Fund. 6. Fund of funds – this is similar to a feeder fund but invests in a number of underlying funds rather than just one underlying fund.

The other option investors have, is to use their annual R4 million investment allowance. If they choose the second option, they will require a tax clearance certificate from SARS as well as approval from the SARB.

“What South Africa needs is a regime that allows investment managers to conduct discretionary activities.”

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Gearing up for the IASB’s

new insurance standards

Amy Escott Deloitte senior manager, audit Accounting & financial advisory (AFA)

he IASB has been working on the insurance project since 2001. The aim of the project is to produce a comprehensive standard which can be applied by both long- and short-term insurers, reflecting the nature of the industry and providing useful information to users of financial statements. The project also aims to facilitate comparability of financial reporting between entities, jurisdictions and capital markets. The most recent exposure draft of the proposed standard was issued in June 2013, and redeliberations on the comments received are ongoing. The IASB’s progress on the standard received a setback in February 2014, when the Financial Accounting Standards Board, which sets the accounting standards in the United States of America (US GAAP), announced that it had decided to abandon working with the IASB to issue a converged standard and would instead focus on making its own targeted improvements to the current US GAAP requirements. The standard is yet to be finalised. One reason for this is the difficulty encountered by the IASB in defining what forms part of the

Given the global importance of the insurance industry, the International Accounting Standards Board (IASB) has been working on developing an accounting standard which will enable users of financial statements to meaningfully understand an insurer’s financial position, performance and risk exposure.

insurance industry. One of the topics that the IASB has been deliberating on is what to do with fixed-fee service contracts – for example, entities that provide roadside assistance to motorists in return for a fixed fee. During its May 2014 meeting, the IASB tentatively decided that fixed-fee service contracts, with the primary purpose of providing services that do not include an assessment of risk in price-setting, can be accounted for either in terms of IFRS 15 Revenue or in terms of the proposed insurance standard. Another reason for the time taken to finalise the standard is the determination of the measurement model for insurance liabilities and the recognition of profits from insurance contracts. The current insurance standard does not prescribe a measurement methodology. Therefore, the IASB has had to develop a model that is suitable for both long- and short-term insurers. This model, known as the ‘building block’ approach, comprises the following elements: • Unbiased, probability-weighted estimates of future discounted cash flows • A risk adjustment which measures the effects of uncertainty and timing of the future cash flows

• A contractual service margin which represents unearned profit on a contract and is released as the insurer performs its obligations Each item has specific measurement requirements and challenges before they are combined as a whole to form the insurance contract liability. This could result in significant system changes and measurement calculations for insurance companies, as well as a potential change in the timing and amount of profit recognition. There are also various questions that the IASB is in the process of redeliberating. These include: • Accounting for participating contracts • Portfolio definition and unit of account • Discount rate for long-term insurance contracts • Treatment of reinsurance contracts • Transition requirements At this stage, there is no indication of when the final standard may be released but insurers all around the world will be watching the IASB closely because the release of the standard is likely to have the most significant impact on accounting by insurers since the introduction of IFRS.

Deloitte & Touche • Tel: +27 (0)11 209 8930 • E-mail: aescott@deloitte.co.za www.deloitte.co.za

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JHB 45648

Together we can grab Worry by the scruff of its neck, poke it in the eye and give it a good old wedgie. Oh, and we can also sell insurance together.

We’re super proud of the lasting partnerships we’re building with each and every one of you, our brokers. When we work with people like you, forehead veins don’t throb, swear words aren’t hurled, and everyone’s lives become a lot less worrisome. personal

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Hollard Short-term, Hollard Life and Hollard Investments are Authorised Financial Services Providers.

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4158 Wetpaint Advertising

Where have all the young people gone?

allow the insurance industry the opportunity to highlight the many faceted opportunities of employment in our chosen profession.

Do your bit to promote the industry to youngsters

Jackie Salter business development manager at Renasa Insurance Company Limited

s insurance not ‘sexy’ enough? Is the perception that the industry comprises surly old people, that there is no innovation, no fun? Or is it our own apathy which fails to attract young people back into our profession? In the past, entrance into the financial industry workplace was relatively easy. One could start as a junior in insurance and work your way up through various divisions gaining experience and interesting training. However, the plethora of regulatory exams, insurance qualifications and Continuing Professional Development (CPD) criteria, as required by the modern regulatory environment and which are necessary to maintain industry professionalism, have sadly served to focus inordinate attention on compliance, dissuading potential new entrants. If the industry loses its flow of new entrants, the skill set of an aging industry will be lost. So, what can we do to reverse this trend?

Improve formal industry specific education Start with the Department of Education. Planned interventions and curricula are necessary to

Don’t wait for the ‘industry’ to do this. Create awareness by giving a talk to your child’s class on Career Day or Bring a Child to Work Day. Invest in young graduates. In return for their commitment to an insurance career, send them on a Fast Track Learnership Programme, exposing them to the various opportunities available. One can always find an interesting niche, be it sales, claims or perhaps a specialisation from a professional in that field or develop an innovative product as a result of passion for a hobby.

Set a good example of professional endeavour Parents in the insurance industry need to remember that they too are role models for their children, and appreciate the impact of their example on their children. Proactive participation in further education to gain additional knowledge, skills and qualifications, demonstrates that insurance is a professional career and one that offers job prestige.

Offer internships to promote the industry and attract new entrants Create a learning environment. Put in the time and effort with a matriculant. Team up with colleagues with skills and knowledge as mentors to young employees for ‘on the job training’. Make it varied and interesting.

Provide financial and other professional development support Some large organisations have training

academies in place for their staff and associated business partners. But what of the small business which is not affiliated? Industry participants look for courses that are accredited – as required by the FSB – but the cost of training is often prohibitive, so employers must lend support, financial and otherwise. How are young people going to get the necessary exposure if the education they require remains unaffordable?

Explain with positivity the motivation for a highly regulated environment The burden of an intense regulatory environment is another barrier. New entrants observe the struggle to balance time required to meet CPD and compliance requirements with customer retention, growth, and new business and query resolution. The pressure of making up for unproductive business time exerts pressure only too apparent to potential candidates, to whom the cost and time consumed by this effort may seem unattractive. Extol the benefits of a safe and regulated environment so that new entrants come to appreciate the value.

Use the attraction of a modern technological environment to entice young entrants The comfort of a steeped technological environment employing computers and cell phones with apps that can be developed and applied can be an enormous attraction. The young are adept in this environment and that way of working is more attractive to them. We must implement these and other actions at a strategic business level to attract, encourage and retain self-motivated, dynamic young people to take the industry forward.

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2014/03/14 8:43 AM

The Taxation of Risk Throw away existing principles

The National Treasury released the first batch of fiscal amendments on 10 June 2014. One of the most significant amendments relates to the way in which risk policies will be taxed in the hands of long-term insurance companies (insurers), DLA Cliffe Dekker Hofmeyr explains.

y way of background, the business of an insurer has, to date, been divided into four separate funds for tax purposes:

• individual policyholder – owned by individuals • company policyholder – owned by corporates • untaxed policyholder – owned by untaxed entities and annuity contracts • corporate fund – remaining assets of the insurer. To date, both risk policies as well as investment policies were categorised within the relevant policyholder funds concerned. However, the proposals will have the effect that risk policies will have to be accounted for by the insurer in the corporate fund and no longer in any of the policyholder funds. In other words, it will only be investment policies that are accounted for in the policyholder funds concerned. The proposals state that any policy issued by an insurer during any year of assessment commencing on or after 1 January 2016 in respect of a risk policy, must be accounted for in the corporate fund. A risk policy is defined in terms of which any benefits payable under the policy is dependent on any future event, the happening of which is uncertain, or in terms of which any amount payable under the policy is only payable by reason of death. It includes any reinsurance policy in respect of these issues. However, to the extent that the policy contains both investment and risk elements, the policy will be deemed to be a risk policy even if only a small portion of the policy benefits may be attributed to risk and/or

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investment. This categorisation may well give rise to manipulation as it would be relatively easy to decide in which fund a policy must be accounted for. To the extent that the decision is taken to reflect the policy in the corporate fund, one can merely attach a small element of risk to the policy. In cases where it is more advisable to account for the policy in the policyholder fund, one can split the policy so that only investment risk is accounted for in one policy and the risk element in another policy. It is noteworthy that no reference is made to existing losses that may have been derived in a policyholder fund and how that is to be dealt with going forward. The only reference is that the insurer must place assets having a market value equal to the liabilities in respect of the relevant policies in the fund concerned. Once the policy is reflected in the corporate fund however, a number of new principles are introduced. Firstly, the corporate fund is only entitled to claim a deduction equal to the amount of the insurance liabilities as reduced by reinsurance assets in respect of the risk policies as determined in accordance with accounting principles. The amount of insurance liabilities reduced by reinsurance assets relating to risk policies that have been claimed in the preceding year of assessment must be added back. The problem, however, is that the corporate fund now contains a mix of both risk business as well as the surplus assets of the insurer. In order to overcome this difficulty, premiums will now be included in the income of the corporate fund on the basis that claims incurred will be allowed as a deduction.

This is similar to the treatment of the shortterm insurance industry. The proposal goes much further in the sense that: • dividends will become taxable • reinsurance claims received will become taxable, whereas reinsurance premiums paid are deductible • capital gains will be subject to normal tax at the rate of 28 per cent and not the normal corporate rate. There are a number of fundamental changes in the normal taxation principles that apply to corporate taxpayers. The fact that dividends will become taxable and capital gains are subject to normal tax at the rate of 28 per cent is far-reaching. This should be seen against the background that insurers are to be taxed on an annual basis in respect of unrealised capital gains. It is appreciated that not all of the dividends and capital gains will be taxed, but only a percentage thereof, calculated with reference to the premiums received compared to the total value of assets in the corporate fund. Even on this basis, however, it seems inconsistent with existing tax principles and the previous amendments that have been made to the taxation of the long-term insurance industry. If anything, one should rather consider the use of a fifth fund in which the risk policies must be reflected. This will have a much more equitable effect than throwing these policies into a corporate fund where a number of inconsistencies will arise.

