RISKSA March 2010 by COSA Media

riskSA

We chat with... Sandra Dunn | INSETA Phillip Matlakala | Metropolitan Retail Tersia Davey | SAUMA Kgabo Badimo | Spescom DataVoice

The budget: all the usual suspects

Public Liability

@ Lunch with... Murray Wright & Don Tocknell of Monitor Administrators

contents The budget: all the usual suspects

p10 Niche: A-Z insurance products A is forâ&#x20AC;Ś

p26 regulars Interviews

Short term insurance

Finance and insurance

Life, assets & investments

Enterprise risk management

Better business

Lifestyle

101

in this issue Public liability insurance

p30

Events liability

p34 Earthquakes and their affect on insurance

p38

March 2010 | riskSA Magazine

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Publisher & editor Andy Mark Managing editor Nicky Mark Assistant editor Linda Scarborough Features writer Bianca Wright Copy editor Margy Beves-Gibson Art director Dries van der Westhuizen Cover design and layout Gareth Grey Regular contributors Clive Simpkins, Jenny Handley, Kirsten Halcrow, Ivano Ficalbi

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March 2010 | riskSA Magazine

Opinions expressed in this publication are those of the authors and do not necessarily reflect those of this journal, its editor or its publishers, COSA Communications. 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.

PUBLISHER

LETTER FROM THE

Dear Reader, Another month and another mailbag with letters from readers highlighting their problems with FAIS accreditation. RISKSA has organised a Better Business seminar in Cape Town on 24 March with highlevel speakers from INSETA, the IISA and UNISA ready to present answers to tough questions. This is a wonderful opportunity for intermediaries to obtain clarity on issues that remain unresolved and to get the lowdown on how to properly approach the accreditation process. Space is limited (we’re holding the event at the prestigious Pepper Club Hotel and Conference Centre in Cape Town) and booking is essential. The cost for intermediaries is R120 excl. VAT. Please contact Bonnie at our office (or fax the return sheet elsewhere in this issue) Bonnie’s e-mail address is bonnie@comms. co.za. Booking is strictly on a first-come first-reserved basis. In our February issue we ran a story entitled “PI Cover for FSPs”. In it we wrongly accredited Glenrand MIB as being the author of the piece. In fact, the research was conducted by Moonstone Compliance. We regret the error. Earth Hour 2010 Were you one of the thousands of subscribers to RISKSA Wired (our weekly electronic version of RISKSA) that joined us in supporting Earth Hour last year? Well it’s that time again, when 807 cities, towns and municipalities in eighty-two countries across every continent turn off their lights for one hour to send a message that a resolution to global warming is possible through collective action. One not-too-bright journalist posted a story on last year’s event that she “didn’t get it”. She questioned how much power was actually being saved around the world and she went on to say the whole thing was “rather pointless”. What she didn’t get is that by writing her 500-word article, she was actually contributing to the success of the campaign; which is all about raising awareness and not necessarily saving electricity. So we urge all of our readers to join us in switching off the lights at 20h30 (local time) on Saturday, 27 March (If, of course, Eskom hasn’t already done that for you.) Enjoy the read.

Andy Mark

March 2010 | riskSA Magazine

Send your letter to mailroom@comms.co.za

Your accreditation woes “It seems as if the credits achieved have not been placed on record at INSETA, which is the reason why the FSB has not updated their records. This brings about the fact that I am not compliant in terms of the Fit and Proper requirements. INSETA should have followed up whether the prescribed standards were followed during the assessment and moderation processes – and issued the certificate of competence. Only INSETA could then have forwarded the certificates to the FSB, who should have updated the FSP’s details - which is not done yet. Deadline – Verification Process – 04 November 2009 – INSETA Web page: how were we supposed to have come to know about this arrangement if not communicated with the students/FIA members? Organisations take it for granted that everything posted on Web pages will just become common knowledge. This is just not acceptable.”

< “Attached, please find the credit statements achieved through Prior Learning Centre. Copies of previous correspondence to RPL and the FSB are also included for your kind attention. I do not understand why these credits have not been accredited by the FSB. This brings to mind that I do not comply with the Fit and Proper requirements, which means that I may not act as a Key Individual or carry on with my business. It goes beyond comprehension that this just cannot be finalised. Can I submit a claim for not earning an income, due to incompetence of the regulators?”

< “I was informed by Liberty Life by e-mail that I was found to competent in both the work book and the exams. However, after all this time, INSETA has still not acknowledged my additional credits. When I contact Liberty Life they say it takes time. Why is it that we as brokers have to be competent and diligent at all times, but the same rules don’t apply to the government organisations we belong to?”

In response to several similar letters we have received recently, RISKSA is excited to announce its first Better Business seminar for intermediaries, to be held in Cape Town on 24 March 2010. This seminar will provide answers for all intermediaries’ FAIS credit-related questions. Delegates will be addressed by high-level contingents from INSETA, the IISA and UNISA. Book your space without delay. The cost for the seminar is just R120 per delegate and includes refreshments. E-mail your attendance request to bonnie@comms.co.za.

The views expressed in this letter do not necessarily reflect those of the publisher, RISKSA magazine or its staff.

March 2010 | riskSA Magazine

The Budget:

all the usual suspects A by Bianca Wright

“We have a shared

appreciation for the

role of investment

and enterprise in

underpinning growth; and we share a common commitment to improve service delivery and build a competitive economy”

ll eyes were on Parliament on 17 February when Finance Minister Pravin Gordhan delivered his inaugural budget speech to the nation, the first under President Jacob Zuma’s administration. Following in the footsteps of respected and well-liked former Finance Minister Trevor Manuel, who is now Minister in the Presidency in charge of the National Planning Commission, Gordhan presented a modest budget speech that nevertheless will have an impact on various sectors. “This was a budget that didn’t hold many surprises,” said Tendani Mantshimuli, consumer economist at Liberty. “As expected there was a very moderate tax relief amounting to just R6.5 billion in this budget, sharply down from about R13 billion in the previous budget. This was not surprising as this budget took place against a backdrop of a severe global economic downturn and the country’s first recession in 17 years.”

This was intended to support the fragile economic recovery, although Mantshimuli says it does not go far enough to offset fiscal drag. “While the minister in his inaugural budget speech may not have been able to meet all expectations, which are difficult to meet in the best of circumstances, he has done well in presenting a balanced budget,” said Navin Ramparsad, head of legal and compliance at Momentum Wealth, pointing out that this was perhaps the most difficult budget speech post 1994, considering the budget deficit and prevailing economic environment. Gordhan addressed the world economic crisis in his speech, pointing out that worldwide, an estimated 34 million people have lost their jobs. He added that through a co-ordinated effort by the G-20, involving extraordinary fiscal and monetary policy interventions, a depression has been staved and that after declining by 0.8 per cent in 2009, the world economy is expected to grow by 3.9 per cent this year driven largely by the momentum of China’s industrial expansion, urbanisation and modernisation. The minister cautioned, however, that these positive trends may be short-lived, and that the world economy may yet experience a second recessionary wave, echoing the warnings of economic analysts globally. “As with the boom period prior to 2008, the global recession will entail sweeping changes to the world economic landscape. Major industries from automobiles, to telecommunications and energy are undergoing restructuring and rapid evolution,” he said. Gordhan highlighted the difference between the previous five years of strong growth, during which about two million jobs were created in South Africa, and the experience of the past year during which the economy shrank by an estimated 1.8 per cent. Mining output, he said, fell by about seven per cent; manufacturing by over 12 per cent. “Consumption and private investment contracted. About 900 000 people lost their jobs,” he added. But, he said, there was some good news. Whereas in October last year, in tabling the

March 2010 | riskSA Magazine

Medium term Budget Policy Statement, he had indicated that recovery from the economic deterioration experienced in 2009 would be slow and uneven, with a projected growth of just 1.5 per cent this year, the growth expectation for 2010 is now 2.3 per cent. It rises to 3.6 per cent for 2012. Household consumption expenditure will improve during the course of this year as confidence improves and household debt levels abate,” he said. “We expect gross fixed capital formation to record growth of 5.8 per cent, and to strengthen further in 2011 and beyond. The most recent employment statistics show an increase of 89 000 jobs between September and December last year. Consumer price inflation has declined over the course of the last year, and is expected to remain around six per cent a year over the period ahead.” While Gordhan praised the Reserve Bank and the banking institutions for their robust ability to weather the economic storm of the recession, he pointed out the introduction of new measures to further strengthen the sector. These measures will include: o The framework for accountability, co-ordination and performance of our financial regulators needs to be strengthened. A formal council of regulators may be instituted to serve this purpose. o We are reviewing our adherence to global regulatory standards in banking, insurance and securities markets. o Various changes to the Basel II framework will be effected once the impact assessment is completed. o We will be expanding the scope of regulation to include hedge funds, private equity and credit ratings agencies. o We will improve our crisis contingency plans. o We will strengthen enforcement mechanisms to counter abuse. Gordhan also indicated his intention to meet with the chief executives of the major banks in February and March to discuss firm deadlines to respond to the recommendations of the Banking Enquiry Panel of the Competition Commission. The Banking Enquiry Report can be accessed at http://www.compcom.co.za/assets/banking/ executive-overview.pdf. He mentioned that he had already met with key stakeholders and bank CEOs to revitalise the Financial Sector Charter, which commits the sector to demanding access and empowerment targets, an initiative that while supported by industry, will impact on the

nature of the financial services industry. The motor industry may feel the pinch to an even greater extent following the outcome of the speech. Gordhan’s announcement of an increase of 10 cents per litre in the general fuel levy on petrol and diesel and a further 7.5 cent per litre for the funding of the new petroleum pipeline between Durban and Gauteng as well as the eight cents per litre upping of the Road Accident Fund levy on petrol and diesel is likely to impact the automotive sector during this already shaky period, when recovery is still tentative. In addition, the expected flat rate carbon emissions tax is to be introduced on new passenger vehicles from 1 September 2010. “A shocker for consumers, other than the expected increases in the so-called sin taxes, will be the 25.5c increase in fuel taxes. We’ll wait and see what the industrial policy to be announced … will bring and how it’ll contribute to economic growth and job creation,” said Mantshimuli. Potentially good news, though, was the additional R3.6 billion allocated to the Department of Trade and Industry for industrial policy interventions consistent with government’s new Industrial Policy Action Plan. In particular, these funds go to support investment and production in the automotive components and clothing and textile industries, which can have a positive spin for the motor industry. Recently, the automotive industry called for the increase in the use of local content in the manufacture of vehicles in SA and investments in the components sector can only help this cause along. On the healthcare side, the concept of the National Health Insurance scheme, which has been put on the back burner, was once again raised although without specific indicators of a timeline. “Alongside longer term reforms to the financing of health care, a closer partnership between the public and private health care systems is a prerequisite for the introduction of a national health insurance system. Our total national and provincial health spending is projected to be R105 billion next year,” Gordhan said. The major theme for the speech was a drive towards financial sustainability, which Gordhan said was the priority as set out in the Medium term Budget Statement (MTBS). “It is time to put aside our differences and recognise that we have a shared vision of a new economy. We have a shared intent to expand income and employment over the period ahead. We have a shared appreciation for the role of investment and enterprise in underpinning growth; and we share a common commitment to improve

service delivery and build a competitive economy,” he said. According to Arthur Kamp, SIM Investment Economist, the real question is whether the National Treasury can manage to reduce the budget deficit from 7.3 per cent in 2010/11 to 4.1 per cent in 2012/13 and restrict the rise in its debt ratio to 43.1 per cent by 2012/13 as envisaged in the budget. “The risk is that consolidated expenditure does not decline from 34.1 per cent of GDP in 2010/11 to 32.1 per cent by 2012/13, as indicated by the Treasury. The jury is still out on this,” he said, adding that success depends heavily on the Treasury’s ability to constrain average annual real expenditure growth to two per cent over the next three years. “Its projections rely heavily on restraining government’s compensation bill to an average of seven per cent a year and transforming of the public sector by cutting unnecessary expenditure, rationalising the public sector and reprioritising spending to ensure the bulk of the spending supports jobs creation, education and health,” Kamp said. Compensation amounts to no less than 33 per cent of total non-interest spending. “Thus its projections seem difficult to achieve considering the State is likely to be a net jobs creator – especially since the budget projects moderation in the annual advance in compensation from 8.7 per cent in 2010/11 to just 5 per cent in 2012/13. The increase for 2012 reflects a decline in real terms considering the Treasury’s 5.9 per cent inflation forecast for that year,” he said. “Moreover, while the debt ratio is expected to stabilise by 2015, that is the year National Health Insurance is back on the agenda.” The NHI is expected to require significant investment for it to work. According to Kamp, Gordhan and his team will be able to achieve their goal of fiscal sustainability only if: • The economy delivers a protracted economic upswing through 2015 (five years of growth). • Expenditure must decline as per cent of GDP as projected by Treasury, despite increasing demands on the fiscus and the State’s commitment to taking on responsibility for job creation. • The expenditure assumption may not be possible requiring an increase in the tax burden to maintain fiscal sustainability. A full transcript of the budget speech is available for download from the National Treasury website www.treasury.gov.za.

March 2010 | riskSA Magazine

interviews

WHY HOW WHEN WHERE WHAT A-Z Sandra Dunn CEO of INSETA

p14

Phillip Matlakala Chief Executive of Metropolitan Retail

p16

Tersia Davey Chairperson of the South African Underwriting Managers Association (SAUMA).

p18

Kgabo Badimo MD of Spescom DataVoice (Pty) Ltd

p20

March 2010 | riskSA Magazine

CEO of INSETA

Sandra

Dunn

Sandra, tell us about your experience in the financial services sector. My experience in the financial services sector and the banking sector in particular spans some twenty years with sixteen of those being in various human resource development roles. In addition, my BANKSETA (Banking Sector Education and Training Authority) experience goes back to 2000, when I was part of the founding management team of the organisation. I began as the skills development manager, a role that grew to include learnerships and enabling skills development in the small, medium and micro enterprises. In 2005, I was appointed chief operating officer and deputy CEO in 2007. I took a one-year sabbatical from October 2008 in order to pursue my own interests and was involved in rural development work through a company of which I was a member until my appointment as CEO with INSETA.

March 2010 | riskSA Magazine

What do your duties as CEO entail? The main areas of responsibility of the CEO at INSETA are: strategy and planning; fiduciary and financial duties; stakeholder relations; programmes and projects; resources and infrastructure; people management and supervision; and communications and brand building. Is brand building more of a focus because of INSETA’s unfortunate recent past? Brand building should be top of mind for all companies that are serious about their business. INSETA has just been through a very successful strategy planning session and is clear in terms of where it will be focussing in the future. Our brand needs to reflect that future focus or ideal that is captured in INSETA’s purpose statement which is “to grow the pool and quality of scarce and critical skills in the insurance sector, enhancing the sector and supporting the country’s transformation”. INSETA is committed to focussing on the needs of the insurance sector, to provide leadership in the area of education and training, to use research to gain market insight, to communicate regularly and to partner with the sector in developing training and development solutions. What does the year ahead hold for you and INSETA? The journey ahead will require new approaches to the way we do business; always cognisant of advancing the national skills agenda and transformation as we enable and deliver skills development for the insurance sector. Our approach going forward is to have even closer collaboration with the insurance sector and stakeholders and through consultation, focus groups and research, develop and deliver programmes that are needs based, relevant and help narrow identified skills gaps in the area of scarce and critical skills. How do you ensure that all the focus groups, consultation and research deliver results? (Many SETAs do not enjoy a good reputation in this regard.) In my experience, results are achieved when due consideration is given to the complete life cycle of a project. Research and consultation is of critical

importance at the definition and planning stage of the project. Evaluation and communication must be a constant during the execution and delivery stage of the project life cycle. How do you deal with brokers who get very emotional about all the legislative changes and demanding requirements? The legislative changes are now outside of the INSETA’s sphere of influence. What we can do and will be doing is looking at how we can enable the brokers to meet the requirements of the legislation. INSETA has to this end established a FAIS Advisory Committee and is in the process of selecting a training provider to develop the learning material of the FAIS Regulatory Examinations. What is INSETA actively doing to fill the skills gaps in the industry? INSETA has recognised that scarce and critical skills are a strategic focus area for the insurance sector. The identified scarce and critical skills are in the areas of compliance, sales, management and leadership. INSETA will be actively partnering with the sector in developing training and development solutions that help fill the skills gap in the sector. Many brokers have expressed their frustration to us about the accreditation process, communication problems, and their struggle to get registered with INSETA despite having the appropriate qualifications or experience. What route do you recommend these individuals take to get ‘sorted’ as soon as possible? Brokers are one of the stakeholder groupings that have been obliged to fulfil the requirements for licensing with the FSB, under the FAIS legislation. INSETA has offered support to the industry in the form of national assessments and opportunities through accredited learning providers, with qualifying credits for FAIS licensing. The qualifications and experience of all stakeholders and prospective learners have a standing in their own right. However, in order to give recognition of these for credits on the NQF, one has to undergo a formal, structured assessment for prior learning. INSETA’s ETQA function quality assures learning delivery to ensure that learning

“I took a one-year sabbatical from October 2008 in order to pursue my own interests and was involved in rural development work through a company of which I was a member until my appointment as CEO with INSETA.” outcomes are valid and credible in terms of the quality standards of the South African Qualifications Authority (SAQA). To ensure that standards of quality and integrity are maintained, it is necessary to apply stringent quality standards which all learning providers, assessors, moderators and learners are subject to. Stakeholders wishing to be assessed for NQF credits are welcome to contact an accredited provider, accessible from the INSETA website home page. What message would you like to convey to brokers? I think top of mind must now be FAIS and the RE1 examinations. INSETA is in the final evaluation process of appointing a service provider to develop the requisite training material that will support you to succeed with the examinations. The FAIS Advisory Committee will make further recommendations on what additional support INSETA can provide. INSETA is committed to partnering with you to enable others, delivering quality, touching lives, inspiring trust and leading with vision. We look forward to further strengthening our relationship with you in 2010.

March 2010 | riskSA Magazine

Chief Executive of Metropolitan Retail

Phillip Matlakala Whatâ&#x20AC;&#x2122;s the best part of your job? As chief executive of Metropolitan Retail, my span of responsibility and accountability within the Metropolitan Group of companies is positively challenging. I am ultimately responsible for developing, distributing, administering and servicing individual life investment and risk products which target the lower- and middle-income markets under the Metropolitan Life brand. Currently, the retail business also targets niches in the upper market under the Metropolitan Odyssey brand. In the fulfilment of this mandate, I make use of alternative distribution channels such as telemarketing for the distribution of packaged financial services products.

March 2010 | riskSA Magazine

How much is the new Consumer Protection Act going to affect Metropolitan Retail? Historically, the financial services sector was self-regulated until legislative changes were promulgated in recent years. Government can be commended for drafting the Consumer Protection Act (CPA), which is another fundamental step on the road to industry reform. The CPA may be new legislation but I believe companies should have been doing business on the principles of the act even before it became mandatory and not because non-compliance with the CPA will be in contravention of the law. It will most certainly keep the industry on the straight and narrow, and will force all involved to take a hard look at the way we service customers and the way business is done. Ideally, through the positive change the act is sure to deliver, we trust that it will help improve some public misconceptions about our industry. How do you see the industry changing in the next five years? Spurred by increasing consumer awareness and activism, we can expect a more customerfocused way of doing business. By this, I mean constantly delivering on the value proposition made to customers. We understand that our customers are the lifeblood of our business and that they are integral to sustainability, thus we are geared towards providing financial services to meet their needs. This links to the efficiencies in our business and moving away from ‘heavy duty’ business models at the expense of our customers. Also, I anticipate that careers in financial services will become more of a reputable profession and that we will be able to attract increasingly higher calibre people to our workforce. While there have been numerous changes in the industry in the past, the road ahead remains challenging and we look forward to becoming more resilient and responsive to the changes around us. Ultimately, all the challenges conquered contribute towards building a better industry overall. We hear you have been successful in instilling a culture of change-resilience in your staff. How is this achieved?

Consistent communication about developments in the company and the industry is essential to navigate people through change. The environment – both internally and externally – is constantly changing and we cannot pretend that change is not happening. Most people embrace change and adapt but those who are reluctant to change may not survive the transition. It’s important to communicate the positive impacts of change within the context of people’s everyday roles. Often, it’s encouraging them to bear the short-term turbulence to reap the long-term benefits and rewards. To this end, I am tremendously proud of Metropolitan’s people who are proving very competent to deal with change. What do you regard as your personal purpose or role in the insurance industry? While it may not be my personal purpose in the industry, I feel that it is everyone’s role to inculcate a culture of savings within our communities through financial education. Brokers and intermediaries, who are at the coalface with customers, must understand their integral role in improving financial literacy levels, not only in low income markets, but across LSM levels. What are the major issues facing the longterm industry, especially for the lower- to middle-income market, at the moment? Mainly, these are legislative changes, increased consumerism and skills development of the sales staff. These are particularly challenging when servicing the low- to middle-income market. In context, the implementation of legislative requirements has added layers of cost to servicing this market, while margins are very tight. In order to adapt our business model, we’re looking at alternative and more cost-effective distribution models. However, there is only so much cost cutting a business can do to counter the unintended consequences of legislation. Many people have philosophies or ideas they think would improve our country. What are yours? In my opinion, we need to focus our energy nationally on improving education and eradicating the knowledge gap caused by the legacy of

apartheid. If we can fix that, it will go a long way towards improving the lives of South Africans. We hear you are a keen golfer and enjoy jogging? Where is your favourite green/ jogging route? I love golf so much; I would play just about anywhere! I don’t have a particularly favourite green. Jogging has been limited to the gym recently. What advice do you have for our readers? In conclusion, you should embrace change, no matter how painful it may be, because these changes are necessary. And it may be a cliché, but this rings true to the saying that change is the only constant. The financial services sector in particular needs to work towards improving customers’ knowledge of financial products and services. In doing so, it will ultimately enhance the perceptions of our industry. Tell us about your background I started my career at Metropolitan in 2001 as the general manager of group schemes. Prior to this, I worked in various management positions including nine years at Fedsure and Norwich as the national executive of sales support. I obtained both a BProc degree at UNISA in 1985. I have also completed a programme in taxation and financial planning for life assurance consultants.

“You should embrace change, no matter how painful it may be, because these changes are necessary. And it may be a cliché, but this rings true to the saying that change is the only constant.”

March 2010 | riskSA Magazine

Chairperson of the South African

Underwriting Managers Association (SAUMA).

Tersia Davey You have been chairperson of SAUMA since June last year. How have things changed since you took up the mantle? We have been extremely busy at SAUMA. During the last two years, particularly the last year, we have been very active in the industry as an association and we have been a lot more visible. One of our objectives for the last year was to be more proactive, visible and to really make the industry aware of our association and what we stand for. I believe we have really achieved our objectives so far. As chairperson, one of my first goals was to interact more with our members and to make sure that we open the communication channels. We started by having â&#x20AC;&#x2DC;open meetingsâ&#x20AC;&#x2122; for members where various topics are discussed, and where members have the opportunity to openly discuss any issues or questions relevant to the industry.

March 2010 | riskSA Magazine

When we last chatted, SAUMA was focusing on the Insurance Laws Amendment Act, which impacts greatly on underwriting managers. What is the association’s major focus now?

There have been no specific changes requested by our members. However, a question regarding possible future involvement of administrators in our association was raised, but it was unanimously declined.

As an association, we have continued to focus on the Insurance Laws Amendment Act, due to the fact that it could possibly bring about one of the biggest changes in the insurance industry within the last 10 years, and due to its potential impact on underwriting managers.

SAUMA promotes professionalism in the industry. To you, what does this concept of professionalism entail?

Are the industry forums – which form part of SAUMA functionality – still going strong? (The SAIA legal and compliance committee; the needs analysis forum; the intermediary matrix forum; and assessor forums.) What issues are they concerned with at the moment? Yes, we definitely continue with our involvement in the various industry forums and discussions. The forums allow us to represent the underwriting industry by presenting our stance on issues, particularly with regard to issues focussed on niche products. Through our involvement with the above, we also stay in touch with other bodies in the industry and relevant changes or developments in SA that might have an impact on our fraternity, i.e. FAIS Fit and Proper requirements; changes in the Consumer Protection Act; and the impact of the new licence demerit system on the insurance industry, etc. These are continuing workshops, discussions and so on which allow us to inform our members of any changes, developments or requirements. These are all relevant topics that are not openly discussed or publicly available and sometimes not even communicated to our members via their own principles. SAUMA was formed for its members, and their input and requests for change determine the direction of SAUMA, according to the association manifesto. Have any changes been made recently as a result of member requests?

Professionalism means acting lawfully, adhering to the insurance code of conduct as well as the legislation and industry requirements. For me personally, it means that you always act with tact, integrity and at all times treat customers, brokers and insureds with respect. Professionalism entails honesty and clear and open communication. Do you get many UMAs applying for membership who don’t qualify? If so, what criteria are they usually lacking? No, we generally do not receive a lot of declined memberships. When we do, the problem is mainly due to the fact that the applying agency is not just an underwriting manager but actually acts as an administrator or a broker with a binding authority, or there is no underlying underwriting management agreement.

“As chairperson, one of my first goals was to interact more with our members and to make sure that we open the communication channels. We started by having ‘open meetings’ for members where various topics are discussed, and where members have the opportunity to openly discuss any issues or questions relevant to the industry.”

What do you wish for all UMAs on the South African insurance industry landscape? I wish for a future in which people understand the important role and valuable contribution of an underwriting manager; an appreciation for the professionalism, knowledge and experience that we bring to the industry as well as the work opportunities we create in the SA business environment. I particularly wish that each UMA will flourish during 2010 by producing positive underwriting results and strengthen the SA insurance industry’s reputation and capacity by continuing to develop value-added products.

SAUMA is definitely an association for its members and acts on behalf of its members.

March 2010 | riskSA Magazine

MD of

Spescom DataVoice (Pty) Ltd

Kgabo Badimo Kgabo, you took over as MD in July 2008 and have had to weather quite a stormy market since then. How have you kept the rudder steady? In 2009, we operated in one of the toughest markets in living memory, but we were pleased to have defended our market position. Because customers have adopted the approach of ‘sweating assets’ and spending money on maintenance and service for maximum operability, DataVoice focused on improving on its customer support services, thereby improving on annuity revenue. We cemented a strategic partnership with an international vendor through our OEM strategy to extend our international distribution. With the ‘sweating of assets’ paramount within business today, a great deal of focus has swung to the performance of people, being the most valuable asset of any company. This has led to a greater appreciation within the market of workforce optimisation. We have propelled ourselves forward competitively in this space by adding integrated product solutions to complement our global voice-recording technology, with tools such as screen recording, quality management, eLearning, workforce management, customer research and agent selection. Our professional consulting services, in conjunction with these tools, put us in a powerful position to not only advise, but to put into action ROI solutions that really do provide our customers with the ability to achieve more with less whilst increasing the bottom line at the same time.

March 2010 | riskSA Magazine

What are your goals for 2010? Our goal is to drive our strategy within the WFO and RM market space, focusing at delivering the underlying technology that assists organisations to mitigate risk, compliance and ultimately good corporate governance. It is our intention to excel in this space through our expertise and state-of-the-art technology. In addition to our products, our local support, integration and development capabilities will add considerable value and reduce the cost of ownership for our customers. This has led us to another area of focus the managed services component of our business, allowing us to drive annuity income and deliver ‘value added’ services to our customers through support contracts. You have qualifications from Universite de Cleremont Ferrar and Universite de Caen in France, University of the Keele in UK as well as numerous qualifications from highly regarded local institutions. How did you end up studying in so many places? My dream was to become a medical doctor. I applied to Wits Medical School and was accepted. However, I was refused Ministerial Consent, due to laws at that time prohibiting black students from studying at white universities. I went to Turfloop (University of the North) intending to do pre-medicine, which was a requirement for blacks. However, at Turfloop, I ended up studying BSc Computer Science (not that I knew what computer science was at that time – I just wanted a degree). With all the uncertainty prevailing at that time, I ended up in France where I had to study the French language, and subsequently did Licence D’informatique (BSc [Hons]) at Universite de Caen. I went to the UK through the Luthuli Foundation Scholarship and completed my MSc in data engineering at the University of Keele. Coming back to South Africa in 1992, I went to do MCom (Information Systems) at Wits; Executive Leadership at UNISA School of Business Leadership; and Diploma in business administration (Wits Business School). All my studies though were focused on computer sciences disciplines.

You have headed up departments of people (HR), as well as managed systems and technology. Would you say you are a people’s person, or do you like the details? My studies, training, experience and knowledge are in information technology and communications (ICT). However, during the early days in my career, I made a conscious decision to move into management but still within the ICT environment. With a solid technical background, I needed to reinforce my people skills and business skills. I moved into HR, gaining experience in people management, which at the time, developed and honed my interpersonal skills. With the next phase of my career development, I focused on business and business development but still within an ICT environment. All three phases of my career development (ICT technical skills, human resources skills and business skills) combined have made me a rounded ICT business executive.

“Our goal is to drive our strategy within the WFO and RM market space, focusing at delivering the underlying technology that assists organisations to mitigate risk, compliance and ultimately good corporate governance.” Your experience and involvement in leadership roles at various companies and institutions has taught you...? My experience and involvement in leadership and executive roles at various companies and institutions has taught me, amongst other lessons, five key attributes: courage, caring, optimism, self-control and communication.

Courage. I learnt about the two kinds of courage: literal and moral. Moral courage means standing up for my convictions and values while risking criticism or persecution. It means the willingness to risk loss of power, position, possessions and reputation. Moral courage taught me to respect a selfless form of behaviour, which is a sign of having overcome fear and taken responsibility for one’s actions. Caring. To me, humans are the resource with the most overall potential in the company. I have learnt over the years that by treating employees with appreciation, understanding, courtesy, attention, loyalty and encouragement, one is rewarded with co-operative and supportive behaviour. However, having a sincere interest in and genuine concern for others does not mean I should tolerate or ignore shoddy performance, violations of company policies, bad attitudes, dishonesty or slothfulness. Optimism. I learnt to take the most hopeful and cheerful view of things, and to see opportunities, possibilities and silver linings in every situation while still acknowledging the reality of the situation. I believe that my optimistic attitude also encourages my perseverance and patience. When everything looks hopeless, my attitude can cause me to keep pushing and driving and not give up. Self-control. I learnt to control my emotions, actions and desires. I cultivate discipline in my behaviour and lifestyle, and do things that have a positive influence on others and avoid those that have a negative influence. My self-control has given me the drive and initiative, as well as a clear vision and focus, to concentrate on success-oriented, career-enhancing behaviours. Thus, I have created a foundation for my longterm personal achievement. Communication. By learning effective direct interpersonal interactions, I can reveal my sincerity and make an emotional connection. How can voice recording be used to benefit a business, as well as the consumer? On the risk mitigation side, recorded calls can protect companies like financial service providers, lawyers and health practitioners

March 2010 | riskSA Magazine

against litigation and disputes resulting from advice or instructions provided over the phone. Various regulations including FAIS and FICA also require companies to keep a record of all transactions with their clients. Since many transactions are handled telephonically, it is critical to record them, adhering to compliance of these regulations.

voice recording solutions. The SA market is now maturing beyond that, to the point where efficiency and service level drives now turn the corporate focus to workforce optimisation and management solutions. The clear preference is for one-stopshop solutions, and fortunately our forward planning has perfectly positioned us to serve these maturing requirements.

Voice recording can also greatly enhance a contact centre’s ability to assess the performance of its agents or phone operators and thus improve customer satisfaction. Historically companies have based their performance assessments on quantitative indicators like call volumes and average hold times, but these do not provide the whole picture. To assess the true performance of an agent or operator, it is important that the qualitative angle is provided for by listening to the actual conversations. It provides for identification of specific training requirements.

What are some of the main issues/talking points/innovations in the voice recording industry at the moment?

Voice recording is also widely used by law enforcement, emergency services and the transport industry to help with investigations. Therefore, voice recording, along with our other solutions, help organisations conduct their business with greater efficiency, as well as with greater efficacy. Consumers directly benefit from this, of course. Greater organisational efficiencies also translate to greater cost-savings, which for consumers translate to greater value and better contained service cost increases. But if you look beyond all that, the benefits continue. Because of better record-keeping now, consumers can look forward to continued good service in future. And they can look forward to that good service improving all the time. This creates a fantastic ecosystem of win-win-win – our customers win, their customers win, and we win. How common is voice recording in SA today? Voice recording is already widespread in SA amongst banks and other large financial service providers, as well as the police, emergency services, the transport industry and all the large telecommunications providers. The BPO market has shown tremendous growth in recent times and any new call centre will implement voice recording as standard. The smaller companies or institutions within these verticals have also shown growing interest in the last couple of years and I’d say that more than half of them have already embraced voice recording as a critical business tool. The benefits of voice recording have become important to individuals, too. Not only have regulatory requirements been put into place to better serve consumers, but service organisations have also realised the direct operational efficiency and ROI benefits of

March 2010 | riskSA Magazine

Three developments stand out for us. The first is the drive towards more value-added solutions beyond voice recording, towards even greater control over service quality and service levels. This is where customers’ hearts and wallets are now being won or lost, no longer in the voice recording world alone.

Take time to understand the FICA and FAIS requirements that apply to the financial sector today when communicating with customers. Not having high quality voice recording is not an option, the risks are too high.

and identification to combat fraud. Word spotting is also used to confirm compliance to scripts in call centres and for identifying and listening to problem calls or customer service complaints (identifying words indicating stress or unhappiness). Finally, the increasing uptake of software as a service or cloud computing has created renewed interest from our customers to adapt our recording solutions to work with the hosted PABX providers. The financial pressure as a result of the recession has urged companies to move towards an OPEX or rental model for their IT spend. What are the chances of voice recording becoming compulsory for financial services providers in the near future? The Financial Advisory and Intermediary Services Act of 2002 clearly states that financial services providers must record all verbal communication related to a financial service rendered. However, many of the recent and upcoming regulatory requirements cannot cost-effectively be complied with, unless voice recording is deployed. The vast number of business benefits that voice recording unlocks is beyond mere regulatory compliance, so we strongly encourage people not to include ‘compulsory’ in their vocabulary. That notion is far too restrictive; it is far more a case of voice recording being desirable. Our most successful customers see regulatory compliance as a welcome by-product of the very productive investment they’ve made in voice recording and related solutions. What advice do you have for our readers?

The second is the extent to which regulatory requirements have made things perceivably difficult for the service providers our customers. Consumers have it easy: they simply expect their service providers to comply with regulatory and legislative requirements. Our customers, on the other hand, often feel confronted by a maze of jargon, complexity and uncertainty. Thirdly, and especially exciting for us, is the advent of mobile telephone recording, which we helped to pioneer. Clients can reap the benefits of immediate, mobile business operations, backed by high performance and advanced levels of access and data security. Other interesting prospects include the use of biometrics which has become commonplace in many security applications. We are on the verge of it becoming part of our everyday lives, since banks and telecommunications providers are already running trials. This has also spawned renewed interest in speech analytics in the voice recording market. This technology is used for speaker verification

o Take time to understand the FICA and FAIS requirements that apply to the financial sector today when communicating with customers. Not having high quality voice recording is not an option, the risks are too high. o Ensure that objective and equitable quality monitoring tools and processes are in place to manage compliance. o Where readers have contact centres they should be aware of the SABS TC 99: Business process outsourcing and off shoring (BPO&O) Standards that are available. Further information can be obtained from the SABS website and by joining the national association Business Process enabling South Africa (BPeSA). o Far too often we see customers investing heavily in technology and solutions in other areas of the contact centre, but failing to address the areas of risk, and workforce management in your business could lead to severe consequences. It is important that the proper research is done to ensure the technology can stand up in court and fulfils your needs.

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Valuables vehicle building workplace info Niche: A-Z insurance products A is forâ&#x20AC;Ś This first in our new regular directory of specialist insurance products focuses on the As of the A to Z.

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Public liability insurance With the World Cup almost here, many ordinary citizens have become business owners and rented out a room or even their entire house to excited tourists for the soccer season. These new entrepreneurs, however, may not be aware of the very real implications that becoming an hotelier, even for a relatively short period of time, has for them. RISKSA spoke to specialists in the public liability insurance sector to get the inside story on what brokers should be telling their clients about this important type of specialist insurance.

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March 2010 | riskSA Magazine

Niche:

A-Z Insurance Products

A is forâ&#x20AC;Ś This first in our new regular directory of specialist insurance products focuses on the As of the A to Z.

March 2010 | riskSA Magazine

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Academic institutions

Accidental HIV infection

Abacus (Pty) Ltd Contact details: Postal address: Unit 3 Medgate, c/o Kingfisher and Pheasant Streets, Helderkruin Willie van der Schyf Phone: 0861 33 33 88 Fax: 0861 33 33 38 E-mail: willievds@abacus-ins.co.za Denis Styles Phone: 0861 33 33 88 Fax: 0861 33 33 38 E-mail: deniss@abacus-ins.co.za

Lifesense Group Contact details: Phone: 0861 567 567 Website: www.lifesense.co.za Postal Address: PO Box 1774, Parklands, Johannesburg, 2121 Products: Lifesense offers a comprehensive HIV/Aids management programme that includes accidental HIV infection cover. Who is the typical client for this product? Those working in the medical profession and at-risk of accidental exposure to HIV+ infection through a needlestick or other contact with infected bodily fluids.

Products: Abacus specialises in niche products to cover educational institutions including pre-primary, primary and secondary schools as well as technical colleges for the specific risks associated with running an educational institution. Who is the typical client for this product? The owner or governing body of an educational institution such as a primary school or technical college.