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Business unusual Brought to you by

THE VOICE OF THE INDUSTRY

Dominic Uys

The second Insurance Bootcamp of 2014, sponsored by Hollard, Santam and Emerald Risk Transfer, zoomed in on the essentials of insuring against business interruption. With three speakers chosen from the industryâ&#x20AC;&#x2122;s foremost experts, the three day roadshow saw packed venues and a record number of viewers via the RISKSA telecast. A special thanks to our diamond sponsor

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Our platinum sponsor

Our silver sponsor

his year marks the fourth year of the Insurance Bootcamp, and 2014’s second round sessions witnessed participation from over 600 brokers and insurers. Interest in these events has grown exponentially and tickets sold out within two weeks of being made available. 120 subscribers also participated in the live RISKSA broadcast. Kicking off at Cape Town’s V&A Waterfront Pavilion Conference Centre on 4 June, the roadshow featured industry insights from head of independent brokers at Hollard, Justin Naylor; 40 year short-term insurance veteran, Charles Lindstrom; and senior loss adjustor at Cunningham Lindsay, John Wattrus. Our speakers explored the nuts and bolts that brokers need to know about cover for business interruption, in three parts. Naylor began by unpacking the basics of business interruption, Lindstrom looked at underwriting and claims writing, as well as the importance of wording

these correctly, and Wattrus covered the critical elements often overlooked by brokers on a dayto-day basis. Naylor started by pointing out that interruption of a client’s business is the one eventuality that should scare brokers and the catchphrase for this Bootcamp was ‘Are you scared yet?’ A look at some of the consequences of inadequate cover made for a host of chilling discussions and seemed to support this statement. Lindstrom summed the day’s topic up quite adequately, stating “Business interruption cover is the most undersold policy in the market, but insuring for it is not complicated.” Finally, Wattrus set the scene with a collection of real case studies, exploring both the foreseen and unforeseen sides of business interruption cover. The panel of experts not only doled out valuable insight but also fielded some interesting questions from a thoroughly engaged audience. The RISKSA broadcast

was brought live to boardrooms across the country, and the online platform, created by RISKSA TV, allowed viewers to pose their questions to the speakers in real time. The work for RISKSA is far from over, having already started organising the final Bootcamp sessions for 2014. 20-22 August will see the three venues in Cape Town, Durban and Johannesburg filling up for presentations by more industry gurus breaking down commercial property, including building combined and sectional title cover. Tickets have been made available and are selling fast. Registration for the live broadcast is also available to clients outside of the major centres that the Insurance Bootcamp roadshow visits. Make sure to book right away: no RISKSA reader should miss out on truly valuable info from the best specialists in the field.

THE VOICE OF THE INDUSTRY

Insurance Bootcamp is powered by RISKSA magazine and partners with the Insurance Institute of the Cape of Good Hope (IICoGH) and the Financial Intermediaries Association of Southern Africa (FIA).

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Morocco beckons New legislation in the country of Morocco is set to help international reinsurance companies gain a foothold in not only the North African market, but also the fast growing economies in the rest of the continent. Dominic Uys

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n recent years, the African continent has witnessed rapid growth taking place in its key gateway countries, and South Africa has had to relinquish its title as the global community’s primary access point into the region. The economic boom in Nigeria has made it fertile ground for international companies looking to gain a foothold into Western Africa, and Kenya’s growth has done the same for the eastern part of the continent. Similarly, Morocco has steadily been establishing itself as one of North Africa’s main entryways. The country’s considerable construction boom, starting in 2008, overtook even the substantial increase in the cost of building material, resulting from the global economic depression, and saw foremost international contractors, architects and engineering houses compete fiercely for contracts in the region. The financial district in the heart of Morocco’s largest city is now also receiving attention. In February of this year, a new law was adopted in parliament to formalise the status of the Casablanca Finance City (CFC) as Morocco’s international financial centre. New measures were also put into place to attract investment. Capitalising on the rapid growth in the western and central parts of the continent, the CFC will now start to establish itself as a gateway for capital inflows to the African market. The Moroccan Financial Board has been renamed the Casablanca Finance City Authority (CFCA), which will serve as the CFC’s permanent oversight body. The new legislation also expands the list of financial service organisations eligible to obtain CFC status. Originally, international corporate and investment banking institutions; law, audit and consulting firms; and major companies were all authorised to set up their regional headquarters in the CFC with an eye on expansion into Africa. This list has now been broadened to include a wider array of financial services, including insurers and reinsurers. The change in legislation also permits firms to establish

representative offices in the zone, instead of requiring regional headquarters to be established immediately. This will allow large businesses to gradually shift their activity to the CFC. One of the first companies to take advantage of Morocco’s new policies was AIG, which received the go-ahead to establish its servicing office in the financial hub earlier this year. Commenting at the announcement, Michael Whitwell, AIG’s president of Middle East and Africa, confirmed that the company’s presence in CFC would serve as a platform to facilitate its reinsurance and other insurance contracts in the continent’s three main developing regions. “It will also allow AIG to enhance its service to existing clients in the region, as well as raise the company’s profile in these territories,” he added. More recently, Bahrain based Trust Re also set up its regional office in the zone, following approval in June. Similarly the company stated that it would focus on developing business partnerships in the northern, western and central regions. The rest of the international reinsurance sector has yet to follow suit, but there is no denying that the country has made significant strides in making a foothold for new and seasoned entrants into the African market easier. Among the new measures that the country expects will stimulate more interest in the CFC as an international platform are, nodouble taxation agreements put into place in a number of key countries, including South Africa; agreements for the protection and promotion of investments with 17 African countries and free trade agreements with five North African countries. The goals put forward by Morocco for this financial district seem to be coming within reach as interest in the CFC grows. Lower corporate and income taxes as well as milder currency exchange controls are expected to continue drawing more companies.

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Are all PR agencies

pie in the sky? Michelle Camps

R agencies get a bad reputation because of the minority that poorly reflect the industry. The PR industry also seems to reflect a stereotypical type of employee which does not necessarily reflect the intellectual capacity of the industry. If you mention to people that you’re in the PR industry they tend to get a wary expression, indicative of you not being anyone of great worth intellectually. To the uninformed, PR is all about launches and parties, and nothing much else. Ask some people what PR stands for and it is amazing what answers you will get. ‘Press release’ seems to be quite a common answer, clearly indicating that all PR agencies do, besides the launch and party types, is generate press releases. Alas, some are only worthy of doing just that. However, there are definitely PR agencies out there that do represent their craft professionally and are now more commonly known as Corporate Communications agencies, with some still preferring to maintain the PR agency title, even under the potential misguided misrepresentation of their great work. According to the Public Relations Society of America, public relations is a strategic communications process that builds mutually

beneficial relationships between organisations and their publics. The emphasis being on ‘strategic’ and ‘mutually beneficial’, as this is the pillar stone of a sound PR agency – an agency that offers strategic communications and not just a lot of hot air, as well as ensures that a positive relationship is built between their client and the relevant stakeholders they are engaging with. Strategy has also become such a buzz word and is quite often one of the most over paid for service offerings. Put the word ‘strategy’ in front of a person’s title or an agency offering and you know it’s likely to come with an additional fee. Agencies tend to bamboozle clients into believing they are getting an offering worthy of an astronomical fee, again placing the agencies at risk of gaining a negative reputation. Quite honestly, strategy should be part of an agency’s base offering, given that nothing of worth should be implemented if it doesn’t stem from a sound strategy aligned to the client’s overall strategy. So are all agencies pie in the sky? The

answer is quite honestly, no. The minority that have given the industry a bad reputation are no reflection on the industry as a whole. I have been privileged to work with some great agencies that have not only delivered on brief but have added great value to their clients’ business. It is important though, to know who the good agencies are, that offer a strategic communications solution that best suits your business needs, and who can consistently deliver on their value proposition. Also ensure that, if an agency offers an holistic solution, they have these resources internally, and that you are not paying a third party mark-up because these services are being outsourced. Ensure you align your agency choice with your strategic business requirements, and don’t buy into the glitz and glamour if it comes with no substance. Your return on investment must be measureable and it is important to set clear targets and deliverables in place prior, so that you can gauge the agency’s performance on a regular basis. Don’t measure an agency purely by column centimetres in the media but rather whether the centimetres added any strategic worth to your business, and what other opportunities came from these engagements.

Michelle Camps is a marketing and communications specialist with a wealth of experience covering a broad spectrum of industries from financial services and healthcare to aviation and tourism. Michelle is an independent consultant assisting clients with marketing and communications strategy, brand management and business development. If you have questions for Michelle regarding advice for your business, please forward these c/o editor@risksa.co.za

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Time management tips

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For some busy brokers, there just arenâ&#x20AC;&#x2122;t enough hours in the day. RISKSA reveals the time management tips that will help you keep your work-life balance. Laura Owings

rom client conversations to management meetings, brokers have to put in a lot of time to keep their firms successful. Add to that time for admin, keeping up to date on regulations and building new business, and every second is precious. Following a few simple tricks can help brokers boost productivity and get the most out of their time.

Plan your day Before you reach for your smartphone and before you sit down at the computer, take a moment to write out an action plan. Take 15 minutes in the morning to outline the day’s direction; it is one of the most common habits of successful business leaders. Ambition gets a lot of breathing room if you decide when and where you are going to spend your day. Focus on activities you can realistically accomplish and which allow you to leave at the end of the day feeling like you’ve been productive and successful.

Diarise it Having a calendar is the most fundamental step to managing your daily activities. Whether you work better with an agenda, smartphone calendar or simple notepad, it is incredibly valuable to have a visual schedule. Placing priorities on your calendar and scheduling them into specific time slots works best when business leaders place the hardest and most important items at the beginning of the day. This has a two-fold time-saving benefit. When items don’t fit in a day’s calendar, you should consider reprioritising your list.

Time limit tasks Whether it’s a meeting, a phone call or writing a brief, set yourself a certain timeline to finish. Be clear with colleagues – or yourself – that each task on your list needs to end at a specific time. This prevents work from dragging on and eating into time reserved for other activities. For those who find this tricky, one recommendation is to use a timer. Key in the amount of time you think each task will take. This will give you great insight into how much time you think tasks take, compared to how much time they actually do.

Aim to be early When you aim to be on time, the odds are you’ll

either arrive on time or late. By readjusting your style to be early, you can earn bonus time throughout your day. If you arrive 15 minutes early for an appointment, you’ve got extra time to prepare, freshen up or take a few minutes for yourself. However you use those minutes, they are better spent than when running late. The same applies to deadlines. Rather than waiting for the last minute rush, strive to be done and dusted as soon as you can.

Jumpstart your clock When you are really stuck in a project, it is easy to lose track of time. Not only does this upset your daily planning, but it can also send you into a workplace slump. Taking a one-minute break every hour can do wonders for inspiration and productivity. Try setting a timer to ring every hour. Then, take a deep breath, look at your list and recommit to how you are going to use the rest of your day. If you’re feeling under pressure during a task, take a longer break to stretch your legs or pop outside for fresh air. The short distraction will help clear your head and give you a new burst of energy.

Learn to say no No matter how successful you are or aim to be, it is a danger to take on more than you can handle. That can result in stress, anxiety or in the worst of cases, burnout. Give yourself permission to pass on things that don’t take priority. Whether that means skipping a coffee break, missing out on a meeting or delegating a task to a colleague, saying no means you can focus on more important tasks. The same applies to meetings that run overtime. Don’t be afraid to speak up and set a cut-off time. Otherwise, you’ll just eat into the time you’ve allocated to getting your daily tasks done.

Go offline Everyone has an online habit that tempts them at work. Yours could be Facebook, Twitter, constantly checking e-mail or browsing the news. The secret to getting more done is to keep these habits in check. One good strategy is removing these links from your bookmarks or favourites. Another is to disconnect from the Internet altogether at peak times. While this can be one of the hardest habits to break, even easing back the frequency can have a big impact on work.

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Picture perfect Luka Vracar

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South African companies spend a small fortune on public relations and communications. The PR agency then spends money and time to communicate the company’s brand and services to the media. However, often this hard work is wasted when the media outlet receives the executive’s headshot. Low-quality, substandard corporate photography often accompanies important press releases and interviews and shows the company, its employees, and the brand in a negative and unprofessional way. This should not be the case.

ne photo shoot with a professional photographer is more affordable than the cost of hiring billboard advertising space for a month, or even taking out a full-page advertisement in a magazine, and yet when newspapers, magazines and online news sources receive press releases citing important industry news, all too often the accompanying image, if there is one, is substandard. A media report by Webdam, a leading digital asset management company in the US, recently highlighted that 75 per cent of media think that all releases should have an image of the subject attached.

that there is no shortage of bad corporate headshots and that people do notice.

Who should get a professional portrait done?

The growth of social media has placed a higher emphasis on online corporate presence. Webdam’s report indicated that, by the end of 2014, internet communication will make up nearly 25 per cent of the entire advertising market. So, online communication and appearance has become as important as in-person appearance, as it has become commonplace for potential clients and decision-makers to view the press releases, company websites, and social media profiles.

Anybody who wants to make a good impression when introducing themselves to clients, whether it be in print or online. Putting in a little bit of extra effort makes a difference.

The mug shot has become common. Executives are often guilty of second rate, low-resolution headshots, usually against a dreary face brick or office wall backdrop. Sometimes it even seems as if it were snapped by a secretary with a camera phone.

Sexy Executives is a tongue-in-cheek collection of forced smiles, bad backgrounds, and generally awkward compositions of some of the world’s corporate headshots. The blog proves

The image has to be recent. You cannot have a photo of yourself from ten years ago. When people meet you, you need to be recognisable. You should be the only one in the photo. I have seen many images where I can tell other people have been cropped off and it looks unprofessional. Your whole face has to be in focus, especially the eyes; otherwise it is just shoddy camerawork. The subject should also be wearing the appropriate clothing. For example, if you are the CEO of a company, you cannot be wearing a T-Shirt, unless you are the CEO of Facebook. The look should match the industry.

This has a negative effect on the business, as it shows its representative in a poor or sloppy light. And that image could have far reaching consequences; reused by others, appear in countless online search results, blogs, and articles. Google recently landed in hot water over questionable corporate photography, for refusing to take down a satirical blog it hosted on their popular Blogger website. The web giant is being sued by a US marketing executive from a prominent legal and financial services firm, who was shocked to find her headshot on the blog, which pokes fun at the executive portrait.

What are the characteristics of a great corporate portrait?

Your head should always be upright, to portray confidence, and a pleasant facial expression makes one seem approachable. The whole idea of having portrait shots done is to give your brand a face that people have met, before they meet you in person. Jessica Marx

Jessica Marx, a professional photographer based in Cape Town, says that the most common problem with portraits is that the pictures are underexposed and very dark. We met with her to discuss the importance of good corporate photography.

How do you ensure people are comfortable when having their portraits done? People are generally quite stiff. A photographer will never get the right picture on the first shot, so we have to take a few before the subject feels more comfortable, sits more naturally and is able to relax.

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How long would you say a photo shoot at the office would take? Usually, it takes about 45 minutes to set up all the equipment properly and do a few test shots with an assistant. This is usually done while the make-up artist gets started on the first group of employees. Once the equipment is set up, taking the headshots doesn’t take very long. I usually spend about 10 to 15 minutes with each employee. How do you take good photos at events? Photography at corporate events is dependent on the environment. The most important thing about event photography is usually to ensure the lighting is correct and to get all the images in focus. I’ve worked with a well-known bank that purchased a relatively expensive camera to use at a corporate event, assuming that it is the camera alone that takes the good quality pictures. Needless to say, the pictures did not turn out well at all.

With the growth in social media, do you think that people are more aware of how they represent themselves online? Definitely. I think people in general are trying to take better pictures. I have friends who take photos on their phones all the time, and the pictures are amazing, mainly because technology is getting better, and photography in general is more accessible. People are certainly becoming more image conscious. We’re living in an era where information is freely available and it is easy to Google your next client before you meet them in person, so that you know exactly who you are meeting.

Jessica can be contacted via her photography studio at www.jessicaellen.co.za.

How did you get started as a photographer? When I was in grade 11, my father worked for a company that gifted him a digital SLR camera when he left. I took a liking to it and borrowed it until it was mine, taking photos of absolutely everything. I studied art direction and ventured into advertising, working extensively on shoots with commercial photographers, mostly taking pictures of food. Why did you get into portraiture? I love taking photos of people. I am a portrait photographer through and through. It is the most rewarding thing to give somebody a photo and have them think they look amazing – to make them feel good about themselves. That is what I love about photography. I don’t get the same reward from shooting landscapes. Why do you think it is important to have a professional take your corporate photos? They say that a picture is worth a thousand words, and this picture could be your first impression. Professional corporate photography of executives, as well as employees, speaks about the individuals as well as the brand, and is a small investment compared to the advantage it offers in building company reputation and image.

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WHY LOOK ANYWHERE ELSE? We’re all different. We think, work and live differently. At Centriq, we see insurance in the same way – differently. It’s this way of looking at you and your clients that makes us a partner you can trust and turn to, whatever your clients’ insurance needs, from assets to liabilities to people. Over the years, we’ve built relationships with leading UMA business partners in our industry that position us to offer each insurance broker and their clients unique solutions provided by dedicated and competent people – that’s the Centriq difference.

news

Survey reveals habits of successful pensioners The results from Sanlam’s fourth annual retirement benchmark survey this year offers insight into the saving habits of 50 affluent pensioners stacked up against a core group of 250 average retiree participants. Participants representing the affluent sector had incomes in excess of R25 000 per month. The core group’s retirement age increased from 59 in 2013 to 60 in 2014, and their average period of contribution increased to 29.8 years. By comparison, results from the affluent group showed approximately 33.2 years of contributions, with individuals both starting formal employment and long-term savings at an earlier age.

PSG Konsult JSE Listing. PSG Konsult chairman Willem Theron and CEO Francois Gouws at the company’s listing on the JSE main board.

PSG Konsult lists on JSE Independent financial services advisory group, PSG Konsult, listed on the main board of the Johannesburg Stock Exchange, with a market cap just over R10 billion. Francois Gouws, CEO of PSG Konsult, said the company is not seeking to raise capital through listing, but hopes that coming to market will raise its profile and also provide shareholders with a liquid, tradable asset within a regulated environment and a market-determined share price. The listing allows PSG Konsult to access capital markets to raise equity capital in the future, when required; to give the general public an opportunity to acquire an equity stake in PSG

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Konsult and share in its potential future success; to enhance PSG Konsult’s ability to implement acquisitions and other transactions, involving the issuing of shares as consideration; to raise PSG Konsult’s profile, to reflect its position as a leading independent financial services group and to incentivise employees and align their interests with those of shareholders through the allocation of options for listed shares. PSG Konsult, a subsidiary of JSE-listed PSG Group, with other subsidiaries including Capitec, Curro Holdings and Zeder Investments, is an independent financial services group with the largest independent advisory network in South Africa operating since 1998.