Aviation AvSure (Allianz) Contact details: Allianz Insurance Limited, PO Box 62228, Marshalltown, 2107 Phone: +27 (0)11 442 1111 Fax: +27 (0)11 442 1124 Products: Under Allianz’s Corporate and Specialty division, Allianz offers a variety of specialist aviation products, including hull and liability protection for passenger and cargo airlines, covering the full range from single aircraft operators and international to major international carriers; physical damage and liability cover for manufacturers and suppliers as well as for airports, refuellers and associated service providers; and hull and liability cover for smaller aircraft and helicopters including privately owned, commercial fleets, business jets and ground service providers. In addition, Allianz offers reinsurance of worldwide aviation portfolios including international airline and general aviation account reinsurance.

Praesidio Risk Managers Contact details: Physical address: 5th Floor, 296 Kent Ave, Randburg, 2194 Postal address: PO Box 3337, Cramerview, 2060 Bronwen de Kock Underwriter and Managing Director Phone: +27 (0)11 521 4120 Products: Praesidio’s HIV+ Needlestick cover offers a benefit of R1 million to doctors who accidentally make contact with body fluids in the workplace. All staff members who may accidentally come into contact with blood are also covered and the cover can be extended to include ‘occupational’ HIV cover, which is not limited to needlestick incidents only. The cover also provides up to R2 000 of the initial prophylactic treatment required after an accident. Who is the typical client for this product? Those working in the medical profession and at-risk of accidental exposure to HIV+ infection through a needlestick or other contact with infected bodily fluids.

Who is the typical client for this product? Airlines, owners of private planes including cargo planes, and manufacturers and suppliers of aviation products as well as airports.

March 2010 | riskSA Magazine

Agricultural and farming Agri Risk Specialists (Santam) Contact details: Head office: 1 Sportica Crescent, Tyger Valley, Bellville, 7530 Postal address: PO Box 3881, Tyger Valley, 7536 Phone: +27 (0)21 915 7000 Fax: +27 (0)21 914 0700 Products: Santam’s Agricultural policy is flexible enough to fulfil all of your personal and agricultural needs. The cover includes replacement of new vehicles; tow-in costs and safeguarding after mechanical breakdown; trauma treatment; emergency accommodation; safeguarding; emergency repairs; delivery after an accident or breakdown; and cover for damage to tractor tyres. In addition, the policy covers passenger liability; that is insurance against the death of, or injury to an employee while travelling in an open vehicle; the cost of renting a replacement vehicle after loss of use or while your insured vehicle is being repaired; credit shortfall; comprehensive cover for your irrigation systems; labour practice liability and cover under the buildings section for borehole and swimming pool pumps. Who is the typical client for this product? The owner or manager of a farm who is looking for protection against loss of crops or livestock.

Agricola Underwriting Managers (Pty) Ltd Contact details: Address: Block A2, Somerset Office Estate, Kudu Street, Roodepoort, 1737 Phone: +27 (0)11 288 0300 Products: Agricola’s products cover broadacre summer and winter crops including maize, grain sorghum, soya beans, dried beans, barley, sunflower oats, peanuts, potatoes and wheat. Agricola’s multi-peril policy for cereal crops covers for full loss of yield from emergence to delivery at the silo. Cover against hail, fire, transit to and from receival point and frost can also be included. Agricola ensures that claims are handled swiftly and efficiently by dedicated crop insurance professionals located in your region. Who is the typical client for this product? The owner or manager of a farm who is looking for protection against loss of crops or livestock.

March 2010 | riskSA Magazine

African Rand Underwriting Managers (Pty) Ltd Contact details: Physical address: 49 Sophia Street, Fairland, Johannesburg, 2030 Postal address: PO Box 731386, Fairland Phone: +27 (0)11 678-1354 Fax: +27 (0)11 678-1357 Products: African Rand’s AGRInSURE policy is a complete farm insurance product that covers dwellings, personal contents, farm buildings, machinery, equipment and livestock as well as providing farm-liability coverage. In addition to the typical commercial and domestic covers offered, the policy is extended to provide cover specifically for farmers.

Phone: +27 (0)51 430 3371 Fax: +27 (0)51 447 2463 E-mail: gert@landmark-ua.co.za Products: Landmark UA’s policy covers the following risks: Livestock-variable cover options including electrocution and accidental death by dogs and wild animals; fodder stored in buildings and in the open; pedigreed/ registered farm dogs; spread of fire cover options; products liability; bursting of water dams; droving of animals; animal trespass; house owners; stress cover following a total loss; landscape cover; post-trauma counselling; labour relations advice cover; visitors’ medical expenses following injury caused by any animal; domestic veterinary expenses following a road accident; loss of use of private cars/ combines and tractors; large tyre cover for farming vehicles; and emergency overnight accommodation as well as other risks. Who is the typical client for this product? The owner or manager of a farm who is looking for protection against loss of crops or livestock.

Art, antiques and collectibles This includes, inter alia, the following: - Special provisions with reference to crude fodder, hay, straw, chaff and similar crops in buildings as well as tobacco in air curing barns. - Special provisions with reference to game and/or ostriches - Pumps and electric motors. - Irrigation pipes and pumping equipment. - Hammermills. - Property in the open. - Spray irrigation systems on wheels and centre pivots. - Paddock and boundary fences. - Damage to water tanks, water apparatus. - Produce and livestock in transit. - Droving and escaping of animals as strays. - Spreading of fire. - Various farming-related risks to motor vehicles. - Funeral cover for workers at a very nominal rate. Additional optional cover for livestock, crops and wildlife can be added. Who is the typical client for this product? The owner or manager of a farm who is looking for protection against loss of crops or livestock.

Landmark Underwriting Agency Contact details: Head office: 1st floor, Wesdene Centre, Cnr 1st Avenue and Reid Street, Westdene, Bloemfontein, 9301 Postal address: PO Box 1941, Bloemfontein, 9300

ArtInsure Contact details: Physical address: 22 Oxford Road, Parktown, Johannesburg, 2001 Postal address: Postnet Suite 176, Private Bag X18, Milnerton, 7435 E-mail: info@artinsure.co.za Phone: 0861 111 096 Products: ArtInsure offers insurance solutions to collectors, museums, dealers, auctioneers, restorers, valuers, galleries and exhibitions and creates specialised custom products to suit their needs. ArtInsure lists some of the benefits of its products as: - All risks coverage. - Agreed value – allowing you to determine the insured value of your collectible items. - Tailored basis of valuation – this ensures that you are accurately covered for the true value of your investment. - Depreciation recognition – we understand the impact of damage to the value of an item even after professional restoration. - Defective title cover – we can insure you for items purchased while you insure with us which you may discover are the subject of an ownership dispute. - Away from premises cover – providing insurance for transits, exhibitions, fairs, storage or consignment of your item to a third party. - New acquisitions – new acquisitions can be automatically included, providing

peace of mind until you are able to notify your broker. - Buy-back ability – in the event that we recover an item of yours which was stolen, we will give you the opportunity to buy it back from us. - Recognition of pairs and sets – we understand that the value in a set is the sum of all of the parts and our product therefore responds to the loss or damage of a part of a set. - Repaired items – repaired items are automatically included without additional premium. - Temporary storage – should your premises be compromised, we can agree to transport and store the items at a suitable location at our cost until such time as the problem is resolved. - Access to professional restorers. - Access to professional valuers. The Hollard Insurance Company owns a majority share in ArtInsure and underwrites all of its products.

Who is the typical client for this product? The owner or manager of an art collection and may include museums and art galleries as well as private or business collectors.

Renasa Fine Arts Contact details: Gavin Isaacs Physical address: 1st Floor, Isafam Place, 53A Wierda Road East, Wierda Valley, Sandton Postal address: PO Box 5597, Rivonia, 2128 Phone: +27 (0)11 883 7140 Fax: +27 (0)11 883 6974 E-mail: gavini@renasafineart.co.za Products: Renasa’s Fine Art’s cover is available for collections valued at more than R750 000 on a standalone basis or R50 000 on a supported basis; that is if the insured’s portfolio of houseowners, householders, all risks and motor cover is with Renasa. Who is the typical client for this product? The owner or manager of an art collection and may include museums and art galleries as well as private or business collectors.

RISKSA does not make any warranties or representation that content and services mentioned in this series will in all cases be all-inclusive, true or free from any errors. However, we will take all reasonable steps to ensure the quality and accuracy of content. RISKSA will not be held liable for any errors or omissions.

New contacting details Tel 0861 00 0090 Fax 0861 00 0030

KEU can provide you with a KALEIDOSCOPE of products to assist in all your entertainment insurance needs

UNDERWRITING MANAGERS

Website www.keu.co.za Contact Denise Hattingh e-mail denise@keu.co.za

March 2010 | riskSA Magazine

Public Liability Insurance

March 2010 | riskSA Magazine

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ith the World Cup almost here, many ordinary citizens have become business owners and rented out a room or even their entire house to excited tourists for the soccer season. These new entrepreneurs, however, may not be aware of the very real implications that becoming an hotelier, even for a relatively short period of time, has for them. RISKSA spoke to specialists in the public liability insurance sector to get the inside story on what brokers should be telling their clients about this important type of specialist insurance. While public liability insurance may not sound like something that the average home owner needs to consider, during the unusual activity – like renting out of homes or rooms – of the World Cup, it has become vital. Desmond Langkilde, director of SATIB Business Consultants’ marketing division, uses the example of an incident where your guest leans against the faulty or inadequate construction of the balustrade and falls off the balcony at your cottage. She damages her spine as a result of the fall, leaving her a paraplegic for life. She subsequently sues you for damages, citing your negligence in not maintaining the balustrade in a safe condition as the cause of her injury. After a lengthy and costly court case and, despite the fact that you have a clearly worded indemnity disclaimer notice positioned prominently in the cottage, the court awards her costs of legal suit, medical bills and loss of income for the rest of her natural life. “If you do not have appropriate public liability insurance in place, which extends to cover your legal costs as well as the court award, you will be forced to liquidate your assets to pay the claim,” he said. “It must be borne in mind that even if you are not at fault (negligent), you will still have to prove it in a court of law if a case is brought against you. This will entail appointing a lawyer to represent you and lengthy court costs. A public liability insurance policy will pay these costs for you.” Shirley Hirst of Network Liability Underwriting Managers advises brokers to read their clients’ policy wordings carefully – especially the policy exclusions – to ascertain whether cover will be provided or not and if not, to recommend the purchase of commercial liability insurance for the duration of the World Cup. According to Fazilla Tillek and Madelein Trybus, underwriters at Hospitality Industries Underwriting Consultants (HIU),, apart from the obvious safety hazards like slippery floor surfaces, loose wiring and poorly maintained buildings, there could be other less obvious risks when opening your house to people you have never met and whose physical and health conditions you do not know. She cited

the example of allergies. “You need to ensure you are aware of any allergies, to avoid serving food that might cause severe allergic reactions or even death. If your garden attracts lots of bees, it will be prudent to alert guests who might be allergic to bee-stings,” Tillek and Trybus said. In addition, they warn, if your guests bring small children, you need to ensure that fish ponds, swimming pools and other water features pose no drowning risks. Hirst adds the possibility of claims for emotional stress should the venue that the foreigner is staying in is burgled and the foreigner held up at gunpoint or, worse still, claims by the family should a foreigner be killed during a robbery on the premises.

“Brokers should tell their clients that when you rent your home, you are essentially changing your private home into a commercial business, very similar to a guesthouse or a bed and breakfast

insured’s property, it could result in a major liability claim. “As the client’s tenants will be mostly foreign clients and often very wealthy individuals, the client stands the risk of being financially crippled should the client suffer a loss during the period the home is rented,” he said. Paul advises that all brokers should contact their clients and offer helpful tips to ensure that the clients are fully covered by performing a full risk needs analysis. Elri van Heerden of Momentum Short-Term Insurance said, “This is where your financial advisor can become invaluable in making sure that your policy matches your intended hospitality and that you are not left with an own-goal loss. Whether you are renting, leasing or kindly lending, the principles as stated in your Personal Policy Document will apply.” With regard to Momentum’s Short-term Insurance policy, she advises that even while your house is being occupied by tenants, your home is covered for theft if it is burgled, as long as there are visible signs of forced entry or that your house was broken into. Visitors’ possessions (maximum limits do apply) are also covered under your regular contents, household insurance, if stolen from your home.

facility. This has serious implications for the client’s personal cover. The client’s policy under the personal liability section could exclude cover for legal claims instituted by paying tenants” Edward Paul, general manager for Product, Actuarial and Reinsurance at Mutual and Federal added that food poisoning, dog bites and damage to property are all risks that property owners face when renting out their homes. “Brokers should tell their clients that when you rent your home, you are essentially changing your private home into a commercial business, very similar to a guesthouse or a bed and breakfast facility. This has serious implications for the client’s personal cover. The client’s policy under the personal liability section could exclude cover for legal claims instituted by paying tenants,” he said. Paul added that if paying tenants are injured by something unsafe on the clients’ property or suffer food poisoning while renting the

“Of course, if your visitors make off with your goods, this is not covered. Try to be cautious and discerning about who you allow into your home or to access your goods,” she said. As with all visitors to South Africa or any international travellers, it is recommended that guests have their own insurance. “All Risks covers their personal possessions and valuables, such as clothing, luggage, cameras and other valuables. Again the best advice is to be cautious and careful wherever you go,” Van Heerden said.

March 2010 | riskSA Magazine

Momentum Short-term Insurance’s personal lines cover automatically includes public liability insurance as part of its standard cover. PLI covers clients and their family members for instances where they may be legally liable or responsible for: • Death or bodily injury to others. E.g. a guest slips on a wet tiled floor in their house, their dog bites a guest. • Damage to property belonging to others. They damage guest’s car. Personal lines cover automatically includes PLI as part of its standard cover. Public Liability Insurance is optional in Commercial Cover. A standard Commercial policy (fire policy in the industry) which covers the assets in the house as well as public liability cover will suffice. The client must remember that public liability is not automatically covered. It is an additional cover for which a premium must be charged. Stand alone PLI cover is available from specialist

liability product providers, but it makes better sense to automatically tap into your existing comprehensive coverage. Van Heerden added that paying guests (tenants) would need to be covered by Business Liability cover. “There are tailor-made products with niche insurers or the client’s current insurer may be able to provide an extension to the existing policy or write a niche product for this type of liability risk,” he said. Langkilde added that this applies to selfcatering accommodation, such as granny flats, cottages and holiday apartments as well. Home owners may believe that they are covered under a conventional ‘umbrella domestic policy’. “Sadly this so-called umbrella has been proved to be inadequate specifically where overseas tourists are involved,” Peter Darroll of One Commercial Investment Holdings said. “They should be well aware that this is one of the crucial factors related to the problems with the Road Accident Fund. In recent times, the largest local claim was a passenger claim for a London-based investment banker who was earning about £250 000 sterling at the time of the accident. Based on a normal

“If paying tenants are injured by something unsafe on the clients’ property or suffer food poisoning while renting the insured’s property, it could result in a major liability claim.”

life expectancy of another 30 years working, the potential loss of earning was £7.5 million sterling. Liability claims would then be finalised at the ruling rate of exchange which at 12 Rand to the Pound would be R90 million but at 16 jumps to R120 million.” Medical expenses are also affected by these factors. “The domestic versus business use is a critical factor and cannot be under estimated,” he said. Your house or flat might not be the only risky business you enter into during the World Cup. Clarendon Transport Underwriters, which currently insures most of the insured taxis in SA, believe that the World Cup organisers will be using some of these taxis during the World Cup to transport visitors and that these visitors will be using taxis of their own accord to get around. Many tour operators have already entered into agreements with taxi operators to take visitors to games as well as to game parks and other tourist attractions. “When you transport any person in your vehicle, whether this person is a family member, friend or fee-paying customer, you have a duty of care towards this person. This is in terms of SA Law under the law of delict,” said Louis Fivaz of Clarendon Transport Underwriters. “If you breach this duty of care, you could be held liable for injuries or damages. The law of delict not only applies to the use of motor vehicles, but also if you operate a bed and breakfast or even rent your house to somebody. Therefore, if somebody is injured in your house and it can be proven that you were negligent in any way, you could be held liable for injuries or damages.” Fivaz added that if you lend your car to one of your guests, there are other issues to consider. Most insurers offer passenger liability cover, but the recent changes to the Road Accident Fund restrict benefits and the commuter may need more cover. “Before the changes to the Road Accident Fund, the injured passenger could institute legal action against the negligent driver for damages not covered by the RAF but this legal right has been taken away,” he said. Where an accommodation provider also provides transport as an extra benefit, this can well be construed as “fare-paying passenger cover”. “Certain players believe that they can solve the problem by simply taking out additional passenger liability cover but this only addresses part of the problem. Whilst conveying such passengers, the driver is operating outside the ‘class of use’ provisions and there would be no cover in terms of other sections of the policy such as own damage,” Darrell advised. Fivaz would recommend that brokers advise their clients to insure their vehicles on a comprehensive basis but also to ensure that they continue to

March 2010 | riskSA Magazine

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ensure against any passenger liability claims until the constitution court makes its ruling. “It would also be recommended that personal accident cover be considered to take care of any shortfall from RAF covers,” he said. Owners of self catering accommodation may also need to comply with the statutory registration requirements of the Provincial Tourism Authorities. In KwaZulu-Natal, for example, this requirement is defined in The Department of Economic Development and Tourism regulation notice No. 6263, dated 02 April 2004 and referred to as the KwaZulu-Natal Tourism (Registration of Tourism Establishments and Tourism Operators) Regulations, 2004, which makes it compulsory for all tourism establishments and tourism operators to apply for registration with the authority. The process of registration requires that the applicant be a member of at least one community tourism organisation, be in possession of a business or trading license and have public liability insurance in place. The penalty for contravening the regulations is a fine of up to R10 000, suspension of registration for a period of three years or both. BnB Sure’s managing director, Dave Jack, warns that guests might not always be on the up and up. “Sadly, it is known that ‘professional claimers’ follow large events, whether sporting or otherwise, around the world and ‘slipping’ is a favourite,” he said. It is difficult to resist that sort of claim without the strength of an insurer behind you. “The other favourite is the supposed ‘theft’ of goods from rooms and whilst there is a strict liability as far as ‘innkeepers’ are concerned, this does not remove from the guest the need to prove that the goods existed or the value of those goods. In many cases, the guest simply ‘goes away’ as the situation was not true to begin with,” he added. While it is a milestone in SA history, the Soccer

World Cup is not the only time that public liability insurance is necessary. There are many other events that are drawing visitors to South Africa, such as the annual IronMan South Africa event. “It is often overlooked what the value of, for example, a 35-year-old specialist physician is worth, one who is likely to work for another 30 years and is now suddenly stopped from that by an accident, the cause of which was the negligence of a guesthouse owner. That claim, even for a South African, could be huge,” Jack warned. His message is simple: ensure you and your clients have enough public liability insurance. “There are specific products in the market depending on the type of risk we are dealing with and limits and premiums vary again according to the type of establishment,” said Jack. “As far as limits are concerned, these are available as high as R100 million. Many people query limits of the sum but converted, it is not that many Euros!” The lower risk profile and assessment prompted SATIB Risk Solutions to launch a self-help webbased facility at www.letsure.co.za. Indemnity limits of R5 million and R10 million are available instantly 24 hours a day. Tillek and Trybus added that some standard policy exclusions include: a. Damage to property in the custody or control of the insured or any employee of the insured. b. Liability consequent upon injury or damage caused by or through or in connection with any advice or treatment of a professional nature (other than first aid treatment) given or administered by or at the direction of the insured. c. Caused by or through or in connection with goods or products (including containers and labels) sold or supplied and happening elsewhere than on premises occupied by the insured other than food and drink supplied incidentally for consumption on the premises.