The number of core group individuals who stopped their retirement contributions at some stage during their employment, through withdrawal at either resignation or retrenchment, increased from 17.1 per cent to 20.8 per cent. Of the individuals who made a withdrawal, 63.5 per cent withdrew their full benefit in cash as opposed to 48.8 per cent taking the benefit in cash in 2013. The cash was used to pay for the rising living expenses for 52.4 per cent of respondents in 2014 compared with 29.4 per cent in 2013. This trend is very different among affluent retirees, with only 12 per cent of respondents indicating that they withdrew from their retirement savings at resignation or retrenchment. The number of core group pensioners receiving financial advice before retirement has dropped slightly from 60 per cent in 2013 to 57.6 per cent in 2014. On average, these pensioners received financial advice 11 years before retirement, whereas, ideally, active members should receive financial advice from much earlier on in their working career. The proportion of general pensioners who received financial advice from their company’s HR office continues to rise. Around 72 per cent of affluent retirees sought financial advice from professional financial advisers.

Nadeson Investments takes slice of RBS Nadeson Investments, led by Hassen Adams, chairman of Grand Parade Investments, has acquired a 25.1 per cent stake in independent insurance and risk specialists Risk Benefit Solutions (RBS), for an undisclosed amount. Grand Parade Investments also owns Burger King SA, and has shareholding in various leisure and gaming entities.

MMI acquires CareCross Life insurer MMI Holdings has acquired CareCross Health Group for an undisclosed amount. According to MMI, the recent acquisition, which includes a majority share in Occupational Care South Africa (OCSA), bolsters the strategy of its other group entities, including Momentum Health, insurer Guardrisk, and Hello Doctor medical advice services, toward affordable access to quality healthcare. The acquisition will provide the current CareCross and OCSA clients with access to Metropolitan Health initiatives, such as an in-pharmacy clinic venture, Hello Doctor services and the Multiply rewards programme. CareCross focuses on delivering affordable healthcare through provider networks, and the company has a national network of around 2 000 general practitioners and 4 000 associated healthcare professionals. Currently, CareCross delivers managed care to around 200 000 medical scheme beneficiaries. OCSA provides workplace health solutions and currently, together with CareCross, provides occupational health benefits to approximately 55 000 workers nationally.

The transaction will result in RBS - other shareholders include Hollard (34 per cent) and RBS management (30.9 per cent) – attaining a level 4 Black Economic Empowerment (BEE) rating. This will position the company to access its target market in the corporate and commercial arena, and contribute to these companies’ BEE scorecards. Nadeson Investments is a private investment holding company which is 95 per cent blackowned. Hassen Adams and Alan Keet, both directors and shareholders of Nadeson Investments, will join the RBS board as nonexecutive directors. RBS has outlined its intention to target smaller brokerages of about 10 staff to become franchises nationally. These agreements could take place either through acquisition, investment or licensing, and would provide brokers with access to RBS specialists and support systems. RBS currently has over 5 000 corporate and commercial clients on its books, and 10 000 personal lines clients.

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GCR affirms Fedhealth’s AA-(ZA) rating Global Credit Ratings (GCR) has affirmed the national scale claims paying ability rating assigned to Fedhealth Medical Scheme of AA-(ZA); with the outlook accorded as stable. Marc Chadwick, Head of the insurance ratings sector at GCR, says, “The scheme benefits from a long-standing relationship with its administrator, Medscheme, which continues to provide administrative and operational support on a day-to-day basis.”

“This notwithstanding, key credit fundamentals of the scheme remain sound and are supportive of the current rating.” As such, Chadwick says the generation of consecutive net surpluses over the review period continues to underpin.

Poor outlook for construction sector

www.globecreative.co.za

He says the revision in the rating outlook from ‘Positive’ to ‘Stable’ was premised on a notable deterioration in the net healthcare result to a R55 million deficit in F13 (F12: R91m net surplus), with a further net healthcare deficit forecast for F14.

Falling growth in South African construction activity has left roughly 60 per cent of construction companies surveyed dissatisfied with business conditions in the second quarter of 2014, the latest First National Bank-Bureau for Economic Research building confidence index reveals. The index suggests that weakness in the sector is underpinned by the falling activity levels of main contractors in both residential and non-residential projects. This resulted in overall confidence plummeting 11 index points to 41, down from 52 index points out of a possible 100 in the first quarter. FNB property economist, John Loos, said a further decline in residential building activity in South Africa was expected. But the slowdown in non-residential activity, which up until now has lifted the sector, is surprising and will weigh on the outlook. Despite the fall in activity, overall profitability has improved – especially in the residential sector – possibly due to firms increasing their margins. Given the continued weakness in building demand, Loos suggested this may not be sustainable. Confidence in all the sub-sectors of the index was lower, with manufacturers of building material registering the biggest fall.

Identity theft increasing in South Africa

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and the figure is expected to continue to soar this year. The data showed that 1 370 cases had been reported by the end of April 2014.

Identity theft is rising in South Africa. It increased 16 per cent in 2013 and is draining more than R1 billion a year from the economy, according to statistics released by the Southern African Fraud Prevention Service (SAFPS).

Identity fraud has become a nuisance as the majority of consumers prefer credit to cash. SAFPS executive directo,r Carol McLoughlin, said the trend was worrying, and she advised businesses and consumers to be more prudent with personal information. The increase in digital services might be instrumental in the rise of identity theft, she said.

The category of crime surged from 3 327 cases in 2012 to 3 873 last year,

She urged firms to protect digital personal details of consumers.

Z T a fi a n b r

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Zenith For The Accomplished (Pty) Ltd, partnered by The Hollard Insurance Company Limited, manage and design insurance products for an elect market of financially accomplished individuals. Our products are augmented by their distribution through an elect broker network who presents after sales advice to policy holders, based on the content of a comprehensive inventory and risk appraisal obtained from independent industry leaders.

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109 5 CR Zenith For The Accomplished (Pty) Ltd is a licensed Financial Services Provider, Underwritten by The Hollard Insurance Co. Ltd, an authorised Financial Services Provider. FSB Number: 36469

newappointments MMI Holdings MMI Holdings Limited (MMI) has announced the appointment of Herman Schoeman, managing director of recently acquired Guardrisk, to the group’s executive Herman Schoeman committee as CEO of the corporate and public sector business. Schoeman will join MMI’s restructured executive committee, to align with the group’s new client-centric business model. Schoeman, who has extensive experience in the financial services industry, joined Guardrisk in June 1999 as general manager and was appointed managing director in August 2002. Prior to joining Guardrisk, Schoeman spent 10 years at the Financial Services Board as a financial analyst for the insurance department. He has a BCom degree and an MBA from the University of Pretoria.

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Marsh Africa

working for insurance companies like Hollard and Absa in general management.

Audrey Obasogie, current senior HR manager for South Africa, has been appointed to the Marsh SA executive committee. Obasogie started her career in the Audrey Obasogie banking industry where she gained valuable experience in various positions from HR consultant, employee wellness manager, transformation manager and HR manager, before joining Alexander Forbes in 2009 as senior HR manager. Dan Moeti has been appointed as the head of sales in South Africa, and is responsible for all corporate, commercial and consulting new business at Marsh South Africa, and is a member of executive management (EXCO). He was formerly business development executive at Marsh Africa and has over 18 years’ experience in the insurance sector having gained underwriting experience

Dan Moeti

Prabashni Naidoo

Prabashni Naidoo has been appointed as head of legal for Marsh Africa. Prabashni is responsible for all legal matters across the region, including mergers and acquisitions, regulatory, data governance, employment law, litigation and commercial agreements.

Having qualified as an attorney in 2004, Naidoo was a practicing attorney until 2009 when she joined Regent as senior legal counsel.

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news international

Zambia MTN, Hollard partner in Zambia

Hollard Life Zambia has announced a new partnership with MTN Zambia to bring a new insurance product to the Zambian market. “We are thrilled to be able to partner with a company of the stature of MTN to bring this new product to the market,” comments Hollard Life Zambia CEO, Ian Malilwe, adding that the partnership with MTN Zambia is exciting, given the telecom giant’s brand strength and increasing traction in Zambia.

China Drunk insurance: China cashes in on World Cup debauchery

The 2014 World Cup in Brazil may have been on the other side of the earth from China, but that didn’t mean the country’s insurers didn’t find quirky new ways to cash in on the festivities. Online insurance company Zhong An, provided an innovative range of products such as ‘drunk insurance’ and ‘football hooligan insurance’, according to Chinese media reports. The drunk insurance policy covered the medical costs of any fan who became too intoxicated during the revelry, while football hooligan insurance covered accidents, and “claims can be made related to disability or death incurred, with part of the medical costs covered.” Another offering was ‘disappointment insurance’, offered by Ancheng Insurance on

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China’s eBay-like website, Taobao. Under the promotion, supporters of Argentina, France, Germany, Holland, Italy, Portugal, Spain and hosts Brazil could purchase plans covering them for compensation of roughly R60 in the event their team was eliminated from the tournament. However, Chinese fans that rooted for England were excluded from the scheme on the grounds that the team was almost certain to be eliminated.

The product, called MTN EduSure, brings affordable insurance within reach of everyone. MTN provides the transactional platform and the distribution capability. The policy requires no medical examination and is purchased using a cellphone. Premiums are deducted from an MTN Mobile Money account. The policy pays out an amount on the death of a main insured person or that person’s spouse. That amount may then be used for the current or future educational costs of the insured person’s children. The partnership is optimistic about the offerings and expects to generate a significant number of sales. Hollard acts as the underwriter for the insurance product, provides policy administration support, and handles the claims administration while MTN’s extensive branch and digital network will serve as the distribution channel through which customers purchase the insurance. In the medium-term, the roll-out of additional products, including other life insurance, is expected.

United Kingdom Rapid jump in motor fraud

‘Crash for cash’ car insurance scams rose by 51 per cent last year, according to one of the UK’s biggest motor insurers. Aviva, which insures one in 10 of the cars in the UK, detected about 820 ‘induced accidents’ in 2013. These faked accidents led to around 2 200 fraudulent claims for personal injury, according to the insurer. Typically, accidents are caused deliberately by syndicates who put in claims for whiplash compensation. The insurer reports that the number of suspicious accidents is likely to be much higher than the hundreds its fraud team has discovered. The company is dealing with more than 6,000 suspicious injury claims of various kinds linked to known fraud rings.