They advise that the broker should highlight the need for products liability in connection with any food, drink or other products supplied by the insured to visitors as well as highlight potential shortfalls in the existing cover, should the client offer any additional services such as hairdressing or massages. “If the policy does not make adequate provision for damage to guest effects, the broker needs to ensure that the client is aware of this exclusion under the public liability section,” Tillek and Trybus said. Come the World Cup, tickets are going to be your and any visitor’s prized possessions. “It is important to note that no insurance can cover or replace lost tickets, therefore keep them safe. Likewise, passports, identity and travel documents and personal documents,” Van Heerden warned. “If you lose your tickets, contact FIFA directly on www.fifa.com to read about their ticketreplacement policy.” As Hirst says, the World Cup is a wonderful platform to show the rest of the world what a beautiful country South Africa is, and what warm, friendly people we are – but it is equally important for service providers to take extra precautions to ensure that our visitors have a wonderful and safe experience. “That may mean that properties rented out to foreigners have the very best security measures in place to secure those properties (with perhaps security guards stationed on the properties day and night); that vehicles hired out have been properly serviced and are fully roadworthy (with good tread on the tyres, spare tyre in the boot, etc.); that foreigners are advised where not to drive, where it is not safe to walk at night, to not flash their valuables around, etc.,” she said. This is where public liability insurance cover can make all the difference.

March 2010 | riskSA Magazine

liability s t n Eve ding to ident lea sant acc a le should p n e u quenc s t of an the conse e though h th it for is w l n le a o b e d to d e functi host lia ly covere year offic elf, is the te fa rs u e -o q h d e n d re e a and inju sts are party or d few ho t launch the pool ravagan a risk an slip into xt is ld e t u r n o u e v sh yo e ant at l party ction. at every oor poo ing you w ostly fun ality is th t an outd remely c a he last th ut the re xt b st e , e n u u a g yo g ple, if a against up bein or exam a claim uld end wrong. F ver, it co o o c g y g it il in b lia someth ut events s? Witho damage

March 2010 | riskSA Magazine

Hosting sporting events is another area where events liability insurance is needed. While major venues might have such cover, hosts of amateur events at schools, churches and clubs rarely think of the need for insurance. Yet spectator pavilions can – and have – collapsed, fan stampedes can cause injury and death, and personal property has been known to go missing. The cancellation of an event can also result in unforeseen costs such as lost revenue from sponsors, the need to reimburse ticket holders, costs for sub-contractors and other issues. Restaging the event at a later stage adds even more to the total cost, which is why events liability insurance is a needed expense for anyone hosting an event. Confex Insurance Brokers (www.confexbrokers.com) offers cover that includes, but is not limited to: • Cancellation due to transport strikes. • Cancellation due to labour strikes. • Power failures. • Non-availability of the venue. • Non-appearance of key speakers – subject to additional premium. • Adverse weather conditions – subject to additional premium. • Loss of translation/interpretation equipment – subject to additional premium. According to Denise Hattingh of KEU Underwriting Managers (www.keu.co.za), events liability is not standard MultiMark liability policy as the risk profile for an event organiser differs from most businesses especially those being mainly office bound. “For the event organiser, the risk is at the specific venue for that specific event which could vary from a conference, an exhibition, a festival, music concert, sporting event and the like,” she said. KEU’s product covers event organisers for legal defence costs includes 11 statutes; food and drink includes catering companies contracted, sub-contractors, damages to venue and participants. The collapse of temporary construction such as marquee tents and stands can be added to the policy.

afternoon attracts an increased possibility of lightning exposure). • Capacity of venue and anticipated attendance or current actual ticket sales. • Audience – A ‘mainly children’ event will attract a different risk profile. • Political influences in the surrounding areas. • Weather conditions – mainly applicable to exterior events. • Events taking place near or at water. • Use of amusement rides. • Use of temporary lighting. • Use of temporary seating or structures. • Additional risk profile, i.e. motor racing events.

Other companies offering special events liability insurance include African Dawn Risk Solutions (www.africandawnsa.co.za), PCFA Short-term Insurance Specialists (www. pcfa.co.za) and Halifax Insurance Brokers (www.halifaxbrokers.co.za). Vimba Sports Consultants (www.vimbasports.com) offers events liability insurance and sports travel insurance.

Events using fireworks require additional cover. In addition, all events must have a health and safety policy as per the South African National Standard (SANS 10366:2009 Edition 2) Health and Safety at Events Requirements. KEU’s policies exclude personal events, pyrotechnicians and security companies. Barrington Insurance Brokers (www. eventsliability.co.za) also offers events insurance, which is a necessity for anyone hosting an event, at a minimum premium of R5 000. An annual policy is also an option if the insured hosts numerous events throughout the year. According to Barrington Insurance Brokers, it typically handles two different types of events liability claims. Small frequent claims include guest vehicles being damaged in parking areas, guests being served food they were allergic to, guests’ handbags or coats going missing, gates closing on guests’ vehicles and other similar incidents. “The rarer but crippling claims occur when guests are injured because the event organiser failed to protect them. Even if the event organiser was not negligent, costs in defending the organiser can quickly escalate out of control especially in cases where many guests are harmed at the same time,” it said. “Events liability insurance costs a fraction of the price of paying large awards if you are found negligent. Even if you have not been negligent, the legal costs incurred in defending yourself could cripple your business if not insured against.”

“We find that generally most liability policies are silent in respect of the above critical risk points and only upon incident will the questions be asked,” Hattingh added. She advises that the following points are specifically critical when underwriting an events liability policy: • Type of event. • Period of insurance. • Period of actual event (i.e. an event held in the open in Gauteng in summer, late

March 2010 | riskSA Magazine

THE DANGERS of UNDERINSURANCE Michael Clack | Divisional Manager Renasa Insurance Company Limited

ore and more people are falling into the ‘underinsurance’ trap when, in fact, avoiding under-insurance and the application of average when claiming is easily achieved. Under-insurance occurs where the insured has not arranged adequate insurance cover for the financial/replacement value of the property being insured. Simply put, insurers replace property on a new for old basis. For example, an item that cost the insured R1 000 two or three years ago, will be replaced at the current value which may be, depending on various factors, as much as 50 per cent more than the original purchase price. This results in a gap in cover. This gap, between the insured value and the replacement value is then, effectively, borne by the insured. The formula that is used to determine average is as follows: • (Sum insured ÷ value at risk) x amount of loss. For example, if a building is insured for R100 000 while the actual reinstatement value of the building is R250 000; were the building to be damaged by a storm and the cost of reinstating the damaged portion amounted to R40 000, the settlement would be calculated as follows: • R100 000 ÷ R250 000 x R40 000. • The amount payable would therefore be R16 000. Some of the factors that may cause the value of many household items, from audio

March 2010 | riskSA Magazine

equipment to furniture and appliances, to increase in value are inflation, increasing import costs and a weaker Rand/exchange rate. The likelihood that an insured will not be able to replace his stolen or damaged items for anything close to the purchase price of two or three years ago is very high if these simple factors are not considered when arranging insurance to cover these items. Often an insured discovers that he is underinsured only when a claim is submitted and the insurer applies the average principle in settling the claim. The insured then finds himself in a position that a portion of his loss is actually not covered and he is forced to carry that uncovered portion of the loss himself. In the case of large losses, this uncovered portion could be fairly substantial. The result of insurers applying this principle is the most common cause of discontent among insureds. The average principle simply means that if an item or property is under-insured, the insured must bear a rateable proportion of each and every loss equal to the amount of under-insurance. There are three main reasons for the application of the average principle. These are: • To prevent under-insurance. • To obtain the full premium for the risk the insurer is carrying. • To ensure that each party bears a fair share of each loss. Insureds also lose touch with the value of household items. These items are not purchased regularly whereas the increase in

“The most effective solution in combating underinsurance is to regularly and thoroughly review the replacement values of insured property. “ the price of food, fuel, etc. is easily noticed as these are purchased on a regular basis. As a result, insureds are often out of touch with the current replacement values of household items, and therefore out of touch with the required sum insured for their household contents. The most effective solution in combating underinsurance is to regularly and thoroughly review the replacement values of insured property. A simple inventory can be completed or the services of a professional short-term insurance adviser may be employed. This review should be carried out at least once every year, not only to update the current replacement values of existing property, but to include any additional property acquired since the last review. The most convenient time for such a review is on the anniversary date of the policy.

Renasa is an authorised financial services provider (license number 15491)

When smaller brokers have everything they need to thrive and prosper – that’s Brosperity. • a policy, claims and administration system on tap at all times, at no extra cost • the scientifically underwritten “best of breed” insurance products your clients demand • real power and personal service when it comes to claims Want Brosperity? Call us today on 0860 RENASA or visit us at www.renasa.co.za

The Broker’s BesT Friend

Christelle Fourie | Managing Director, MUA Insurance Acceptances

March 2010 | riskSA Magazine

SHORT - TERM

hroughout the Caribbean, calls are being made for better preparation to cope with earthquakes. It’s no surprise – the Enriquillo fault line that caused Haiti’s massive 7.0-magnitude earthquake starts in Jamaica, runs east through Haiti and extends to the Dominican Republic. About 10 per cent of this 483-kilometre fault line has been ruptured since the devastating January quake that destroyed much of the Haitian capital Port-au-Prince and displaced about three million people. The earthquake and dozens of aftershocks are causing increased seismic pressure on both sides of the tear – and seismologists warn there is sufficient strain to release another devastating earthquake during the lifetime of new structures built during reconstruction. While nations like Jamaica examine their readiness to deal with earthquakes with regard to building codes, urban planning and disaster management, the Haitian earthquake has also focused global attention on the preparedness of the insurance industry to deal with largescale natural disasters. In Haiti, there is very little private insurance (non-life insurance penetration is estimated at just 0.3 per cent of gross domestic product). Like many other low-income countries that have suffered devastation from natural disasters, the funds Haiti receives for its recovery will come from aid rather than insurance payouts. But in many other parts of the world, a disaster of this magnitude holds potential to wreak havoc on the insurance industry. The Haiti earthquake cannot be linked categorically to climate change. No single event can. But it nevertheless provides a wake-up call for business, chiefly the insurance industry, about preparing for largescale disasters. Insurance and reinsurance companies have been among the first companies to start feeling the effects of global warming in the form of increased payouts related to severe weather events like floods and storms. And if geologists’ projections are correct – that glacial melting will cause extreme geological events – then the industry needs to be alert to the need for continuous assessment of its exposure to natural disasters.

extreme natural disasters, we have become somewhat relaxed about disaster risks, let alone the possibility of loss accumulation (the simultaneous unfolding of two large-scale natural disasters, such as an earthquake and fires, which can be triggered following a large natural disaster by a gas pipe explosion). Part of the problem is that the memory of an extreme natural disaster lasts for only one generation. If it survives, it does so merely as anecdote. Because the last disastrous natural earthquake in South Africa occurred four decades ago, it becomes easier for us to behave as if we are immune to the possibility of being hit again.

“Seismologists identify this as one of South Africa’s natural earthquake hotspots, based on two seismic events in the historical records. The first represents South Africa’s first recorded earthquake, which occurred in 1620 near Robben Island when the captain of a passing ship heard two startling thunderclaps like cannon shots. Its magnitude has since been estimated at roughly 4.0 on the Richter

One leading Johannesburg-based insurance broker puts the risk of a significant earthquake in South Africa at 2 on a scale of 0 to 10, compared to a risk from fires, storms and flooding of around 8. He says when an earthquake happens it will be a “total disaster” – but points out that the likelihood rolls around only every 100 to 250 years. The insurers are not overly concerned because they have catastrophe insurance in place with reinsurers. Randolph Moses, managing director of reinsurer Hannover Re Africa, says South African insurers and reinsurers do calculate their catastrophe exposure and probable maximum loss in respect of earthquakes and other perils, but cautions that capturing the correct data and creating actuarial models remains a challenge. “It’s quite a complex subject because not only does it require actuarial modelling, but also other specialities, like geosciences,” he adds. It’s unclear to what extent all insurers update their models regularly to take account of factors like urban sprawl. Professor Andrzej Kijko, director of the Aon-Benfield Natural Hazard Centre at the University of Pretoria, says South Africa is lucky because strong seismic events tend to be separated by a couple hundred years. “But remember once it happens, it will happen again. It’s just that people don’t remember. Look at Haiti where people started rebuilding in a day.” Kijko co-authored the first detailed investigation to assess South Africa’s seismic risk as applied to the insurance industry in 2003. It found that seismic risk in Cape Town, Johannesburg and Durban was “not a negligible component” of property rating. In Cape Town, up to 80 per cent of all structures could experience light damage and another 10 per cent moderate damage.

scale.”

In South Africa, most insurance companies are aware of the implications of climate change but more needs to be done in order to better understand its full impact. Coverage is provided for properties that are highly susceptible to flood damage, even when flooding occurs in certain areas every second year and sometimes annually. Because we’re not a country with a recent history of

March 2010 | riskSA Magazine

Seismology experts say South Africa’s potential for earthquake damage comes in the form of natural seismic activity, miningrelated events from deep underground mining, and earthquakes that occur outside our borders but are nevertheless strong enough to create some kind of effect. Of these, Moses believes the industry’s exposure to earthquakes would rank among the highest in Cape Town – overtaking that of Johannesburg, where the two main natural hazard perils for insurers are hail and earthquake exposure, the latter driven by deep level mining. “The Milnerton fault is an area we are aware of,” Moses says of a fault line that is believed to start about eight kilometres offshore of the Koeberg nuclear station before cutting southeast through Milnerton and across the Cape Flats. Seismologists identify this as one of South Africa’s natural earthquake hotspots, based on two seismic events in the historical records. The first represents South Africa’s first recorded earthquake, which occurred in 1620 near Robben Island when the captain of a passing ship heard two startling thunderclaps like cannon shots. Its magnitude has since been estimated at roughly 4.0 on the Richter scale. The German scientist, Von Buchenröder, gave us detailed accounts of the area’s next significant earthquake in Milnerton in December 1809, which notched up an estimated magnitude of 6.1. Other natural earthquake hotspots include St Lucia on the northern KwaZulu-Natal coast, which recorded an earthquake with a magnitude of 6.0-6.5 on New Year’s Eve in 1932; Koffiefontein in the southern Free State, where an earthquake with an estimated magnitude of 6.0 was recorded in February 1912; and Ceres in the

Western Cape, where a September 1969 earthquake, estimated at a magnitude of 6.1- 6.3, killed 10 people and caused insured losses at the time of $7.4 million. The Ceres earthquake prompted the South African authorities to start keeping instrumental records for seismological activity for the first time in 1971. Coenie de Beer, a specialist scientist at the Council for Geosciences in the Western Cape who recalls the walls of his childhood home in Bellville, Cape Town shaking as a result of the Ceres earthquake and its aftershocks, believes the southwestern Cape represents an enhanced hazard for potentially damaging seismic events in historic times. He points out there is evidence for two big events as a result of the Milnerton seismic source in the early 1800s. Kijko cautions that it is controversial to locate precisely the epicentres of earthquakes in the Cape Town area because of the margin for error in anecdotal accounts. In Gauteng, the threat of earth tremors comes from mining-related activities rather than natural causes. The biggest such seismic event, measuring 5.3 in magnitude, occurred at DRDGold’s operations in Klerksdorp in March 2005, killing two miners and injuring 58 people in nearby Stilfontein. A government investigation found it to have been caused by past mining. It warned that seismic activity would continue beyond the mine’s lifetime due to flooding. As Kijko noted in his 2003 paper, South African insurers rarely issue separate earthquake policies, and cover for seismic risk is generally combined with standard or all-risk policies. After the 2005 Stilfontein tremor, several insurers said their policies did not cover mining-related seismic events

Christelle Fourie | Managing Director MUA Insurance Acceptances Christelle Fourie’s career within the shortterm insurance sector has led her to start the specialist underwriting agency Thatch Risk Acceptances, head up Personal Lines Underwriting for Santam Limited, and work for companies such as Hollard Insurance and Alexander Forbes. In addition to this, Fourie has also served as president of the Insurance Institute of the Cape of Good Hope for three terms and is currently its treasurer.

March 2010 | riskSA Magazine

but within a week they had decided to pay. One industry insider believes the insurers were heavily lent on by bondholders to find a reason to pay. Kijko advises insurers and reinsurers to factor in the risk of mininginduced seismicity, along with natural seismicity, in their catastrophe calculations.

“The industry is certainly aware of earthquake risk and has factored it into premiums for insured risks. But it might take a large seismic event to test just how seriously it is rising to the challenge.”

It’s worth bearing in mind that seismologists insist even the best among them can’t pinpoint precisely when or where an earthquake will strike, nor for that matter how big it will be or the severity of its impact. Of the three elements required to make a prediction – geographical location, magnitude of the earthquake and time of occurrence – only the area can be deduced from previous seismic activity. Nevertheless, seismologists are able to say how often they expect an earthquake of a given magnitude to occur in a particular place. This allows engineers to assess whether particular buildings or structures can survive earthquakes within a range of magnitudes. Via a series of complex overlays, they can then translate the hazards associated with the potential vibration of the ground into potential damage to buildings and monetary losses. “For example, if we know that a building costs R1 million and say five per cent might be destroyed, then we estimate expected losses of R50 000,” Kijko says. “This is the starting point for the insurance industry.” The industry is certainly aware of earthquake risk and has factored it into premiums for insured risks. But it might take a large seismic event to test just how seriously it is rising to the challenge. Additional contributions by Ingi Salgado, Business Report

advertorial

Santam launches innovative online quoting tool

for brokers Santam provides an online tool for the new Personal Accident Solution policy

antam’s philosophy of always thinking big and continuing to innovate the shortterm insurance market has resulted in Santam launching the first online quoting tool for brokers in South Africa. The novel Internet tool has been developed to support their new Personal Accident Policy which was launched by Santam towards the end of 2009.

Santam monitored international insurance trends and markets and identified the need to provide local brokers with an innovative tool which could benchmark local practices against the best in the world. “We aimed to address our brokers’ needs to work independently and have therefore developed a self-service functionality so as to quote clients as and when needed, alleviating the task of briefing the call centre and awaiting feedback,“ said Hendri Nigrini, executive head of risk services at Santam. “This online tool will produce a quote in real time, lessening the waiting time dramatically. The interactivity of the tool also allows for a more personal approach between the broker and the client.”