Nigeria Guinea Insurance gets certification to insure oil, gas businesses

The Nigerian Petroleum Exchange (NIPEX) has certified Guinea Insurance Plc to undertake oil and gas businesses. “The NIPEX certificate affirms the company as a viable player in the industry as well as attests to its capacity to take on mega oil and gas business,” said team leader or corporate services, Ufot Hanson, in a statement. “This is as a result of its strategic re-engineering initiatives which are beginning to yield results.” This comes as the company rejoins the Africa Insurance Organisation (AIO) at its just concluded 41st General Assembly. The statement said that rejoining AIO would avail the company the opportunity to subscribe to the African Oil & Gas and Aviation pool. Being a full AIO member will give the company an opportunity to participate in its Energy and Aviation pools in Africa.

global AIG launches global mid-market commercial property policy

breakdown, crisis management, and cyber, with additional property coverage extensions available.

American International Group (AIG) announced the launch of a new line of multinational commercial property products and services for mid-sized businesses confronting global risk exposures.

The policy is available to mid-sized businesses in Australia, Canada, Europe, South Africa and the United States, with plans to expand the policy offering to businesses in other countries later in 2014.

The cover will include expanded coverage, loss prevention engineering, and risk management solutions.

“The complexities facing middle market companies operating globally do not have to extend to insurance,” says Carol Barton, head of product strategy for global property at AIG. “Our offering is designed to help clients maintain their business continuity by providing outstanding coverage and contract certainty, as well as services modeled on those provided to the largest multinational organisations.”

“Middle market companies are shifting their focus from deep cost cuts to strategic opportunities for growth, including global expansion,” says George Stratts, president of global property at AIG. “With the property performance series, AIG is meeting the needs of our middle market customers wherever they go.” The property performance policy is an all-risk property damage and business interruption policy that can offer a company cover for all operating locations and property exposures, and can include environmental clean-up, equipment

As part of the new property performance series, AIG is also scheduled to roll out several industryfocused policy forms tailored to provide coverage enhancements for clients in different industry segments, including healthcare, higher education, manufacturing, real estate and retail.

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events

PSG Charity Golf Day

A cheque of R56 730 was handed over to the current president of the PE Rotary Club Andrew Binning (left) and incoming president Karen Hermanus (centre).

In June, PSG hosted their annual charity golf day in aid of the Rotary Club of Port Elizabeth, the third largest club in South Africa. The Rotary Foundation helps fund humanitarian activities from local service projects to global initiatives. Twenty-five foursomes teed off on a very cold and windy morning at Humewood Golf Club in Port Elizabeth. Reviews from the players during the course of the day proved to be very positive. PSG managed to raise a total of R56 730. This was obtained through various auction items that were enthusiastically bid for as well as raffle tickets that were sold at R50 each. A Hole-in-One prize of R100 000 (R50 000 to the winner and R50 000 to the Rotary Club) was, unfortunately, not scooped up. The cheque was presented to the current president of the Rotary Club of Port Elizabeth, Andrew Binning, and incoming president Karen Hermanus. Organisers Estelle Pieterse (PSG regional manager) and Riana Van Der Merwe would like to thank all their advertisers and sponsors for their generosity and support. “Watching the camaraderie during the day and at the prize giving dinner, together with the remarkable donation we were able to hand over to rotary, made us realise that – despite the winter chill – the day had been a warm and friendly success which could not have been done on our own,” Pieterse says.

Lancet and Hannover Re host first insurance seminar Hannover Re and Lancet Laboratories recently hosted an insurance seminar at the Protea Hotel Balalaika, Sandton. The event aimed to create an open dialogue and a transfer of much-needed industry expertise. The event was well attended from industry stakeholders such as Discovery, Old Mutual and Altrisk to name but a few. The speakers, Dr Nico van Zyl (Hannover), Dr Chessman Wekwete (Hannover), Dr David Rambau (Lancet) and Prof. Eftyhia Vardas (Lancet) engaged the audience with very informative topics around insurance. The aim of the insurance seminar was to create dialogue and enhance relationships amongst the insurance role players.

IIG mid-winter rave Untz-untz-untz! The Insurance Institute of Gauteng (IIG) hosted their mid-winter rave at Movida in Rivonia Crossing, Johannesburg in June. With colourful outfits, glow sticks and peculiar dance moves, it would seem that everyone had an absolute blast. Sponsors of the event included AIG, Allianz, Global Choices, Hollard, PG Glass, Stalker Hutchinson Admiral and Sasria.

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With the much-anticipated RISKSA Regatta less than three months away, the South African financial services industry is gearing up for yet another spectacular sailing showdown in Cape Town. And, judging from the amount of fun had last year, this yearâ&#x20AC;&#x2122;s event is shaping up to be another delight. For first-timers, sailing can be a bit intimidating. We give you a proper rundown of a few aspect associated with sail racing thatâ&#x20AC;&#x2122;ll blow your fellow members out of the water. 158 8 2

Things first-time racers should know It’s often taken for granted, but many spectators are completely clueless when it comes to exactly how a sailboat race works. It’s actually very similar to that of a runner’s track race. There’s a start, a finish and buoy marks floating on the ‘track’. There are however, a few major differences that make a sailboat race very different from a track race. The starting gun Sailboats don’t have any type of brakes or the ability to stand still, so while there is a start line that each boat must cross, they cannot all line up and simply wait around for a gun to start the race. Instead, there is a five minute countdown (sometimes it can be three or four minutes, but five is the standard) where the boats will sail around, check the breeze direction, look for puffs of wind seen by ripples on the water, and come up with a general game plan of where they want to be on the start line when the gun goes off. As time dwindles down to under a minute, each sailboat starts to approach the line in hopes of being as close as possible but not over when the starting gun goes off. (If a boat is over the line when the gun goes off, they are notified via flags and sound signals that they must come back completely under the line before they have officially started). (Source: www.newtosailing.com; The Sailing Race, Rupert Holmes) Handicap scoring Often, you’ll hear the following at a Regatta: “racers times will be adjusted for boat differences using the Portsmouth system.” This means that even a slower boat has a fair chance of winning against a faster boat if the skipper of the slow boat sails a better race. To score a race using Portsmouth, first you look up the handicap factor, called the D-PN. A smaller D-PN indicates a faster boat and the rating number essentially tells you what percentage faster, or slower, a particular boat is, relative to a baseline boat rated at 100. For example, a boat with a D-PN of 90 that finishes a race in 60 minutes will get a corrected time of 66.67, and a boat with a rating of 95 that finishes in 63 minutes will get a corrected time of 66.32. The slower boat wins this race even though it crossed the finish line three minutes later. (Source: Racing Rules of Sailing – Scoring Sailboat Races, Jay Harrell) Marks The second major difference is how each boat goes around the course. The first mark will most often be directly upwind, so one can just look in the direction of the breeze and see the first mark that boats will round. Because a sail boat cannot go directly into the wind, it needs to zigzag or ‘tack’ back and forth upwind to the first mark. Marks are typically rounded to ‘port’ (on the left side of the boat) unless otherwise noted. After that, they will head to the next mark of the course until eventually they have rounded all the marks completing a lap of the race course. The Race Committee dictates how many laps and what type of course is to be sailed before they begin the starting sequence. The combination of a good start, strong race course tactics, and simply making the boat move as fast as possible will get a competitor to the front of the fleet and winning the race. (Source: Racing Basics, Mark Johnson)

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Testimonials from last year’s participants Shannon Whittle, PG Glass “Wow! Wow! Wow! What an experience! The thrill of the race, the energy of the ocean and the view of our majestic wonder of the world from the deck of a racing yacht. Table Mountain and Cape Town are just something to behold from afar – a rare privilege indeed. Oh, and let’s not forget the agony afterwards once the adrenalin abates. But hey, you only live once and this was most certainly a bucket list experience that cannot be missed. Be a part of the 2014 event!” Clodagh Knott, Hollard Insurance “From start to finish, it was an action packed weekend, from catching a glimpse of the competing teams at the Captains Cocktail party, to the adrenalin pumping racing that unfolded at the actual Regatta on the Saturday. As a first time entrant, words can’t describe both the fear and then excitement as we got used to the motions and how we had to work our way around the yacht to assist the skipper and crew to sail. Flapping of sails in the wind, sea spray on your face – it was a four-hour race to the finish that left most bodies tired … but certainly with stories to relay as the evening unfolded at the awards ceremony.”

Race signals Sail racing possesses an array of colourful flag signals, which can mean a variety of things. Familiarise yourself with some examples below: The red and white flag is a postponement signal.

This flag indicates that all races that have started are abandoned. Ashore: A notice to competitors has been posted. Afloat: Come within hailing distance or follow this boat.

O B t i

The object displaying this signal replaces a missing mark.

Wear a personal flotation device.

The blue flag or shape is to indicate that this race committee boat is in position at the finishing line.

Weather forecast

Sailing terms

It’s rather far in advance for an accurate weather forecast, but according to Accuweather.com, the weekend of 25 – 26 October 2014 looks great for sailboat racing. With an average high of 22°C and average low of 11°C predicted, temperatures are nice and balmy as Cape Town gradually exits its cold and rainy winter season. The maximum precipitation over the last five years was the 1 mm experienced two years ago, so hopefully, we don’t have to worry about rain. But this is Cape Town afterall (four seasons in a day) and anything can happen.

Here are some useful definitions you might want to know according to The Racing Rules of Sailing by the ISAF (International Sailing Federation): Clear astern and clear ahead One boat is clear astern from another when its hull and equipment are behind a line or a beam from the aftermost point of the other boat’s hull and equipment, basically meaning that one boat is clear ahead of another. When they overlap neither is clear astern. The term always apply to boats on the same track and not to boats on opposite tracks, unless both boats are sailing more than ninety degrees from the true wind.