March 2010 | riskSA Magazine

Santam built the online program to allow brokers to discuss the product benefits with clients, while adding information on their individual requirements as the discussion progressed. The step-by-step procedure shows clients their various options and explains the definitions on screen, before a final quote is generated. “The Personal Accident Policy Internet quotation tool is easy to navigate, resulting in a bespoke quotation for each client. Brokers simply select their preferred agency when using the tool, followed by their client’s identification and personal details. After this information has been supplied, it’s a matter of selecting individual or family cover options and furnishing the system with the additional information for each option,” Nigrini explained.

“The tool is so simple to use,” said Nigrini, “that no training is required. The tool offers explanations and, should there be any questions, brokers will find the supporting documents online. The product further demonstrates Santam’s transparency and trust in its brokers as Santam lets its brokers generate the quote in real time without the involvement of the insurance company.” The benefits of using the online tool include: • It produces a real time quote. • It is simple and fast to use. • Providing information to the client during each step of the quotation application process ensuring that all the details are captured immediately, leaving little room for error.

• Ease of navigation with practical examples and supporting information on the relevant screens. Brokers can arrange an online services user account to access the tool by contacting their relationship manager. All they need is Internet access to use the programe. The Personal Accident Policy online quoting tool will test the waters before Santam launches online quoting tools for other products. For additional information, brokers can log into Online Services or contact Santam on 0860 726826.

March 2010 | riskSA Magazine

Why premium parallels don’t always measure up

n integral part of meeting the needs of clients is making sure they know how their insurance works, and how their insurance company mitigates risk. By doing this, we can truly meet the needs of the market and take the ‘grudge’ out of the purchase, said Gari Dombo, managing director of Alexander Forbes Insurance. According to Dombo, a question that puzzles many users of insurance is the degree to which insurance rates differ, especially when the items being insured are very similar; for example, vehicles of the same value. “Notwithstanding that vehicle drivers could have very different profiles, and attract different rates, most people battle to understand why similarly priced vehicles attract such different fees,” said Dombo. A variety of models in very similar price ranges often offer a widely differing spectrum of risks. Parts prices could differ, or the frequency and severity of accidents could vary from vehicle to vehicle. While the smaller new car and the older luxury model might retail at the same value, their repair costs is another matter. A simple example is windscreen prices. “A new entry level vehicle worth R80 000 could have a windscreen that costs R2 000, while a six year-old luxury vehicle, now only worth R80 000, could have a windscreen that costs R6 000 to replace,” he noted. Also, the position of parts is important. Some vehicles, for example, have expensive electronic components in the front. Since front-end damage is most common, vehicles with expensive front-end components have a greater frequency and cost of repair. So, even if one vehicle has cheaper parts overall, it could have a higher repair cost profile. Furthermore, some vehicles are more prone to accidents than others. Even ignoring driver differences, like age, gender, how long the driver has been licensed and where the vehicle is driven, factors such as design differences

March 2010 | riskSA Magazine

and performance could result in a greater frequency of accidents. More dangerous combinations will therefore attract higher rates for owners of certain vehicles.

Saving the Insurance Industry R6 billion is no small change By recommending Tracker to your clients, you’ve helped us recover more than 46 000 vehicles, saving the Insurance Industry billions. Just another way we’re working towards a better tomorrow. Why dont’ you joint us?

Call 0860 60 50 40

Crime Stop 08600 10 111

Real deal car rentals

Glen Waisbrod | Gage Car Hire

ar rental companies focus on four areas within their business models: corporate, private, international and insurance replacement rentals. Being a niche provider, Gage Car Hire operates solely in the insurance replacement market. But being in the game, I have come across some attractive options when renting a vehicle for vacation or for business.

I would recommend: Kulula.com offers competitive pricing for air travel and has a great car rental affiliate programme. Visit www.kulula. com.

Companies which have a substantial spend on car rental usually have a contract with one of the leading car rental companies at more attractive rates due to the size and volume of their account. But for the medium-sized businesses and private rentals, here are some of the options.

I would recommend: Discovery Vitality offers competitive value-added products including car rental. Visit www.discovery.co.za. Conventional Europcar, Avis and Budget Car Rental are no doubt the leaders within the car rental industry and offer an excellent fleet with low mileage, and their service offering is on par with that of First World countries.

Airline affiliates Most airlines have affiliate car rental companies. Airlines have successfully reduced rates by contracting with specific car rental suppliers and are happy to pass these discounts on to their clients. For the airline, itâ&#x20AC;&#x2122;s simple: a happier client, more hits on their website, and potentially more airline ticket sales.

March 2010 | riskSA Magazine

Medical aid affiliates Some of the leading medical aids now offer added buying power and benefits for their members with a similar business model to the airlines.

I would recommend: Europcar has a huge footprint locally and internationally, so whether it be an overseas or local car rental, you will be assured of receiving a decent vehicle and excellent service. Visit www.europcar.co.za.

Web based The Internet is becoming the main portal to arrange your travel arrangements. Internationally stats show over 70 per cent of all travel arrangements are now done on the web. And why not? You can get the most competitive pricing and can arrange your reservation instantly. I would recommend: Play Car Rental offers a wide range of suppliers to choose from. If you are after a low cost rental with a decent supplier, itâ&#x20AC;&#x2122;s the way to go. They have an exceptional model in offering you access to 500 000 rental vehicles worldwide with a nil excess option, including South Africa. Visit www.playcarrental.com. At the end of the day, one needs to take into account vehicle age, service and cost, which are all equally important. We all have different needs, budgets and time constraints. Consider yours, and I hope the options I have given make your next car rental experience more enjoyable and hassle free.

Toughened

or laminated?

nsuring the safety and security of your loved ones is paramount whether you are on the road or in your home, so the choice of the right glass product for car and home is imperative – both for yourself and your clients. But just what is the difference between toughened and laminated glass and which do you use for which purpose? Laminated glass is always used in windscreens while toughened glass can be fitted for the side and rear glass of vehicles to provide added security against hijackers and intruders and additional safety defense in the case of an accident. Laminated glass, as used in Shatterprufe® windscreens, is made up of three layers. The two outer layers of high impact glass sandwich an incredibly strong vinyl interlayer between them, meaning that on impact, Shatterprufe® windscreens may crack but will not

March 2010 | riskSA Magazine

shatter. Shatterprufe® only makes use of virgin (non-recycled) vinyl in its windscreens.

polyvinyl butyral (PVB). SmartGlass products can, therefore, resist multiple blows from an intruder before cracking.

Toughened glass is just that: tough. Armourplate toughened glass is five times stronger than ordinary glass. It is a single layered glass that is subjected to an exacting manufacturing process that radically alters its molecular structure and characteristics, resulting in a stronger glass that when broken, disintegrates into small relatively harmless pieces. Armourplate can thus minimise the chance of serious injury as well as deterring hijackers.

Understanding the right product for each situation is the first step in ensuring security and safety under all circumstances.

The same principles apply in your home or office. SmartGlass products can assist in intruder-proofing your premises. Similar to laminated glass, intrusionresistant SmartGlass is made from two layers of glass permanently bonded together under pressure and heat with one or more layers of high-strength

SmartGlass, Armourplate and Shatterprufe® products are available through PG Glass. For a quote on this tough and adaptable glass, call them on 0860 03 03 03.

SHORT - TERM

Santam’s new subsidiary

Quinten Matthew | Executive Head of Specialist Business at Santam

antam has launched a new subsidiary with a set of tailored insurance products for high net worth individuals. Named Echelon, the business will focus on the LSM 10+ market segment. Brokers who operate in this affluent market segment will receive training on the product offering. “The rising value of customer loyalty and retention means that we need to find innovative and relevant ways to engage with clients. We believe that the strong relationships our brokers have with our clients are the ideal vehicle to further grow our relationships with this astute group of both existing and potential clients. This means moving away from a one-sizefits-all-approach to one that is more tailored, personalised and segmented which achieves higher levels of customer bonding and longer term relationships,” said Quinten Matthew, executive head of specialist business at Santam. A new lifestyle underwriting model has been conceptualised to help select and tailor products for Echelon clients. Created by Darrel Dawson, co-founder of Echelon, the new underwriting model rates each client individually according to a lifestyle matrix. The matrix allocates points according to the client’s lifestyle factors such as: age, gender, occupation, suburb, claims history

and security. The selected client is then matched with the assets to be insured and offered a premium that is determined by their unique demographic risk profile. Matthew added, “We are working closely with strategic partners to develop differentiating solutions that answer our clients’ unique needs,” he said. Dawson continued, “Echelon does its own specialist insurance underwriting and underwrites assets and all risk covers for motor, buildings, contents, pleasure craft, specified and unspecified assets, as well as flexible personal accident and personal liability solutions. We also offer clients innovative benefits such as roadside, home and trauma assistance (available on a transparent buy-up basis), comprehensive cover and competitive premiums for their personal assets.” Echelon clients can also utilise the concierge service, which provides access to preferred restaurants, entertainment, household and auto concierge, as well as advanced driving courses and dedicated consultants to help plan holidays. In addition, Echelon offers car replacement cover for a three-year period. Should a new vehicle be stolen and not recovered within 30

days, or written-off, Echelon will pay the cost of purchasing a new car of the same or similar make and model. For those who want to follow the trend towards more sustainable forms of energy, Echelon has an environmental benefit. This assists clients in building or converting their current homes into an environmentally friendly house with features such as rainwater tanks and solar power heating. To eliminate unnecessary documentation and printing, clients and brokers receive all documentation via e-mail. Should additional information be required, a disc pack can be supplied. “We live in an age where markets are saturated, products are commoditised and consumers are more and more empowered. Mass production, mass media and mass marketing is being replaced by a totally new one-to-one economic system. We believe that Echelon addresses these needs for broker and client certainty in its product design, pricing model and choice of Santam as the risk carrier. It is ultimately a partnership that will enable clients to receive peace of mind and a world of certainty which is a key focus for Santam in 2010,” concluded Matthew.

March 2010 | riskSA Magazine

back to the drawing board?

o the immense relief of many healthcare industry players, Minister of Finance Pravin Gordhan gave no details on the planned introduction of National Health Insurance (NHI) in his 2010/2011 budget speech in February. The respite may be brief, however, as President Zuma’s remark in his state of the nation address that preparations for the establishment of the national health insurance system would be continued.

also been set aside for measles and polio immunisations.

The Minister of Finance did announce plans for a closer relationship between the public and private sectors, which he said would be a prerequisite for the introduction of the NHI. This may suggest that the Department of Health has requested more time to calculate the cost and impact of NHI. It seems that perhaps this necessary research was not performed before the premature announcement of a compulsory national medical insurance was made.

In his state of the nation address, President Jacob Zuma pledged to build and upgrade hospitals and clinics, and improve the working conditions of healthcare workers. The government has partnered with the Development Bank of Southern Africa and the Industrial Development Corporation in a bid to improve hospitals and to provide finance for public-private partnership programmes to refurbish hospitals and provide finance for related projects.

Graham Anderson, principal officer of Profmed Medical Scheme, has said that Profmed, along with many other medical schemes, is sympathetic to government objectives to introduce a health insurance system for the whole country.

“We congratulate President Zuma on ‘grasping the nettle’ and focusing the efforts of the health ministry on these difficult and important problems,” said Anderson. “Revitalising hospitals and clinics through private-public partnership financing and improving the working conditions of staff will, over time, help with winning the battle against the disease burden presently blighting South Africa,” he said.

Consolidated annual government expenditure on health is due to increase from the present allocation of R84 billion (2008/09) to R105 billion (2010/11) to R121 billion in 2012/13. Additional earmarked expenditure was allocated to HIV/Aids (R8.4 billion), hospital revitalisation (R140 million) and public sector doctor and nurse salaries (R2.6 billion). According to the 2010 budget review, R50 million has

March 2010 | riskSA Magazine

“Both President Zuma and the Minister of Finance have sought to prioritise the most urgent health problems in South Africa affecting the poor, and this should be applauded. Boosted spending on HIV/Aids, immunisations and public sector salaries will have a direct and immediate effect,” said Anderson.

“As we have seen in the United States – a country much richer than ours – compulsory, mandatory health insurance is not necessarily the first choice of many citizens, nor is it easy to implement,” said Anderson.

MEDICAL

Healthcare boons in budget

he dreaded N-word was thankfully not uttered in Finance Minister Pravin Gordhan’s recent budget proposal speech. But if not the rolling out of the NHI, what will the government spend its shiny pennies on in the healthcare sector in the year ahead? Susan Erasmus from Health24 neatly rounded up ten health highlights from the budget speech:

tracked for completion. • R2.6 billion will be set aside in the coming three years for doctors’ occupation-specific dispensation adjustments. • R1.3 billion will be put towards the dispensation for ‘therapeutic practitioners’, such as physiotherapists and psychologists.

• A total of R105 billion will be spent on national and provincial health in the next financial year.

• An amount of R50 million will fund a national mass immunisation campaign to combat measles and polio.

• Government is to expand its use of publicprivate partnerships in the health sector, particularly to improve hospitals.

• The government is budgeting for the number of people on antiretroviral treatment to more than double over the next three years. At present, about 920 000 people are receiving ARV treatment. The budget aims to treat 2.1 million people in 2012/13.

• The new George Mkhari and Polokwane academic health complexes have been fast-

MH_513270_Risk_210X160_Paths.indd 1

• A further R3 billion has been allocated to the treatment of those infected with HIV, specifically TB patients and women and children with CD4 counts lower than 350. (Previously, a CD count of 200 was used as the cut-off for being put on ARV treatment. Authorities expect that the higher figure will help save about 10 000 lives a year.) • Total spending on ARV treatment over the next three years will add up to R8.4 billion. • A Treasury official estimated that total Aids spending in South Africa was some R18 to R19 billion a year. This included conditional grants to provinces that funded, inter alia, the ARV programme, R5 billion a year on treating people in health facilities, and some R5 to R6 billion from donors.

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March 2010 | riskSA Magazine

FINANCE & insurance

Sales TRENDS events news info Auto industry outlook

finance & insurance

Volkswagen managing director, David Powels, was recently re-elected as president of the National Association of Automobile Manufacturers of South Africa (NAAMSA). As a glimmer of hope appears on the horizon, RISKSA sat down with him to discuss the future of the automotive industry in South Africa and the very real challenges that still threaten it.

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What the budget means for the motor vehicle industry In the context of the challenging economic environment and uncertainty about the sustainability of the global recovery, the budget proposals represented an appropriate and pragmatic response aimed at promoting higher levels of economic growth and job creation.

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March 2010 | riskSA Magazine

David Powels

Auto industry outlook by Bianca Wright

David Powels | NAAMSA President

olkswagen managing director, David Powels, was recently re-elected as president of the National Association of Automobile Manufacturers of South Africa (NAAMSA). As a glimmer of hope appears on the horizon, RISKSA sat down with him to discuss the future of the automotive industry in South Africa and the very real challenges that still threaten it. How do you foresee the outlook for the industry in 2010? The expectation is that the total market will grow between eight and ten per cent. Passenger and light commercials will show light recovery, though we do not expect to see growth in the medium and heavies market. This total market growth will be driven by growth in the passenger market and light commercial market.

March 2010 | riskSA Magazine

FINANCE & insurance

How is the Eskom price increase likely to affect the motor industry? How is the industry reacting to this? The automotive industry is a significant consumer of power, although it depends on which part of the industry you are in. Energy costs can be a very significant part of the cost of manufacture and this increase will have a definite inflationary impact on that cost. The industry is not in the situation where that can be absorbed and so it will be passed on to the end consumers. In the auto sector, prices are driven by the competitive situation, so it is difficult to predict the extent to which prices will change. The cost pressures are there; how and when the impact will be felt are difficult to predict.

“I don’t believe that any manufacturer is using spare parts prices as a strategy to offset low sales. The market doesn’t operate like that. Pricing is based on what the competitive environment allows and it is not driven by cross-subsidisation, certainly not at VWSA.”

What will the proposed new emissions tax do to the motor industry's recovery? As an auto industry, this as a necessary obligation because it has been accepted by the automotive industry worldwide. But there will be an additional cost burden as a result of the tax that will be passed on to the end consumer. We are not anti the concept, but this will have a knock-on effect on pricing. The timing is not good because as a sector, we are just starting to come out of a downturn where there was a decrease in sales of 50 per cent compared to 2006. As the market starts to recover, it’s not ideal that we have this additional issue to deal with which will impact price. The details of the emissions tax are not final, there is ongoing consultation and the issue is still under review. In addition, the industry has had to face the tightening of lending requirements by banks. How has this hindered the automotive industry?

It is a known fact that the banks’ lending requirements have had an impact on the industry. The tightening up started with the National Credit Act two years ago and the significant lending requirements over this period has seen a dramatic increase in the number of finance rejections from banks. This is starting to change, however. There has been a slight improvement in the lowering of rejection rates to applications from the banks. A more normalised situation will bring some positive effect to the market. How do you react to allegations that the motor manufacturers are hindering the recovery of the motor trade by keeping prices inflated?

It seems there are a number of challenges and opportunities ahead for the automotive sector in South Africa. What can the industry in SA expect over the next three years? That will depend on what happens in the South African economy and worldwide over the next three years in terms of growth and how the global market recovers. I don’t believe that on the local side we will see a huge upswing, but we should see slow steady growth, assuming the economy improves. Worldwide the situation is very uncertain and therefore not too easy to predict. That will determine the fortunes of the automotive sector. We are optimistic but cautious that we will see a slow growth from a fairly low base.

The automotive industry is an incredibly competitive industry. I don’t believe that we’ve priced ourselves out of the market. It is determined by the extent to which the competitive environment allows that price. There has also been some speculation that spare parts prices are being inflated in order to compensate for the falling sales figures. How do you respond to that? Again spare parts prices are a function of the competitive environment. I don’t believe that any manufacturer is using spare parts prices as a strategy to offset low sales. The market doesn’t operate like that. Pricing is based on what the competitive environment allows and it is not driven by crosssubsidisation, certainly not at VWSA. At South African Automotive Week (SAAW), among the other issues you mentioned, you indicated that there was a need to increase local content in locally manufactured cars. What is being done to address this issue? It is up to the individual companies to address that issue. VW has historically had about 40 per cent local content and we are working to increase that to 70 per cent. We’ve made the investments and are in the process of increasing it. I believe this is a commonly shared view and we will see other manufacturers start to increase local content if they have not already done so. You also indicated the need to address the costs of manufacture and export. What is being done to tackle this issue? There are some inefficiencies in the logistics cost chain such as tariffs at ports and so on. The industry is in discussions to improve costs. The challenges are known, but this is an ongoing negotiation process with the relevant bodies.

March 2010 | riskSA Magazine

What the budget for the motor vehicle industry means

ommenting on the minister of finance’s budget proposals, the President of the National Association of Automobile Manufacturers of South Africa (NAAMSA), Mr David Powels, said in the context of the challenging economic environment and uncertainty about the sustainability of the global recovery, the budget proposals represented an appropriate and pragmatic response aimed at promoting higher levels of economic growth and job creation.

Despite severe pressure on fiscal revenue receipts, the minister announced personal income tax relief to the extent of R6.5 billion to compensate for the effects of inflation. This will have a positive impact on consumer sentiment and demand. However, with regard to the increase in threshold above which interest income would become taxable, NAAMSA feels that the threshold should have been increased to well above the proposed R22 300, consistent with the need to boost savings and investment.

would provide a quantum leap benefit in the reduction of CO2 emissions of new cars sold. Specifically, correct fuel quality could reduce new car emissions by over 20 per cent. Moreover, improved quality fuel contains fewer harmful pollutants, contributing to improved air quality regardless of the age or type of the vehicle.

In announcing a mildly expansionary budget to support the economy over the short to medium term, the minister provided reassuring certainty on the maintenance of the status quo in terms of the role of the Reserve Bank, inflation targeting and exchange rate management.

The minister announced the introduction of a CO2 emissions tax, taking effect from 1 September 2010, based on a threshold of 120 g/km and a tax penalty of R75 per g/km above the threshold. This CO2 new car tax regime is intended to influence consumer behaviour in favour of more fuel efficient, less carbon-emitting vehicles and in the process to improve ambient air quality in the country.

Regarding the impact of the additional taxation measures on buyers of new cars, the overall additional cost to consumers, across the board, would be of the order of two per cent. The additional tax burden amounted to about R1.2 billion per annum based on 2010 projected new car sales. There was no doubt that an increase to new car buyers of at least two per cent would depress sales volumes and could have negative implications on industry employment levels.

NAAMSA endorses the minister’s objectives regarding steps to improve the efficiency in and integrity of government spending. Expenditure priorities will include infrastructure expansion to enhance future economic growth capacity, and increases in funding for public health care, education, training and skills development initiatives as well as industrial and enterprise development programmes. With regard to the latter, NAAMSA welcomed the allocation of an additional R3.6 billion to the Department of Trade and Industry for industrial policy interventions. The bulk of this funding is earmarked to support investment and the growth and development in the vehicle and component manufacturing industries, as well as the clothing and textile sectors. The youth employment incentive measures also represented a welcome innovation in the budget.

March 2010 | riskSA Magazine

NAAMSA accepts in principle the introduction of environmental taxes on new cars in South Africa. However, in order to be effective in influencing consumer purchasing decisions, NAAMSA feels it is essential that the tax should be applied at point of sale to ensure visibility to the end customer. A number of technical, administrative and legal issues needed to be addressed to facilitate the introduction of the tax regime and a team of industry experts would assist National Treasury and SARS in this regard. Advocating the need for an integrated approach within government on CO2 emission reduction initiatives, NAAMSA feels that government should legislate and incentivise the introduction of Euro IV, enabling ‘green’ fuel in South Africa. This

NAAMSA believes a further important requirement is the need for measures to replace older, high pollution vehicles with more fuel efficient, less carbon-emitting products.

NAAMSA would prefer to have seen more emphasis on an analysis of the socioeconomic impact of the planned CO2 new car tax, and the quantification of its expected impact on sales volumes and the structure of the new and used car markets in South Africa, as well as on inflation and employment. The timing of the introduction of the tax is also ‘questionable’, given the current fragile state of the industry which was at the initial stage of emerging from an extremely severe recession. NAAMSA feels the impending higher taxes would do little to assist and support the much-needed recovery in domestic sales.

March 2010 | riskSA Magazine

FINANCE & insurance

laiming to drive the best car in the world is quite a boast. You would think that deciding on just one of the vast array of vehicles available to consumers and their widely differing needs would be impossible. Not according to the jurors for the 2010 World Car Awards. The winners of the categories for best green car, design, performance and overall are due to be announced at the New York International Auto Show on Thursday, 1 April 2010, after the finalists are revealed in a press conference at the Geneva International Motor Show on Tuesday, 2 March 2010. A jury of 59 distinguished international automotive journalists selects the top ten finalists in both categories by secret ballot, based on their experience with each candidate as part of their professional work. The jury members represent Asia, Europe, North and South America, as well as other parts of the world. Accounting firm KPMG then tallies the jurors’ ballots and announces the top ten finalists in the World Car of the Year and World Performance Car of the Year categories. The jurors re-evaluate the top ten cars in both classes, in preparation for a final round of voting in February. They rate each vehicle in terms of overall merit, value, safety, environmental responsibility, emotional appeal and significance. KPMG again tabulates the vote results. The top three finalists in both categories will be announced at the Geneva International Motor Show on 2 March during a press conference co-hosted by the New York International Auto Show, the BASF Group and Bridgestone Corporation. 2010 World Car of the Year finalists Audi Q5 BMW X1 Chevrolet Cruze Kia Soul Mazda3 Mercedes-Benz E-Class Opel/Vauxhall Insignia/Buick Regal Porsche Panamera Toyota Prius Volkswagen Polo 2010 World Performance Car finalists Aston Martin V12 Vantage Audi R8 V10 Audi TT RS Coupé/Roadster BMW Z4 Ferrari California Jaguar XFR Lotus Evora Mercedes-Benz E 63 AMG

Nissan 370 Z Porsche 911 GT3 Porsche Boxster/Cayman World Car Design of the Year The design category aims to highlight new vehicles that push the envelope in terms of innovation and style and its finalists are handled differently to those of the overall award. A panel of five respected world design experts assists the jurors in compiling a shortlist of recommendations taken from the entries, before the jurors vote for the ultimate winner. This year, the 59 judges will choose the top design candidate from the following line-up: the Chevrolet Camaro, the Citroën C3 Picasso, the Kia Soul and the Toyota Prius. World Green Car of the Year A similar system applies to the World Green Car award. The eco-friendly finalists of 2010 are the Ford Fusion Hybrid, the Honda Insight, the Mercedes-Benz S400 Hybrid, the Toyota Prius and the Volkswagen BlueMotion (Golf, Passat and Polo). To be eligible for this category, a vehicle had to be available in at least one major market during 2009. The vehicle or the green technology could be in production or an experimental prototype with potential near-future application, provided that it was released for individual or press fleet evaluations in quantities of ten or more during 2008. Tailpipe emissions, fuel consumption and use of a major advanced power plant technology (beyond engine components), aimed specifically at increasing the vehicle’s environmental responsibility, are taken into consideration.

2008 Mazda2/Mazda Demio – World Car of the Year Audi R8 – World Performance Car BMW 118d with Efficient Dynamics – World Green Car Audi R8 – World Car Design of the Year 2007 Lexus LS460 – World Car of the Year Audi RS4 – World Performance Car Mercedes-Benz E320 Bluetec – World Green Car Audi TT – World Car Design of the Year 2006 BMW 3-Series – World Car of the Year Porsche Cayman S – World Performance Car Honda Civic Hybrid – World Green Car Citroën C4 – World Car Design of the Year 2005 Audi A6 – World Car of the Year

Behind the scenes The awards were created to recognise and reward automotive excellence on an international scale, without detracting from the existing national and regional car of the year competitions. Administered by a non-profit association, under the guidance of a steering committee of pre-eminent automotive journalists from Asia, Europe and North America, the awards are co-chaired by Peter Lyon (Japan) and Gerry Malloy (Canada) and directed by Matt Davis (Italy), John McCormick (USA) and Jens Meiners (Germany). There is no affiliation with, nor are the awards in any way influenced by, any publication, auto show, automaker or other commercial enterprise. For additional information, visit www.wcoty.com. Past winners 2009 Volkswagen Golf VI – World Car of the Year Nissan GT-R – World Performance Car Honda FCX Clarity – World Green Car Fiat 500 – World Car Design of the Year

March 2010 | riskSA Magazine

smart still rules the CO2 ranks The smart fortwo cdi is maintaining its top position among the most environmentally friendly cars with a combustion engine, emitting a mere 86 grams per kilometre of CO2 – less than all its competitors. The diesel model used to boast about carbon dioxide emissions of just 88 g/km,

the lowest figure worldwide for cars with a combustion engine. Now the smart fortwo is setting a new record with emissions of just 86 g/km or consumption of 3.3 litres of diesel per 100 kilometres in the manual softip mode. The smart engineers have been able to improve the vehicle’s fuel consumption and CO 2 emissions in the course of further development, which included a reduction in ride height by seven millimetres. Marc Langenbrinck, managing director of the smart brand said, “We continue to work hard to make our smart models even more environmentally friendly. The smart fortwo cdi is proof of this. And the next

Motorists take more tax pain In its budget document, the Treasury announced that the general fuel levy has been raised by 17.5 cents a litre with effect from 7 April 2010, with 7.5 cents of the levy going towards funding a new multi-product petroleum pipeline between Durban and Gauteng.

March 2010 | riskSA Magazine

level of sustainable drives is ready to go: the smart fortwo electric drive has already been proving itself in everyday use in London for three years. Series production of 1 000 vehicles started in November 2009. From 2012, the dream of motoring with no local emissions will become a reality for everyone.”

The general fuel levy for petrol will rise to 167.5 cents a litre and for diesel to 152.50 cents. The Road Accident Fund levy on both petrol and diesel will rise by eight cents a litre to 72 cents. The total fuel tax, which includes a customs and excise levy of 4c/litre, rises to 243.5 cents for petrol and 228.01 cents for diesel. The diesel fuel tax refund and biodiesel fuel tax rebate concessions automatically adjust to maintain the relative benefits.

FINANCE & insurance

Jaguar still purring after 75 years This year marks the 75th anniversary of the Jaguar name. Throughout 2010, Jaguar will celebrate at some of the world’s most glamorous automotive venues, including the Goodwood Festival of Speed and Revival in the UK; the Concours D’Elegance at Pebble Beach in the US; and at the Mille Miglia classic in Italy. Mike O’Driscoll, managing director of Jaguar Cars, said, “In 2010, we

WATS show expanded in 2010 The first Workshop Aftermarket and Technology Show (WATS) of the year will be staged on 24 and 25 March at the Pretoria Show Grounds from 10h00 to 21h30. Visitors to this trade-only event will be able to enjoy the latest workshop-related equipment, services and technology available in South Africa today. If the exhibitor registration numbers are anything to go by (70 per cent of the space was sold out by January), much optimism and enthusiasm is being felt in the industry for 2010.

celebrate our past and 75 years of designing and building cars that celebrate the art of automobile making. We’re also celebrating the promise of the future and the introduction of the all-new XJ.” Just a few years ago, Jaguar set out to revitalise the brand. In 2008, the allnew XF was introduced and, in 2009, Jaguar re-engineered the XK coupé and convertible. This year sees the beginning of sales of the XJ, which Jaguar says incorporates all of the virtues of a car bearing its name.

heart has been central to the Jaguar brand throughout the years.” Sir William Lyons founded Swallow Sidecars in 1922, and went on to create a range of ‘SS’ branded motorcycle sidecars and automobiles in the 1920s and early 1930s. When it came to the launch of the all-new SS 100 in 1935, Sir William wanted a new and evocative name for his company. After asking his advertising agency for suggestions, Sir William chose ‘Jaguar’ and the SS 100 model became the world’s first of this brand.

Ian Callum, Jaguar design director, said, “Jaguar design over the next 75 years must respect and reflect on the past 75 while continuing to push boundaries of technology, luxury and sporting style. Designing cars with a presence that demands a turn of the head and an allure that pulls at the

This year’s show shines a spotlight on training and technology and the extended show hours will sure to bring in a number of visitors to surpass that of the previous years. The Retail Motor Industry Organisation of South African’s (RMI) northern region manager, Angela Calogero, has brought some groundbreaking initiatives to the show to expose more students from FETs, amongst others, to the motor industry.

fuel injection, diagnostic scanning and testing, new generation alternator voltage regulators and an introduction to the electrolog. For further information, visit www.wats.co.za.

Calogero has ensured that the 16 constituent bodies of the RMI will set up interactive and engaging stands at WATS Pretoria. She has teamed up with a panel beating company in Pretoria to set up a demonstration spray booth outside so that visitors can have a go at spraying. WATS will present four 30-minute informative talks each evening, covering a range of subjects such as generic

March 2010 | riskSA Magazine

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Life assets & investments

life assets & investments

life investment markets insight info Africa Tendani Mantshimuli, consumer economist at Liberty Corporate, speaks on the expanding African economy and how eager South African businesses are to get a piece of the pie

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2009 tallied: ASISA Despite local investors ignoring domestic equity funds in favour of money market funds, asset allocation and fixed interest funds for the last three years, this asset class has completed 2009 firmly in the positive, having attracted net inflows of R10.8 billion for the year.

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PlexCrown survey names fund royalty The results of the PlexCrown Survey for the quarter ending December 2009 have been announced, with Allan Gray taking the spot as top South African collective investment scheme management company.

p70 March 2010 | riskSA Magazine

Tendani Mantshimuli | Consumer Economist at Liberty

Tendani Mantshimuli, consumer economist at Liberty, speaks on the expanding African economy and how eager South African businesses are to get a piece of the pie.

uite a few of the top 40 South African businesses have been doing business in Africa for a number of years. This is not surprising as opportunities abound in most African countries ranging from strong GDP growth and populous nations which represent largely untapped markets for South African products. Like everywhere else, African economies were also negatively impacted by the financial crisis. However, the latest IMF’ World Economic Outlook (WEA) indicates that Africa’s economic growth is estimated to pick up from 1.7 per cent in 2009 to 4.0 in 2010. “This growth performance, while disappointing in the light of the experience of the mid-2000s, is still encouraging given the severity of the external shocks. An important factor behind this outcome has been that many governments in the region have been able to use fiscal balances as shock absorbers, sustaining domestic demand and helping employment losses (WEA p89). As quite a number of African economies are commodity based, the outlook for the region depends largely on a fairly robust economic recovery that will support the export market. That and a recovery of domestic demand will support growth going forward. It’s also important that African economies engage in reforms that will strengthen their resilience to external shocks. In an economy like Nigeria this has included economic reform programmes partly aimed at diversifying the economy away from its over dependence

March 2010 | riskSA Magazine

on oil and also improve its infrastructure. These are market-oriented programmes suggested by the IMF like modernising the banking system; curbing inflation by blocking excessive wage demands; and resolving regional disputes over the distribution of earnings from the oil industry. Besides attractive economic growth, African countries have made an effort to improve their appeal as a business destination. The World Bank’s Doing Business 2009 confirms that Africa had a record year for regulatory reforms that makes it easier to do business in Africa. The report ranks economies based in 10 indicators of business regulation that track the time and cost to meet government requirements in starting and operating a business, trading across borders, paying taxes and closing a business. The rankings do not reflect such areas as macro-economic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates. It’s important for companies expanding into the rest of the African market to take all of these factors into consideration in order to succeed in a foreign environment. What does this mean for insurers? Graham Thomas, head of product innovation at Liberty Corporate, talks about this evolving environment and how providers need to change their processes to meet the needs of their clients. More and more businesses based in South Africa have started looking for opportunities outside our borders as their businesses in South Africa become more difficult to grow and sustain in a competitive market. In many cases, staff members that move into the new country on an expatriate basis or

on a long-term secondment are planning on coming back to South Africa at some stage in the future and want to enjoy the same benefits they had beforehand. This requires advising the existing retirement fund and risk providers that the staff member is remaining on the fund and risk scheme, although they are going to be based outside South Africa. Depending on where they are going, the insurer may apply additional costs or exclusions onto the risk cover. It does not end there; staff based locally in the new countries also needs benefits. Usually that means providing benefits through a local insurer or pension administrator. What is available in each country is a function of the sophistication and development of that country’s financial system and legislation. Some countries have local legislation requiring that risk benefits be provided by local insurers; and that pension benefits must be invested locally; others have more relaxed rules; and still others have no rules, so cover and benefits can be provided from anywhere. All of these factors are causing the group insurance market to change around us. Insurers need to become more flexible in terms of covering South Africans wherever they may be working. There are also pooling structures being put in place whereby as companies become more global, they have a multinational pool that pulls together all their staff wherever they may be and wherever they are covered from. As we move into the global city, it seems the insurance industry will need to follow suit, or be left behind.

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Liberty Corporate Receiving the FIA and PMR Employee Benefits industry awards says a lot about us and our commitment to product innovation, administrative efficiency and transparency. More importantly, it says a lot about what we can do for you. With over 50 years experience and 12,000 funds currently under administration Liberty Corporate can help your company by helping your employees take control of their lives. Contact an accredited Liberty Wealth Adviser or call our Client Support Centre on (011) 408 2999. www.libertycorporate.co.za

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pher | CE

Leon Cam

espite local investors ignoring domestic equity funds in favour of money market funds, asset allocation and fixed interest funds for the last three years, this asset class has completed 2009 firmly in the positive, having attracted net inflows of R10.8 billion for the year. Leon Campher, CEO of the Association for Savings and Investment South Africa (ASISA), said that since the majority of investors were not exposed to equities for the greater part of the past five years, they missed out on their solid performance. General equity funds returned an average of 16.2 per cent a year for the five years ended December 31, 2009. The average five-year return for money market funds was 8.8 per cent a year. According to Campher, investors who ventured back into equity funds early last year would have benefited from average returns of between 20 per cent and 35 per cent for 2009. Money market funds, in comparison, delivered an average return of 9.5 per cent for the year. The JSE All Share Index (ALSI) returned 32 per cent in 2009, outperforming the FTSE 100 and the S&P 500 in Rand terms. “Yes, we have seen spectacular volatility in the local stock market over the past five years, but the general trend has been up. Despite the volatility, the JSE ALSI has grown by 119 per cent over the past five years, an annualised return of 17 per cent to the end of December 2009. The only approach that would have enabled investors to benefit from this growth is time in the market, not timing the market.” An end to double counting Assets under management in the South African CIS industry had grown to R786 billion by the end of 2009. This represents an increase of R125 billion in assets under management from the figure at the end of the previous December. At the end of 2009, the industry offered 904 funds.

March 2010 | riskSA Magazine

A ASIS Campher announced that as from the end of the first quarter this year, ASISA would, for the first time, be in a position to compare CIS statistics that completely exclude double counting thanks to a new system. With all double counting removed, assets under management in the CIS industry stood at R750 billion at the end of December 2009 – a difference of R36 billion or five per cent of total assets under management. Campher said the industry will start using the new statistics for quarter-on-quarter comparison purposes as from the end of the Q1 this year. Record net inflows In 2009, the CIS industry attracted record net inflows of R96 billion. The highest ever net quarterly inflows (R35 billion) were attracted in the second quarter last year. Campher said the bulk of the money was attracted by domestic asset allocation funds, followed by money market funds, fixed interest funds and then domestic equity funds. In 2008, 82 per cent of all net annual inflows were attracted by money market funds. In 2009, the inflows were more evenly distributed between the largest fund categories (asset allocation funds, money market funds, fixed interest funds and equity funds), but with domestic asset allocation funds a clear favourite. These funds attracted 31 per cent of the net annual flows last year, followed by money market funds (26 per cent), fixed interest funds (23 per cent) and equity funds (30 per cent). Domestic asset allocation funds have become popular with investors and advisers alike since they provide diversification across asset classes within one fund, with an expert fund manager deciding on the appropriate mix. Funds ranging from low-equity to highequity exposure are available within the asset allocation class.