• • • • • • •

Leeward and windward A boat’s windward side is the side facing the oncoming wind. The leeward side is the opposite side. However, when sailing by the lee or directly downwind, her leeward side is the side on which her mainsail lies. Fetching A boat is fetching a mark when she is in a position to pass to windward of it and leave it on the required side without changing tack. Running rigging This includes all of the moving lines, such as sheets and halyards, used in the setting and trimming of sails.

www.risksaregatta.co.za

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Centre of lateral resistance (CLR) The underwater centre of pressure about which a boat pivots when changing course.

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Shooting for

high returns Dominic Uys

It isn’t often that you encounter a piece of valuable investment art that can double as home security. Classic English shotguns offer a high return on investment but that doesn’t mean they should be confined to display cases.

ake one look at a stunningly engraved James Purdey & Sons 12-bore side-by-side shotgun and you may believe that it belongs in a gallery but these sturdy, well balanced arms have a reputation for being some of the best sporting guns ever manufactured. “These are guns to be used and enjoyed. Even the most ornate Purdeys with top-end gold work are still used for shooting and we very much regard our guns to be useable high-end artworks,” head of gun sales at James Purdey and Sons, Ian Andrews says. “Properly maintained guns also last a really long time, even with regular use. I have seen 120 year-old guns that fire just as well now as they did when they were made,” he adds. Bennie Laubscher, director of B.W. Laubscher & Associates adds that the majority of his

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clients are also shooting enthusiasts, who often take these investments out for hunts or clay shoots, in spite of their age. “A well maintained gun can withstand many years of regular use without devaluing at all and I think it is important to understand that this is one investment that you can enjoy for as long as you own it,” Laubscher says. “On the second-hand market you can get hold of a shotgun that was manufactured 70 or 80 years ago. Their barrels and firing mechanisms are usually in immaculate condition and you could reasonably expect to be able to take these out for shooting. In fact, many of the Purdeys in the secondhand market right now, were made somewhere between the First and Second World War, and they are still in fantastic condition for normal sport use,” Laubscher says.

Considered one of South Africa’s foremost Purdey experts, Laubscher is a dealer in high-end and rare firearms, as well as an accomplished gunsmith. While returns on investment are steady on the international market, their growth is not generally considered massive, with investors generally seeing their guns’ value increase by around 3-5 per cent a year. The South African market can be a completely different experience, however. Laubscher contends that the market for high-end classic shotguns has a lot of potential in South Africa, with some buyers seeing their investments grow substantially. “I have seen the value of shotguns grow by 30 or 40 per cent, in some cases as much as 100 per cent over the course of a year. That is not to say that every high-end shotgun will increase in value. I also wouldn’t necessarily recommend

every Purdey that makes its way onto the market to a client as an investment. Not just shotguns, but rifles too fetch a good price in the market. I recently sold a Purdey small calibre double rifle for R850 000. It naturally depends on the exchange rate and then it absolutely depends on what the collectors in the market are looking for at that moment,” Laubscher says. “It is quite an exclusive market and demand is always going to outweigh the supply. This has done a lot for the guns’ investment value. When South African collectors want to sell some of the guns in their collections, a buyer can usually be found very quickly,” he adds. Buying right however, is the tricky part. “There aren’t many people who really know what to look for in a gun. In South Africa I think there are about two other real experts. The engraving is one thing, certainly, but there are also finer things to look at such as the quality of the firing mechanisms. Most people aren’t able to identify these fine points but that is where the trust-relationship that I built with my clients is important, when I sell them a gun that I consider to be a good investment,” Laubscher says.

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Bringing in the South African expert Laubscher started in high-end guns 25 years ago, when he was forced to make a career change from the farming business. Already a gunsmith and classic gun enthusiast, Laubscher soon realised that his hobby could be turned into a new source of income. Since then, Laubscher has established himself as the go-to guy for those looking for a collector’s shotgun in the second-hand market. “It is a trade that relies heavily on longstanding and well maintained relationships with the key people in the industry. It has taken me the better part of three decades to build those relationships and I can tell you that newcomers have a really hard time breaking into this business,” Laubscher explains. Importing a gun into the country has quite a few steps, as one would imagine. The conventional method of importing is to apply for an import permit into South Africa first. This may take as little as three weeks but if something is amiss with the documentation, the South African authorities could keep one waiting for weeks before alerting them to the problem. Once a permit is granted, this documentation needs to be submitted to the UK authorities, which then extends an export permit for the gun within another two or three weeks. Laubscher’s years in the industry plays to his advantage on this front. “I have a good relationship with South African customs and I make sure that the documentation on their side is in order. In addition, I have an open export licence in England, meaning that I no longer need to do any further paperwork once South Africa has granted the import licence. One of the advantages of being in the game this long,” he says. This shaves more time and effort off the import process and, to our knowledge, Laubscher is one of a very select group of people to possess an open export licence in the UK. From there the weapon falls under Laubscher’s dealership licence and the gun’s new owner can apply for his gun licence once the weapon is safely in Laubscher’s store in South Africa.

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Building your own investment piece Getting your hands on a good second-hand Purdey can be difficult, according to Laubscher. “You have to keep your eyes open for the right pieces and there will always be more buyers than sellers out there,” he says. He adds that the vintage market is not the only opportunity for investment. “There are indeed a lot of buyers who are interested in the vintage guns but the market for new Purdeys is just as big,” he says. The reason is not hard to see. Acquiring a new Purdey involves visiting the company’s premises at Audley House in London. After choosing your shotgun and engraving style, there is then also

a waiting period of approximately two years, while the gun is manufactured. This adds to the gun’s rarity value, according to Andrews. “You can opt for the traditional engraving, which is very tight scrollwork intertwined with very tight rose engraving. On the other hand, you can go to the other extreme, which is high-end gold work and bespoke engraving to create a truly unique piece of art,” he states. All in all, a new shotgun from the company could cost around £40 000, with bespoke engraving potentially costing in the range of an extra £25 000 to £80 000. The re-sell value of the gun once it has been manufactured could once again increase by around 30 per cent in South Africa, according to Laubscher.

Andrews does have one piece of advice for those who want to build their own Purdeys. “What you don’t want to do is over-personalise the engraving. If, for instance you had a rare breed of hunting dog and you engrave the dog’s name on the gun, you would have a difficult time in the second-hand market finding a buyer while maintaining its value,” Andrews says. “My suggestion is to either go for your classic Purdey style that will never go out of fashion in terms of its engraving style, or if you really want to go the other way, opt for high-end gold work so that you can really produce a collector’s piece. They are two extremes. One is a design that has a large target audience, the other is a smaller target audience that is incredibly refined,” he imparts.

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An Authorised Financial Services Provider

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Chevy Trailblazer

2.8 LTZ

In our quest to find the perfect broker wheels (and ensure that RISKSA is the only magazine you’ll ever need to read) we continue this series of driver impressions. This month we test the Chevrolet Trailblazer. This big Chevy is really something on the road. The driving position is commanding, allowing an unhindered view of the traffic ahead. Andy Mark

he space inside the cabin is cavernous. Accommodation varies from two to seven seats with the rear two forwardfacing seats big enough for all but the largest adult. In LTZ 4x4 guise, the Trailblazer sports a BMW-esque central control knob to dial in four-by low range or four-by high range. Not quite on the fly though, the vehicle needs to slow down to under 5 km/h to complete the procedure. Our test vehicle arrived, fortuitously, just before the 16 June long weekend, and I used the opportunity to load up the family and head off to our farm in the Klein Karoo – where we

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have just the sort of tracks and roads to put the car through its paces. We left Cape Town in the middle of a deluge in afternoon traffic. An efficient demister complemented the LTZ’s reassuring ride height and wide-bodied stance on the slick roads. The traffic thinned considerably after the Stellenbosch turn-off on the N1, and after naughtily connecting my iPhone to the Bluetooth in-car audio system while driving, I settled down to enjoy all 500 Nm of torque the 2.8 diesel had to offer, and subjected the family to my best road-tripping iTunes playlist.

With all the back seat room available, my daughters were able to occupy themselves without encroaching into each others personal space too often – which made for a much more relaxed drive than we are used to. Separate rear air conditioning and reverse sensors with camera, add to a pretty complete spec list for the big four-by.

The problem with testing a vehicle that has been in a test fleet for some time, is that occasionally the vehicle arrives (with the greatest respect to my fellow motoring scribes) a little, shall we say, hammered? Which is actually a good thing. Ten thousand kilometre’s of hell by motoring journalists will often be a good indicator of how a car will hold up to abuse by kids, family and that camping holiday in Namibia. The Chevy had an annoying wheel balance wobble right on the 120 km/h mark – probably as a result of some previous journalists off-road work knocking the wheels out of balance, and certainly no reflection of the car’s durability. The test vehicle also had one of the straps on the rear-most seats missing. The strap is used to disengage the seat back from its folded position and without it we were unable to lift the seat at all. In the main, the build quality and trim level is adequate for this sector, but the Chevy is certainly no Land Rover in terms of driver accoutrements and trim levels.

The leather seats and plastics are easy enough to wipe down and keep clean though, and despite evidence of its hard life as a test car, the LTZ seemed to be holding up brilliantly. My only disappointment really came on the hills between Ronnie’s Sex Shop on the R62 and Calitzdorp, where, even with 500 Nm at its disposal, the auto box just couldn’t seem to find the right ratio for the incline and hunted up and down the five speed box, looking for the right cogs. Once we were on the farm the LTZ came into its own and shrugged off everything I threw at her. The track behind the farmhouse, which is littered with sizeable boulders and usually elicits shrieks of delight (or terror) from my girls every time we drive it in my Series II Land Rover game viewer, this time hardly elicited a response from them, as the Chevy’s descent

control and decent ride-height made short work of the obstacles. In summary, this is a very capable family car. Big and imposing enough to drive to the FIA awards or industry golf day without looking out of place amongst more expensive German SUV’s. At a shade over R500 000 in test car trim, the difference between the LTZ and lets say an X5 or a Land Rover Disco, will save you enough to put down a deposit on that little place in the country you’ve always dreamed of, so you’ll have somewhere to drive the LTZ to on weekends. Your clients are also not going to wonder about the amount of commission you earn on their policies in the way they might if you had to rock up to their offices in, say, a Porsche Cayenne. If you are looking for a capable 4x4 SUV, you would do well to put the Chevy through its paces after you’ve driven the Toyota Fortuner and the Ford Everest – its two rivals in the car-on-a-bakkieframe segment. I have a feeling you won't be disappointed.

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Dif fer ent

talents Three newly launched Android smartphones find their niche as we put them to the test.

Dominic Uys

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ew smartphones are unveiled each month, and every year more brands join the party with handsets of their own. In spite of what the die-hard fans would have you believe, the iPhone is not the only brand worth buying anymore. To prove the point, RISKSA tested three of the newest smartphones on the market: the waterproof Sony Xperia Z2, the massive Hisense MAXE X1, and the malleable LG G Flex. All three of these handsets run the Android 4.4 operating system, putting them on equal footing in terms of software features. How these units were put together is another story altogether and, as RISKSA found out, each has a strength of its own.

Picture perfect The widely-publicised waterproof Sony Z2 has found a market with those of us who have a knack for constantly dropping a phone into the nearest body of water, be it the bathtub, swimming pool or toilet. One feature that stood out was the quality of the camera and screen. The 20.7 megapixel camera is supported by a number of software features, among others a superior auto function that takes great pictures in just about any light setting. The quality of recorded video also outperforms the other two competitors, capable of recording 2160 pixel video.

Specifications: Sony Xperia Z2 Sim

Micro SIM

Dimensions

146.8 x 73.3 x 8.2 mm

Weight

163 g

Display

1080 x 1920 pixels, 5.2 inches Full HD

Sound

Stereo

Memory

16 GB internal storage, 3 GB RAM and a micro SD slot

CPU

Qualcomm Snapdragon 801 Quad-core 2.3 GHz Krait 400

Communication

GPRS, EDGE, WLAN, Bluetooth, microUSB v2.0, Near Field Communication

Camera

Primary: 20.7 MP, 5248 x 3936 pixels, autofocus, LED and flash Secondary: 2.2 MP, 1080p@30fps Video: 2160p at 30fps, 1080p at 60fps, 720p at 120fps,

Battery

Li-Ion 3200 mAh battery, 690 hours standby time, and 15 hours talk time.

The 3 Gigabyte memory crammed into this phone comes to the fore when snapping these high resolution pictures and the screen resolution is up there with the best weâ&#x20AC;&#x2122;ve seen. The Smart Connect option allows the user to connect with wireless multi-media devices such as TV screens or data projectors, and the phone software supports Microsoft Word, PowerPoint, Adobe and Excel files. Once again the extra bit of memory means that documents and applications load with lightning speed. The voice recorder leaves much to be desired, and the voice quality is not the best of the lot. Working on documents is comfortable but the display is just too small to make typing long documents or altering Excel sheet an easy experience. Though it is quite heavy for its size, the handset has a sturdy design and fits in hand quite comfortably. The Z2 sells for R11 500 putting it in the same price range as the Samsung Galaxy Note and the iPhone 5.

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Forever young At first glance, the LG G Flex seems bewildering. The slightly curved shape of the handset appears illogical and handling the phone for the first time feels somewhat strange. One does get used to the feel nonetheless, and the phone’s software and camera are on par with the X1. One of the Flex’s main marketing points has been the claim that watching video on the curved screen is more immersive. This has not been the case for us though, and watching a video still feels as immersive as six inches of display ever gets.

The back cover also consists of a self-healing plastic. Light scratches and scuffs from keys in your pocket or dropping the phone disappear within minutes, and the process can be accelerated by rubbing the phone or holding it close to one’s body to heat up. Deeper scratches don’t disappear completely, but they certainly fade substantially over a matter of days. The Flex may not have impressed us with its other features, but the fact that it will always manage to stay pretty is a plus for those who want to keep up appearances.

Specifications: LG G Flex

Typing also feels strange at first, especially when the screen is turned horizontally. The keyboard splits and snaps to either side of the display, allowing the user to type with his thumbs while holding the phone. It still takes some getting used to and one should expect to make a lot of typing errors at first. The Flex’s true talent is its durability. The handset is flexible and the phone can be straightened out completely, returning to its curved shape once released. Along with this, even when sat or stepped on accidentally, the touch screen does not crack accidentally.

Sim

Micro SIM

Dimensions

160.5 x 81.6 x 7.9 mm

Weight

177 g

Display

1280 x 720, 6.0 Inches curved display

Sound

Stereo

Memory

32 GB internal storage, 2GB RAM

CPU

Qualcomm Snapdragon 800 2.26GHz Quad

Communication

MicroUSB, Bluetooth, HDMI, Near Field Communication, Wi-Fi, GPRS, EDGE

Camera

Primary: 13 MP Full HD, autofocus, LED and flash Secondary: 2.4 MP HD Video: 1080p

Battery

3,500 mAh Curved Li-Polymer

The big one Standing tall at 192.2 millimetres and a width of 95.6 millimetres, this is one of the largest phablets (smartphone tablets) that we have seen so far. It is hailed as one of the more affordable handsets in its class, retailing for R4999. Ironically, while it may fit one’s pocket in the

Specifications: Hisense MAXE X1

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Sim

Micro SIM

Dimensions

192.2 x 95.6 x 9.2 mm

Weight

180 g

Display

1920 x 1080 pixels, 6.8-inch Full HD

Sound

Stereo front speakers, 5.1 Dolby virtual surround

Memory

16 GB internal storage, 2 GB RAM and a micro SD slot

CPU

Qualcomm Snapdragon 800 Quad-core 2.3 GHz

Communication

4G, WiFi, Bluetooth, Near Field Communication

Camera

Primary: 13 MP Secondary: 5 MP Video: 1080p

Battery

3,900mAh battery

figurative sense, finding a literal pocket that the handset fits into comfortably, is less simple. The X1 is more suited to be carried in one’s briefcase, and as a phone, its size makes it uncomfortable both for single-handed use and making voice calls. The news is not all bad though. The X1 performs truly well in its role as a tablet. To start, each of these three phones has decent stereo external speakers installed, but it is only the X1 that truly blows you away. The powerful external speakers are backed up by noise cancelling microphones and 5.1 Dolby virtual surround sound. Coupled with the 6.8 inch display, playing video or audio clips at client meetings is made easy. The handset’s size also makes it ideal for typing longer documents, working on spreadsheets or using the internet. The voice recorder works particularly well, capturing dialogue clearly from 2meters away. This may not be a typical, everyday phone, but for working while traveling or doing presentations, the X1 does earn some respect.

AIRPORT NAVIGATION 101

King Shaka A Anton Pretorius

Got time to kill? The airport can be a sanctuary of shops, activities and leisure facilities. But what if youâ&#x20AC;&#x2122;re totally unaccustomed to the going-ons of an international airport? While in-between flights may mean lengthy waiting periods for passengers, there are several things to do at an airport that can keep you entertained. Maybe a strong cup of joe, a quick shower, a place to unwind or pick up a gift for your loved one. Hollardâ&#x20AC;&#x2122;s Zuriel Naiker points out some cool facilities even the experienced traveller may not know about.

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Aloha! For a healthy slice of life and a taste of Hawaii, Naiker recommends you sink your teeth into the delicious Magma Wrap from Kauai. Its combination of mozzarella, cheddar, rice, beans, tomato, sweet chilli sauce, fresh salsa, chicken and spring onion and is a great way to silence those hunger groans after a long flight. For the healthy at heart, Naiker recommends a chicken Caesar salad. “They’re situated in the food court on the ground floor and deliver consistently delicious meals. I always make sure I grab a bite to eat there,” Naiker says.

Life in the SLOW lounge

Most regular travellers are all familiar with our international airports’ SLOW Lounges – a sanctuary for weary feet, tired bodies or those who want to catch up on work or just enjoy a quiet moment while waiting between flights. The King Shaka Airport’s SLOW Lounge is your study, board-room, dining room, library, mail room, shower or even your sit-in-the-dark-andthink-room – and it feels just like home. “The SLOW Lounge has a decent wine and spirits selection – great to just sit, enjoy and unwind after a long day of working and flying. It’s the best lounge by far from a comfort perspective. It gets pretty busy in the mornings and evenings around 17h00,” Naiker explains.

a Airport Coffee snob

There are a couple of things a coffee snob would understand. Good coffee isn’t merely a hot beverage on the morning menu, it's a necessity. Naiker reckons that the best place for a proper cup of coffee at Durban’s King Shaka International Airport, is the Woolworths Coffee Shop, located on the arrivals level. “It’s the best place to grab a quick and yummy espresso or cappuccino before you leave or as you arrive,” he says.

Travelling bookworms

You just found out that your flight to Cape Town is delayed by an hour. What to do? When you’ve got time to kill, there is no better way to while away the time than to get stuck into a really good book. Traipse the world from the comfort of your armchair or get lost in some exotic Mediterranean destination. For the travelling bookworms, King Shaka has a wide selection of book and magazine stores to keep you entertained while you wait for your flight. “There is a great selection of pre-flight magazines and books for your trip (or holiday) at Exclusive Books, of which there are two outlets available, one on the land side and the other on the air side,” he comments.

A quiet spot

The hustle and the bustle of a busy international airport can take its toll on travellers. And without a lounge access card (and plenty of time to burn in between flights), another great suggestion from Naiker is to, “grab a bag of sweets from Cosmic Candy, a magazine from Exclusive Books

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and head to the far right side of the airport, towards gate A13. There is a quiet spot at the end of the gates with a great view over the runway. Hardly anyone ever bothers you here, and you can sit quietly, gather your thoughts and catch up on some emails or work.”