Foreign funds Campher said that while most local investors were still cautiously returning to domestic equity funds, investors who included offshore diversification in their portfolios last year by making use of the foreign currency denominated funds available in South Africa continued investing mainly in equities.

“In 2009, the CIS industry attracted record net inflows of R96 billion. The highest ever net quarterly inflows (R35 billion) were attracted in the second quarter last year.“ Campher said the foreign CIS statistics for 2009 show that 69 per cent of assets invested by South Africans in foreign funds were allocated to equity funds. Only 18 per cent of assets were invested in fixed interest funds last year. As at 31 December 2009, total assets under management in locally registered foreign funds stood at R108 billion, slightly down from the R114 billion at the end of 2008. However, fuelled by a strong Rand, foreign funds attracted a record net inflow of R10 billion – the highest annual net inflow ever recorded by these funds. While net inflows for foreign unit trust funds picked up significantly last year, flows into foreign unit trust funds remain low compared to net investments of R96 billion into domestic unit trust funds. The number of foreign currency denominated funds on sale in South Africa dropped from 382 at the end of 2008 to 372 at the end of 2009.

life assets & investments

PI rose to 6.3 per cent in December, overreaching the market and the Reserve Bank’s expectations.

“Yes, it is above the target band, but that is largely because we had the unusually large drop of almost R2 in petrol prices in December 2008, so this is entirely a statistical base effect,” explained André Roux, head of fixed income, Investec Asset Management. Roux finds the underlying trends very encouraging. December marked the second month of negative food prices, indicating that we are seeing the beginning of food deflation. And because underlying soft

commodity prices have fallen sharply in recent months, we can expect the trend in food prices to gather momentum.

to ignore this trend, as prices will most certainly drop to more realistic levels after the event,” he said.

Roux continued, “The benefits of the strong Rand for inflation are also coming through strongly now. Vehicles prices, for example, are down for the second month in a row and furniture prices are also on the decline.

Inflation will remain outside the target band for January as well, but Roux said this will be purely a base effect. After that, it should subside quickly towards the middle of the target band.

“In addition, several services items surprised on the downside. The only exception to this improvement is the hospitality industry, where prices appear to be accelerating. This will probably only get worse in the months to come, as it so obviously a case of prices going up into the 2010 World Cup. We expect the monetary authorities

“The Reserve Bank has a more cautious inflation forecast than this, so a good number ... means that they will have to revise their forecast down, thus raising the prospects of a rate cut in March,” he concluded.

March 2010 | riskSA Magazine

Balancing act for financial planners Andrew Kemp | Head of Assets Consulting at Liberty Corporate

chieving inflation-beating growth over time while still preserving capital will always be a financial planner’s challenge. Although achieving these conflicting goals is difficult under usual conditions, 2010 is going to make this juggling act even more precarious, according to Andrew Kemp, head of assets consulting at Liberty Corporate. “The Federal Reserve is targeting March to end its policy of quantitative easing and economists are deeply divided over the prospects for the future. The pro-growth faction point to the slow pick-up of trade in emerging markets, and the general stabilisation of the world’s financial system, as signs that the worst is behind us and the world is likely to start its slow recovery,” Kemp said. On the other hand, equally respected economists feel that the signs of recovery are simply a reaction to the massive monetary stimulus by central banks, and are likely to be short-lived. This, along with the sharp recovery in global markets – especially emerging markets on the back of the dollar carry trade – means that there is the potential for another sharp decline in world markets. From a financial planning perspective, according to Kemp, this makes a difficult job even trickier, as there are few clear signals whether or not to be aggressive or defensive in designing investment strategies. Kemp reckons there are a number of ways to approach a problem like this. While each approach is not without its pros and cons,

March 2010 | riskSA Magazine

Kemp attempts to provide some pragmatic guidelines and principles. Firstly, he says it is important to realise that wealth over the long term comes from compounding returns. Compound returns, however, are very sensitive to periods of negative returns. “An example will illustrate this. Assume that we start with R100. We then lose 10 per cent and then gain 10 per cent. The end value of this will be equal to R99 – less than what we started with. Accordingly, it is clearly important to manage the potential downside of any investment. “Conversely, we also know that if one is too defensive, then one’s investments will simply not keep pace with inflation, so growth assets are required to a greater or lesser extent,” Kemp explained. The second principle is the old adage of ‘time in the market’ as opposed to trying to time the market. Kemp continued, “Academic studies have consistently shown that humans are not particularly good at trying to time the market, and so it is advisable to avoid extreme moves in and out of the market.” If we try to apply these principles to the current uncertain market conditions, Kemp said it would be reasonable to base the longterm diversified asset allocation of the strategy on the client’s needs, as per the usual financial planning process. “However, ensure you put clear bands in place with an upper and lower limit on each

asset class. This ensures that you do not fall foul of trying to time the market with extreme moves from equities to cash, but does allow a little leeway to be slightly more defensive when appropriate, and slightly more aggressive at other times. “Given the current uncertainty, it is probably reasonable to be slightly more defensive than usual – but take care to avoid being too extreme,” he concluded.

life assets & investments

s d n fu Hedge attract likely to

t n a c i signifclient private s w o fl in 0 1 0 2 in

edge fund managers are confident that current market conditions are likely to result in significant flows of capital into alternative asset classes during 2010, as investors look for inflation-beating returns at relatively low levels of risk. According to Kevin Ewer, portfolio manager at Blue Ink Investments – the Sanlam-owned leading manager of fund of hedge funds in South Africa – there are still massive amounts of money sitting in money market funds, which in the current interest rate environment are not earning sufficient returns. “Also, with the equity markets having run extremely hard in the last few months of 2009, a lot of financial planners are concerned about the risks of a pullback and are looking for alternative options for their clients.” However, Ewer cautions that legislation remains a stumbling block to both further institutional and private client flows. “While significant progress has been made, we are not going to see the big changes that we are hoping for. At least though, the groundwork has been done and the FSB is aware of how and what it wants to do. Now it is just a case of finding the right method of implementation.” Ewer believes that conditions are favourable for hedge funds to outperform other asset classes in 2010. “Cash rates are likely to remain low and the massive issuance in the bond market is a major headwind for that asset class. From a long

only side in equities, the easy money has been made. The equity market is likely to see increased volatility and to differentiate between quality companies and companies that have simply rallied despite underlying problems. This provides opportunities for hedge fund managers that are good stock pickers, with both the long and short portions of the fund being potential profit centres. Hedge fund managers also have more tools at their disposal to handle more volatile markets than long only funds. We are confident that we will be able to meet our target returns in 2010.” He adds though that he does not expect hedge fund managers to position their portfolios overly aggressively. “Managers remain keenly aware that liquidity is king in a more volatile environment and that good returns can be made without using much leverage. The extremes of 2008 and 2009 should also have left the successful managers with confidence in the models and methods they use in constructing their portfolios, leaving them well equipped to handle whatever 2010 may throw at them.” Finally, Ewer believes that 2010 will remain a difficult environment for new entrants into the hedge fund market and believes that we are more likely to see consolidation than a spate of new funds. “However, if 2010 proves to be a good year and capital starts to flow more freely, new entrants are likely to emerge in 2011.

IRU OLIH

March 2010 | riskSA Magazine

Altrisk[297X75]RiskSA.indd 1

2/10/10 5:34 PM

PlexCrown survey names fund royalty

T 70

he results of the PlexCrown Survey for the quarter ending December 2009 have been announced, with Allan Gray taking the spot as top South African collective investment scheme management company.

March 2010 | riskSA Magazine

life assets & investments

Ratings are done in accordance with guidelines set by ASISA. Only funds with an official track record of at least three years qualify for a rating and subcategories are rated only if they have at least five funds of three years or older. According to Ryk de Klerk, director of PlexCrown Fund Ratings, Allan Gray achieved a rating of 4.5 PlexCrowns out of a maximum score of five and displayed impressive performances on both domestic and foreign Rand-denominated fronts. The PlexCrown Ratings are based on riskadjusted return measures that are timeweighted over three and five years.

“Ratings are done

Leading funds per unit trust category (Previous leaders in brackets and italics)

Unit Trust category

Fund

Rand-denominated funds Domestic - Asset Allocation - Prudential: Overall Domestic - Asset Allocation - Flexible Domestic - Real Estate - General Domestic - Equity - Financial

Allan Gray Balanced Fund (Allan Gray Stable Fund) BlueAlpha All Seasons Fund (Rezco Value Trend Fund) STANLIB Property Income Fund A (Investec Property Equity Fund A) SIM Financial Fund (Old Mutual Financial Services Fund R/A)

Domestic - Equity - General

Absa Select Equity Fund

Domestic - Equity - Growth

Nedgroup Investments Growth Fund A

Domestic - Equity - Industrial

STANLIB Industrial Fund A

Domestic - Equity - Resources & Basic Industries

Old Mutual Mining and Resources Fund R/A

Domestic - Equity - Smaller Companies

RMB Small Mid-cap Fund Nedgroup Investments Value Fund A

in accordance with

Domestic - Equity - Value

guidelines set by

Domestic - Fixed Interest - Bond

Nedgroup Investments Bond Fund A

Domestic - Fixed Interest - Income

Old Mutual Income Fund R

ASISA. Only funds with

Foreign - Asset Allocation - Flexible

Allan Gray-Orbis Global Fund of Funds A

an official track record

Foreign - Equity - General

Allan Gray-Orbis Global Equity Feeder Fund

Foreign - Fixed Interest - Bond

Coris Capital International Bond Fund A

of at least three years qualify for a rating and

Worldwide - Asset Allocation - Flexible

(Prudential Dividend Maximiser Fund A)

Flagship Worldwide Flexible Fund of Funds A (ValuGro Active Allocation Fund)

Offshore funds Europe - Equity - General

Franklin European Small-Mid Cap Growth Fund Orbis SICAV Asia Ex-Japan Equity Fund

subcategories are rated

Far East - Equity - General

only if they have at

USA - Equity - General

Franklin US Opportunities Fund

Global - Asset Allocation

Ashburton Replica Euro Asset Management Fund

least five funds of three years or older.“

Global - Fixed Interest - Bond Global - Equity - General UK - Fixed Interest - Bond

“Four out of the investment house’s six qualifying funds achieved the highest PlexCrown Ratings of five PlexCrowns and topped the charts in their respective subcategories,” said De Klerk. These funds are: • Allan Gray Stable Fund, which was the

top-performing fund in the Domestic Asset Allocation Prudential Low Equity subcategory and second in the broader Domestic Asset Allocation Prudential category. • Allan Gray Balanced Fund, which was the top-performing fund in the broader Domestic Asset Allocation Prudential category. • Allan Gray-Orbis Global Fund of Funds, which was the top-performing fund in the Foreign Asset Allocation Flexible subcategory. • Allan Gray-Orbis Global Equity Feeder Fund, which was the top-performing fund in the Foreign Equity General subcategory. Prudential was runner-up for the sixth

Japan - Equity - General

(STANLIB Offshore South East Asia Fund)

TriAlpha International Bond Fund (Investec GSF Global Bond Fund A Acc) Orbis Global Equity Fund (Templeton Latin America Fund) Invesco Gilt Fund INVESCO Japanese Equity Core Fund (Orbis SICAV Japan Equity Fund (Yen Class))

UK - Equity - General

Aviva Funds UK Equity Focus Fund

Global - Fixed Interest - Other Income

Melville Douglas Income Fund - Euro Income

quarter in a row, achieving an overall rating of 3.708 PlexCrowns, and was placed third in the overall domestic front and joint third in the overall foreign Randdenominated front. Prudential’s Equity Fund attained third spot in the Domestic Equity General subcategory and has maintained its top rating of five PlexCrowns for six consecutive quarters. With an overall management company rating of 3.563 PlexCrowns, Nedgroup Investments, which outsources the management of its funds, pipped Coronation (3.500 PlexCrowns) for third place. “Nedgroup Investments’s second place in domestic markets was boosted by a strong showing in domestic fixed interest where the Nedgroup Investment Bond Fund took top honours in the Domestic Fixed Interest Bond subcategory,” said De Klerk.

STANLIB Multi-Manager was the top-rated offshore management company at the end of December 2009 with a rating of 3.500 PlexCrowns. The company achieved above-average ratings in the Total Fixed Interest category. As at 31 December 2009, a total of 373 Rand-denominated funds qualified for ratings compared to 359 funds at the end of September. Of these funds 71.6 per cent maintained their ratings while 26.4 per cent underwent minor rating changes and seven funds experienced major rating changes. A total of 156 FSB-approved offshore funds were rated compared to 158 at the end of September 2009. Of these, 73.2 per cent retained their ratings, 26.1 per cent experienced minor rating changes and one fund experienced a major rating change.

March 2010 | riskSA Magazine

Clear thinking. Kiln. Leading providers of insurance and reinsurance in the Lloydâ&#x20AC;&#x2122;s market for over 45 years. Kiln Group Cape Town: 5th Floor, Sunclare Building, 21 Dreyer Street, Claremont, 7700 , T +27(0)21 673 8200 F +27(0)21 683 7319 Johannesburg: Ground Floor, Block 1, Tuscany Office Park, 6 Coombe Place, Rivonia, 2191, T +27(0)11 612 9300 F +27(0)11 234 1557 www.kiln.co.za A registered financial services provider

enterprise risk management

strategic planning operations management internal control risk management info

Business challenge or disaster? Itâ&#x20AC;&#x2122;s up to you. When a factory and its contents are razed to the ground, or an underground explosion obliterates a mine, killing workers and halting production, the potential for loss is vast. A loss of this magnitude is usually valued at R20 million or more. But if you act quickly to assess the loss, while putting in place the right expertise, this can mean the difference between a business-destroying event and manageable business challenges, according to Peter Cook, expert in loss solutions for Alexander Forbes Risk Services.

p74

Big ask for actuaries

Actuaries have the most desirable job in the United States, according to a recent ranking of 200 professions in that country. The findings were based on environment, income, employment outlook, physical demands and stress. Lucky for these professionals, they are also in high demand.

p79

March 2010 | riskSA Magazine

Business challenge

or disaster? Itâ&#x20AC;&#x2122;s up to you.

March 2010 | riskSA Magazine

hen a factory and its contents are razed to the ground, or an underground explosion obliterates a mine, killing workers and halting production, the potential for loss is vast.

enterprise risk management

A loss of this magnitude is usually valued at R20 million or more. But acting quickly to assess the loss, while putting the right expertise in place, can mean the difference between a businessdestroying event and a manageable business challenge, according to Peter Cook, expert in loss solutions for Alexander Forbes Risk Services. So-called large losses, such as the ones mentioned above, typically involve the destruction of buildings and machinery, stock and electronic records (including debtors’ records). In addition to the physical destruction, there could also be lost income due to business interruption, or liability arising from injured employees. As such “Large losses cause both asset loss and liability exposure, requiring that client and the insurer quickly assemble a diverse set of skills able to quantify and interpret the nature of the loss while quickly mapping, and then implementing, a practical route to recovery,” said Cook. The diversity of industry and technical knowledge that needs to be brought to every large loss situation varies depending on the nature of the disaster; the industry concerned; applicable government or municipal regulations; or the legal and contractual position of the business, factory or mine. Broadly, however, Cook

and his team have identified six critical requirements to successfully manage large losses. Rapid response “It is critical that in the first phases of a disaster, the client is able to take control of the process by appointing their own task team,” said Cook. Since even very large businesses will not have dedicated and experienced personnel who can deal with major fire or explosion loss, Cook believes that it is wise to appoint a professional team to manage the process and interface with the loss adjuster representing the insurer. Communication between the client and the insurer “Managing information ensures that careless or damaging statements as well as misleading and inaccurate information is replaced with a flow of accurate information facilitating the assessment process and allowing the insurer to make a decision on liability as soon after the loss as possible,” said Cook. Team of professionals with clearly defined tasks and deadlines Cook cautions that the loss adjusters will also have their own team of professionals. This is not duplication. Both teams are working towards

different goals. The insurer’s team want to either avoid the loss entirely, or else minimise the cost of the claim. The client’s team will want to ensure that the client receives the indemnity and benefits from his insurance policy. “Not having a team representing your exclusive interests in a situation of this nature could cost you dearly,” cautioned Cook. Project plan which identifies priorities The project plan may have several facets, each with its own priorities. For example, the rebuilding project, the plant replacement project, stakeholder communication project, and cash flow management project. Managing expectations Managing both client and insurer’s very different expectations requires great skill and even better communication. In short, Cook advises keeping the client and insurer fully informed and reporting bad news early. Securing and preserving evidence “In liability claims, you may be served with papers only two years after an incident. As such, it is critical that you have all the evidence to hand from the time when the incident happened if you are going to be able to manage this claim two years down the line,” concluded Cook.

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March 2010 | riskSA Magazine

Find the way forward with political risk map

n the wake of the recession, political and financial instability remains a cause for concern, according to Aon Risk Services, the global risk management and insurance brokerage business of Aon Corporation.

Commenting on the company’s 17th annual Political Risk Map, Miles Johnstone, director of Aon’s political risk team, said, “Rising risk levels in 2009 have led to a significant volume of credit and political risk claims in international insurance markets which is driving many of the 18 downgrades in this year’s map. For instance, non-payment of sovereign and sub-sovereign debt obligations is a major issue for underwriters insuring risks in Ghana, and underwriters continue to experience a multitude of claims stemming from payment defaults by private sector banks in Ukraine.” Countries least responsible for global warming will be hardest hit The 2010 map introduced new indices looking at food, agricultural commodity and water supplies. For the past 20 years, global population growth has outpaced growth in agricultural output. Sam Wilkin, associate director of the consultancy practice at Oxford Analytica, said, “A run-up in world food prices in 2007 and 2008 led to dramatic geopolitical events, from food riots in India to worker unrest in Cambodia. Last month, the Food and Agriculture Organisation of the United Nations warned that global food prices could quickly rise again. “With global warming changing regional climates and weather patterns and driving demand for biofuels, the world faces unprecedented food and water risks. Aon and Oxford Analytica have developed

March 2010 | riskSA Magazine

enterprise risk management

forward-looking indices analysing global food and water insecurity,” he said. These indices have been applied to the 30 most ‘high risk’ countries, i.e. those countries potentially facing the most severe food and water insecurity in the medium to long term. These are all developing countries, mostly in Africa. Ironically, the impacts of climate change will rebound hardest on the countries least responsible for global warming. Risks to agricultural supply The Agricultural Commodity Supply Risk Index offers a supply-side view, identifying the internationally traded agricultural commodities at greatest risk of a supply shock, and thus a sudden global price spike. Many of the world’s most productive agricultural regions are expected to experience a drop in productivity if temperatures rise. “Cocoa tops the 2010 Agricultural Commodity Supply Risk Index by some margin, as more than 75 per cent of global production is concentrated in four countries at significant risk of supply disruption,” said Wilkin. “These threats to cocoa supplies include political instability, natural disaster

and water supply insecurity.” Early warning The food and water insecurity indices are not meant to be alarmist, according to Roger Schwartz, senior vice-president of Aon Trade Credit. “They are forward-looking assessments designed to be an early warning. While the increasing supply-side pressures of global warming are more of a long-term issue, there are more immediate concerns. “We are already seeing instances of countries that can’t produce enough of certain foods and, in these financially difficult times, cannot afford to import these food supplies. This places localised pressures on a country’s social balance and can lead to the sort of geopolitical events we saw in 2007/8. “With the prospect of real economic recovery over the next year or so, we are likely to see increased demand for food and water globally. With current supply-side issues being experienced in some areas, this will only add to the existing pressures,” said Schwartz. Global developments Nine countries have been upgraded to a lower risk level: Albania, Myanmar/Burma,

Hong Kong, Colombia, South Africa, Sri Lanka, East Timor, Vanuatu and Vietnam. Eighteen countries have seen conditions worsen leading to a downgrade: Algeria, Argentina, El Salvador, Equatorial Guinea, Ghana, Honduras, Kazakhstan, Latvia, Madagascar, Mauritania, Philippines, Puerto Rico, Seychelles, Sudan, United Arab Emirates, Ukraine, Venezuela and Yemen. Sudan, Venezuela and Yemen have been added to the very high category, joining Afghanistan, Congo DRC, Iran, Iraq, North Korea, Somalia and Zimbabwe. Miles Johnstone concluded, “Aon believes 2010 will see elevated political risk levels continue before an overall tendency for improving global business conditions becomes established. For many companies and across different sectors, including credit and political risk insurance, the business environment remains uncertain when trading with or investing in politically or economically unstable countries.” Against this backdrop, the interactive Political Risk Map provides clients with up-todate and relevant tools to assess the various possibilities and determine their impact on continued survival, growth and profitability.