Children of the airport

Travelling with kids can be a challenge. Travelling parents are always on the prowl for kid-friendly facilities or play areas. While there isn’t really any at King Shaka International Airport, the Spur Restaurant, located outside on the landside is the perfect place to take your kids. Every parent needs a break and Spur’s massive children’s entertainment area has enough to keep the young ones busy for hours while you enjoy your meal or your partner’s

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toys, books and all the latest electronics and gadgets. Fantastic gift shops provide shoppers ample opportunity to hunt for that unique souvenir or special gift to take home. Naiker suggests Woolworths, Exclusive Books and the Nike Store (all before you pass through security) as perfect places to pick up gifts for your loved ones.

Bottoms up!

After a long day of meetings, or to keep the holiday spirits alive, head for the Stables Wine Estate bar and cellar on the land side opposite the Exclusive Books store, next to NWJ Jewellery, for an authentic wine tasting or a nice bottle of champers to celebrate. Stables’ professional team, led by Rupert Spence from Sphere Architects, has transformed the 50 m² space into an inviting gathering spot for travellers. “The food and wine offerings here are amazing. Created by local cuisine kings, Stables has a wide selection of choice on their tasting menus, paired to complement the wines,” says Naiker.

company. If they’re bored with Spur and you have enough time, take them to uShaka Marine World just down the road where they can marvel at the myriad of marine life on display. If you don’t have any kids, you can grab a proper meal (like some mouth-watering sushi) at the Cape Town Fish Market outside the terminal building.

Charge your batteries

It’s common knowledge that cellphone chargers top the list of things that are most frequently left behind at home when you’re travelling – which is exactly why cellphone accessory retails make such a killing at airports (or anywhere for that matter). “Cellphone accessories and airtime are ridiculously priced at the airport, so head down to any stall in Umhlanga and you’ll save hundreds of Rands on a mobile phone charger,” Naiker suggests.

Shop till you drop

It’s customary practice to get the family members a gift from your travels. The airport is a perfect place to pick up those lastminute. com gifts. Travellers can shop till they drop at King Shaka International Airport. They offer a wide variety of shops that sell perfumes, liquors, designer sunglasses, fashion watches, stuffed

Romantic restaurant

While airplane food is usually nutritious, a good steak or some hearty restaurant food usually hits the spot after a long flight from overseas. If your flight has an extended detail, Naiker suggests that you head to Bel Punto Restaurant in Umdloti – a 15-minute drive from King Shaka International Airport. Established in 2004, Bel Punto is a modern and casual-chic diner with great food, a contemporary feel and outstanding panoramic views of the ocean, no matter where you are seated. Make some memories with a loved one by sitting out on the deck under the stars and watch the moon rise over the ocean.

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Best online

travel sites It’s time for a holiday, but not one that breaks the bank. RISKSA gives you the top five most cost-effective travel sites to book your getaway. Laura Owings

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Tripadvisor

Booking

Hotels, flights, restaurants: you name it, Tripadvisor has you covered. Billed the world’s largest travel site, it offers a wide variety of travel choices and planning features with seamless links to booking tools. The handy ‘recommended’ feature remembers your preferences and guides your choices. However, this site’s greatest feature is the advice forums from travellers. Users from all over the world are active on the site, and if you’re worried about getting bed bugs or looking for the most romantic dinner spot, these unbiased reviews will steer you straight.

Established in 1996, Booking.com has grown to become the world leader in booking hotel and other accommodations online. It guarantees the best prices for any type of property – from small independents to five-star luxury and B&Bs – and it never charges booking fees. The website is available in 41 languages and offers hotels and accommodations in 195 countries. The site also boasts more than 25 million reviews written by guests to help you choose from that impressive database. The mobile app is also a go-to resource – and it’s popular. In 2013 alone, bookings through the app totalled more than $8 billion.

TripIt!

AirBnB

Kayak

Have trouble keeping track of all your vouchers, check-in forms and confirmations? Let the TripIt! app do it for you. It automatically finds e-mail confirmations for upcoming travel plans and collates them into complete itineraries in one simple format. And, it will pull-in bookings from your favourite travel sites. Collaborative features let you share itineraries with friends, family and colleagues, or you can add them as travellers to your own adventure. The app includes maps of destinations and airport terminals and, with an upgrade, offers excellent seat tracker features including seat selections and notifications when preferred seats are available.

Booking someone’s apartment for your holiday doesn’t sound luxurious, but after one browse of the options on AirBnB, you may change your mind. The accommodations booking site lists rooms, apartments and houses on offer by locals who moonlight as hosts. With household conveniences like supplied kitchens, living rooms and city tips from the owner, the low-budget prices are more than worth it. AirBnB is also great for travelling groups and families, who can find larger accommodations. The site has housing in more than 34 000 cities and 190 countries, and offers short-term of long stay options.

Kayak’s orange logo has become synonymous with low-cost travel. Specialising in flight deals and hotel bookings, the site started as a tech company that wanted to make online travel better. Today, its website and app have seen over one billion queries for travel information. Giving price comparisons from hundreds of sites in each search, Kayak sets itself apart by allowing users to book what they want and where they want. If you decide you’d rather go directly through providers, you can do so at the same quoted price. But we’d recommend making use of Kayak’s streamlined and easy-to-use system.

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Carel Nolte has been a passionate member of the South African insurance industry since 2000. His column aims to educate, cause a smile, instill pride and stimulate debate. He welcomes contrary views and debate and can be reached via carel@comms.co.za.

Kuier with Carel

n his book The News, a user's manual, Alain de Botton reminds us that the news doesn't merely exist to ‘report on facts’ but to also ‘craft a new planet in our minds’. When this column was launched in January I made it quite clear that my intention was not to (merely) write about facts in our industry (the real journalists of this magazine do that much better anyway!) but to ‘craft a new view of our industry’. To remind us all that what we do is the bedrock of the world and something to be proud of. Whilst it is rather difficult to be too direct (my editor has a sense of probity being Swiss, and I have my own reputation to protect!) I have tried to give readers a sense of the funny and the broad diversity we have around us. Over a drink at the Insurance Conference in Sun City I will naturally be a bit more, shall we say, indiscreet. But here we are in August. Three quarters of the year is done and dusted and what do we have to show for it? No major mergers, acquisitions, scandals or surprise winners at industry awards. In fact, business as usual it would seem – a tough economy, increased legislation, rates too low, lack of skills and the normal complaints we all have. But is that really the case? I think not. If one trawls Twitter and Facebook (the former rather difficult as it’s just @christellefouri and a handful of others who Tweet sufficiently about insurance goings on, more about that in the latest KPMG survey I believe) one can pick up nuances and tidbits about what's brewing, far more effectively than company websites and official press releases. And it seems that we have a bit of a revolution on the way. A bit of a shake-up. Exciting, innovative, fun, goodfor-the-industry changes. My proof? Well, take a look at the young people in the industry and what they are getting up to.

Nic Hughes recently joined the Lightstone group to assist in further developments in their insurance businesses. Lighstone Property is perhaps best known, but through their automotive and consumer services these guys are revolutionising our industry and how we use data. Apart from having married a clever and beautiful woman, Hughes is proof (with a degree in anthropology or similar) that insurance has a place for anyone with brains and passion. If data is not your thing, check out the team at Correlation. Mike Thorpe (ex head of Hollard Life actuaries before he was old enough to date legally) is the man driving product development and much else besides. Having been a Contiki tour guide in a previous life (like IIG deputy president Zuriel Naiker, who also managed to ‘meet’ most of eastern Europe’s blonde youngsters needing advice on what to see, where to go), Mike is one to watch as Correlation continues to impress, and who knows, maybe his ex-colleague and fellow life actuary Chris Peters – who is now teaching monks in Thailand – may be resurfacing in the insurance world. Whilst we are on the subject of the life industry, if you still think that Discovery is the latest cutting edge company, you should check out Brightrock. Matt Marais (ex Accenture, sometimes conductor of wedding ceremonies for insurance company MDs – although he nearly missed the ceremony after a rather challenging bachelors) is proof that bright, young and dedicated can drive not only change but add real value to consumers. With their excellent branding, real innovation in terms of product design and a desire to cause some major disruption, Brightrock is a company we will hear lots more of.

Our industry is full of ‘old’ mentors keen to develop talent. Look at beneficiaries like Tjaart Oosthuizen (ex Auto&General and Etana) who knows everything about motor procurement (and powerboating, where he fancies himself a pro) and how he continues to redefine what we do on motor. And Warwick Scott-Rodger from MUA. A mean golfer and qualified attorney, a man who can drink us all under the table and still be a superb underwriter, Warwick continues to ensure MUA pumps, not only at head office with Fourie and team, but nationally as well. And I continue to be impressed by Rosenberg and his ‘oldies’ like Mark Haken. Simply go to Renasa's executive management people section to find a host of dynamic, young people being employed and mentored by the old guard. Renasa is certainly a place to watch in the year ahead. On the broker front, with a myriad of deals (RBS selling 25 per cent to Mr Burger King, amongst others) it is gratifying to find young (excellent) brokers like Rory Mitchell from G van Cuyck Insurance Consultants in the Cape. A lover not only of insurance, but Porsche and little furry dogs, this man impresses his clients and underwriters and is proof that young brokers do exist. As is Simon Dougall, who recently joined dad Andy at Dougall Crawford in Durban ensuring family tradition and service in the vibrant KZN insurance market. And more are coming. I hear talk of a new concept from the team at Fulcrum that will unleash even more young brokers in the market. So, dear readers, three quarters of a rather normal and dull year may be over, but I predict some big news and exciting times as we rush towards December. Enjoy! I know I will.

Please stay in touch via carel@comms.co.za, and look out for September’s column where we learn a bit about social media in the insurance industry, so clean up your profiles if you don't want to be shamed.

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