March 2010 | riskSA Magazine

Environmental insurance

– a wideof risk world W

Steyn McDowall Aon Global Risk Consulting Executive

here there are new categories of risk to be considered, insurance products will follow. The response to environmental risk in recent years demonstrates this, as 17 000 rules are now in force around the world, according to Steyn McDowall, Aon global risk consulting executive. As the environmental issues have become more complex, the policies have become equally sophisticated.

organisation’s overall responsibility to the community,” he said.

Environmental insurance is becoming big business worldwide and is gaining momentum in South Africa. In 2008, global environmental premiums were estimated at $2.34 billion.

“In Europe, for example,

That number is expected to grow to $3.26 billion by 2012. As South African organisations operate within a global arena, they are therefore being forced to adhere to local and international legislative requirements in order to compete.

passed recently which

Companies have to quantify and allocate funds for environmental rehabilitation and protection on projects that could run for 50 years or more. Most directors and CEOs starting long-term projects like these are not likely to be around in 50 years time, raising many issues especially regarding public and personal liability, warned McDowall. In Europe, for example, new environmental liability directives have passed recently which make companies civilly liable for damage to habitats and biodiversity. In addition, companies are required to restore biodiversity. “The South African constitution expressly states that ‘everyone has the right to have their environment protected for the benefit of present and future generations’,” explained McDowall. “Businesses are required by their stakeholders to engage in social responsibility and environmental protection, and rehabilitation is an integral part of an

March 2010 | riskSA Magazine

Also, the spread of environmental regulations means growing potential for companies, as well as CEOs in their personal capacity, to be sued. According to McDowall, companies can become liable retroactively if regulations change, or if the damage was more than estimated, despite the company meeting regulations at the time.

new environmental liability directives have make companies civilly liable for damage to habitats and biodiversity.” “There’s greater concern for environmental issues among customers and among public interest groups,” said McDowall. “With the advent of global instant communication through mediums like Facebook and Twitter, companies are becoming more and more concerned that if they don’t treat environmental problems, it will get out and harm their reputation.” “A business is like an iceberg. It used to be that 80 per cent of assets were fixed and 20 per cent were in market caps. Today, it’s the reverse. Seventy per cent are intangibles, like brand and reputation,” he said. Insurance doesn’t cover intangibles, however. “Instead, companies need to undertake risk management. They need to understand that perception is often greater than the actual risk,” McDowall said.

enterprise risk management

big ask

for actuaries

ctuaries have the most desirable job in the United States, according to a recent ranking of 200 professions in that country. The findings were based on environment, income, employment outlook, physical demands and stress. Lucky for these professionals, they are also in high demand. Peter Doyle, the newly elected president of the Actuarial Society of South Africa, said the situation is similar here. “The global credit crisis has resulted in high demand for professionals qualified in risk assessment and management. Increasingly, actuaries are required to lead the risk strategies of organisations instead of restricting themselves to the traditional field of product design.” According to Doyle, the global financial crisis has opened a whole new career path for actuaries that will ultimately change the perception that actuaries are not generally exposed to high levels of stress. Previously, where organisations were generally happy to appoint whoever was willing as head of risk management, leaders now have to select the person who is skilled at identifying and mitigating risks to take charge of the company’s risk management portfolio.

Upskilling for actuaries Doyle said the evolution of the actuarial profession has placed an added responsibility on actuarial societies around the world to assist actuaries in upskilling. As a result, the society last year joined 14 actuarial societies from other countries in adopting a tough new credential for actuaries: the Chartered Enterprise Risk Actuary (CERA) designation. The new CERA credential is the most comprehensive and rigorous enterprise risk management (ERM) qualification available and will extend the analytical business skills traditionally applied by actuaries to the field of enterprise risk management (ERM). Doyle said the global financial crisis exposed the practice of ‘excessive risk taking’ by those who were trusted as the guardians of consumers’ and trustees’ investments. This has led to a global review of regulatory frameworks for financial services institutions. Global review of frameworks He continued, “While the South African financial services industry did not suffer a single casualty to the global crisis, we are a global player and have therefore not escaped the wide-reaching changes that are being implemented to prevent a recurrence of the carnage that shook the world late in 2008 and early last year. “All members of the actuarial profession are

therefore required to prepare for the regulatory reform processes and changes in corporate governance requirements as they evolve.” Local landscape In addition to dealing with the fallout from the global financial crisis, South Africa is undergoing dramatic changes in retirement, social security and healthcare reform. The actuarial profession is intensely involved in these initiatives through the society, which provides experts to contribute to their development. Doyle said it is therefore imperative that the society assists in developing in-depth knowledge of local conditions. This mandate has been made easier by the launch late last year of South Africa’s very own professional actuarial qualification. (Previously South Africans had to turn to foreign countries to qualify as actuaries, with the majority qualifying via the UK system.) The society also embraces the Actuarial Profession Transformation Charter, which aims to improve the demographic profile of actuarial professionals to become more reflective of the South African population. It has commissioned research into obstacles that black South Africans face in qualifying as actuaries, and supports several mentorship programmes with the aim of helping black students at varsity level succeed in their endeavour to become qualified actuaries.

March 2010 | riskSA Magazine

better business

technology best practice ethics training legislation Sales tips from…

In the first feature of RISKSA’s brand new series of top tips from sales and marketing directors in the industry, we find out from JonJon Smit, sales director at CIB Insurance Solutions, how compliance and expertise can boost your business.

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Budget, business and the economy – what the experts say Deloitte hosted a budget breakfast with a panel of tax and economic thought leaders, who engaged in a lively discussion on how the budget will affect businesses and the economy.

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The bigger picture Viviene Pearson, manager of image and reputation for SAIA, was dramatically reminded recently that we are all connected and dependent on each other in all aspects of life. She tells us more in her column.

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March 2010 | riskSA Magazine

sales

tips from... This is the first feature in RISKSA’s brand new series of top tips from sales and marketing directors in the industry. Look through your copy of RISKSA each month to get the scoop from our sector’s top professionals on how you can boost your business.

JonJon Smit, Sales Director at CIB Insurance Solutions (CIB) JonJon Smit is the sales director at CIB Insurance Solutions, an independent short-term insurance administrator providing brokers throughout South Africa with personal, commercial, agricultural, engineering, building and hospitality insurance solutions for their clients. JonJon has been in the insurance industry for 17 years and has spent nine of those years at CIB. The company’s aim is to be one of South Africa’s leading short term providers and "the" preferred choice for all professional brokers by constantly delivering world-class products, service and keeping abreast of national and global trends.

March 2010 | riskSA Magazine

Focus on compliance and expertise to boost your business

rokers in the South African shortterm insurance industry have had a turbulent couple of years, with a raft of new legislation, the emergence of direct insurers and the development of new products all contributing to massive changes in the sector. Even though brokers have been forced to confront a very different landscape, there are some real benefits from these changes. For example, while complying with the Financial Advisory and Intermediary Services Act (FAIS) may seem onerous and a lot like ‘red tape’, it does also make the process easier and caters for any loopholes in the insurance review and, ultimately, the sale of the product. Complying with regulations forces a broker to be completely comprehensive in his dealings with clients. In fact, it is an FAIS requirement that brokers document all their communication with clients, so that there can be no confusion at the time of a claim. As such, it is vital that you, the broker, get into the habit of checking the quotation provided by an insurer and the subsequent policy document to ensure all cover is in place, and all warranties, excesses and endorsements have been fully explained to the client and understood. Making sure that you do everything comprehensively and thoroughly is crucial in protecting yourself and your client. This becomes ever more important in the event of a query or a complaint, as all correspondence is documented and is freely available to all parties. We currently run training programmes at CIB on our products and services and are always available to assist brokers in the technical aspect of the business as well as taking the time to see clients together with the broker in order to assist the sales process. This kind of personal service is something that clearly differentiates brokers from direct insurers. However, the threat posed by direct insurers is still very real, particularly as some are now broadening their horizon to more

than just basic personal lines insurance. We always advise brokers to clearly explain their unique selling point to clients. Brokers are able to provide sound advice, acquired from years of experience in the market, and add real value to customers. These are factors that one simply cannot get by going direct and are fundamental to the benefits of obtaining insurance via a broker.

sales

• Compare apples with apples, then suggest appropriate changes. • Don’t just sell on price, show the value-add of the product. • Sell yourself as a broker and highlight your expertise. • Build a relationship with the client as it promotes loyalty.

“it is an FAIS requirement that brokers document all their communication with clients, so that there can be no confusion at the time of a claim.” Another major threat to a broker’s business is that of loss ratios and claims experience. You not only need to be aware of their claims ratios, but you also need to be proactive in managing this in conjunction with insurance partners. Failure on the part of the broker to do this will lead to large annual premium increases that will have a big, often damaging, effect on your business. Here are my top five tips to enable you to write more business: • Do a comprehensive needs analysis with your client.

March 2010 | riskSA Magazine

CHAMPIONING

FINANCIAL LITERACY – THE ROLE OF THE INTERMEDIARY Herman Botha | Broker Distribution Executive at Metropolitan Herman Botha focuses on industry issues affecting intermediaries. In this issue, Herman looks at the role of the intermediary in promoting and championing financial literacy amongst South Africans.

he role of the financial intermediary is pivotal to our industry. The intermediary is the conduit between the insurance company and the customer and his or her role in facilitating the flow of information in both directions is crucial. This flow of information involves understanding a customer’s needs and matching these to insurance products and services; but the broader issue of financial education also needs due consideration in order to create long-term sustainability in the industry. In many ways, it is like the proverb of teaching a man how to fish rather than merely giving him fish that makes the difference to his long-term sustainability. When a financial intermediary meets a customer and conducts an initial confidential customer needs analysis (CCNA), the customer’s current and future financial needs and circumstances are assessed so that a relevant, tailored portfolio can be structured. This process is crucial, but it does not necessarily fulfil the broader need to educate customers. We need our intermediaries to step into this role and enable South Africans to take responsibility for their own financial health and well-being. Lack of financial education is the root of many of the scourges of our industry and society in general. Lapses are one prime example. A factor that has a huge influence on the decision to lapse a policy, particularly

March 2010 | riskSA Magazine

at the lower LSM, is the level of financial literacy of the customer. It is not just a case of the customer’s knowledge of the value of insurance and insurance products; it is also about the customer’s ability to manage his/ her own finances, the issue of affordability, and the customer’s sophistication in terms of utilising banks and banking services. The healthcare industry has seen a tremendous shift towards holistic health management and people taking personal responsibility for their health and well-being. This concept now needs to be applied in the area of personal finance. For many South Africans, financial jargon can be confusing and the personal finance arena can seem daunting. Intermediaries can help by explaining basic financial terms and concepts and taking the time to answer customer questions. For many, the difference between order and chaos may be as simple as drawing up a monthly budget, consolidating debt and making an effort to commit to regular savings, however small. With some advice and long-term planning and investment, these small changes could make a big difference. Although every customer is an individual and therefore has a different level of sophistication, there is almost always room for improvement. There are steps which each South African can take to streamline and improve their own long-term financial prospects. The starting point is a mindset change and the cumulative effect of individuals taking charge of their financial health will eventually have a farreaching and positive impact on our country’s economic stability. I cannot stress enough the importance of the intermediary as the facilitator in this process.

0 1 T JUS TES U IN M ITH... WWESTHUIZEN

der n a v E PAULIN

ur series gets to grips with what makes our brokers tick and how they square up to the issues facing the industry. In this issue, we chat to Pauline van der Westhuizen. Quick Bio Name: Pauline van der Westhuizen Age: 47 Family status: Married with two children, a son and a daughter Years in the industry: 20 Favourite leisure activities: Reading and listening to music Currently reading: I Dare You (Embrace Life with Passion) by Joyce Meyer Pauline, what do you love most about your job? Working with people: through my seven years of experience as a financial adviser, I believe I have gained invaluable exposure to customers, assisting them with their life savings. When working with people, you need the essential skills of empathy, integrity and honesty. I believe I’ve mastered these skills and they are part of my value system. I operate life based on these values and I believe that this is crucial when dealing with customers. Having such a strong and powerful value system allows me to better assist my customers and create a measure of success for my work. Each of my customers comes with a unique set of circumstances. I provide sound financial advice to customers during each consultation session. I aim to uphold the culture, values and vision of the company I represent, striving to provide unquestionable advice. I can honestly say

that I have found something in my profession that brings out the best in me and makes me passionate about my job. How do you feel about the economic turbulence of last year? At the moment, I especially feel the impact of last year’s recession (just like every other person!). We were all affected, no matter what our profession. Most people were and probably still are struggling to cover their expenses and excess debt. This results in saving less or simply having nothing to save. I want my customers’ hard-earned money working for them, but it has been difficult having to explain to them why the rate of return on their investments has taken a knock, regardless of whether it was a high- or low-risk investment. I determine how people can achieve their goals and then help them to turn those goals into reality. In brief, I take a snapshot of where a customer is now and where they want to be in the future, and then simply help them to get there. Having a stable foundation is the key to achieving your goals. The impact of this recession shows in cases where customers realise the importance of what they need to do to achieve their family’s goals but do not have the funds make their plans reality.

the result of financial know-how, information and education. The most important thing to do in this industry is to educate yourself. In order for me to provide my customers with the best, I have to know everything about what the market is doing at any point in time, whether it is a change in legislation, the change in the oil price or a new product being offered by an insurance company. What is the most important thing an intermediary can do for his or her customers? Listen carefully to your customers, show that you understand your customer’s needs and maintain good eye contact and body language. Ask questions and know your customer. Act appropriately. Allow customers to express themselves. Do not appear judgmental. The list is long, but the best relationship one can have with a customer is one based on trust. Servicing your existing customers effectively is the key. Like everything else, good service starts with the basics, such as a phone call or a birthday card, a newsletter, or even meeting the customer for a cup of coffee. Meeting with your customer on an annual basis to review their portfolio is also crucial.

How do you keep up to date with new products and services?

What is the broker’s role in promoting financial literacy amongst South Africans?

The experience I have built up over the years has been supplemented by various in-house training courses and completing various exams to provide a better service to all my customers. I also rely on new product information from the insurance companies’ consultants and I read Business Day every day! Good advice is

People are comfortable doing business with advisers who have the skills to educate them on financial and insurance issues and guide them to make well-informed decisions. Leaders must also have the ability to educate people to a higher level and this is where we, as brokers, can make a difference.

March 2010 | riskSA Magazine

Budget, business

and the economy

– what the experts say

eloitte hosted a budget breakfast on Thursday, 18 February, at the Westin Grand Ballroom, a day after Minister Gordhan’s debut budget speech. The panel of tax and economic thought leaders, who were billed to engage in a lively discussion on how the budget will affect businesses and the economy, certainly delivered on this score. Brian Kantor, esteemed economics lecturer at UCT and consultant to Investec, was animated but lucid and there was much enjoyment of his mischievous interactions with Keith Engel from the Treasury. Anthea Scholtz, a tax director at Deloitte, provided some level-headed insight and the discussion was chaired by her associate Le Roux Roelofse, also a tax director at Deloitte.

March 2010 | riskSA Magazine

No increases ... for now Scholtz kicked off the discussion with the bottom line: companies and individuals will not pay more this financial year. There are no new taxes and no increases; however, she did warn about the possibility of rate hikes to come. Indeed, Minister Gordhan, at another breakfast session held on the same day, threatened that personal tax rates could climb in his next budget if the country failed to produce additional tax revenue from more sources by October this year. In fact, he asked taxpayers to stop begging for tax relief every time there was a problem, and to please leave some money for government, according to a Fin24 news report. Luckily for government, the tax base has broadened since last year. Scholtz said further encouragement in this regard is the new voluntary disclosure period, which will run for 12 months from November 2010. This window will offer taxpayers the opportunity to pay their undeclared liabilities at lower interest and with no penalties.

Scholtz highlighted the welcome announcement that SARS will treat retrenchment package lump sums in the same way as retirement lump sums, i.e. that the first R300 000 will be tax-free. However, Scholtz advised caution as it appears that this will apply either to a person’s retrenchment package or their retirement sum – only once in a lifetime.

“raising taxes now would only serve to diminish the tax base; economic growth must be a priority before any hikes are introduced.” Dealing with the deficit In his opener, Keith Engel from Treasury said the budget had been criticised for not being ‘exciting enough’ but joked that Treasury could always demand more tax if consumers wanted more to

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talk about. He revealed that the finance minister had a difficult task in the budget to continue the policy of the past in these very uncertain times. There is a deficit, but do we correct the balance right away? Engel agreed that raising taxes now would only serve to diminish the tax base; economic growth must be a priority before any hikes are introduced. Later, he spoke at length about the difficulty of achieving cultural consensus with regard to changes in policy, specifically with the discontinuation of tax on dividends. This was much to the consternation of the outspoken Kantor. Both Scholtz and Engel praised SARS’s efforts at modernising and automating the tax return process, which has the welcome result of encouraging more taxpayers to register. Engel said the strategy going forward will be to continue broadening the base, while lowering rates. Treasury will go after the ‘big loopholes’ next, such as in the form of cell captives and funnel schemes through which a lot of potential revenue is lost. Sensible continuity despite challenges Brain Kantor’s address ran over time, but he never failed to enlighten and entertain. He reminded the audience that the budget proposals are just that, now that parliament has more of a say in things than they used to. However, he summarised the 2010/2011 budget proposals as “adapting well to difficult economic conditions and representing helpful continuity in macro-economic management that remains sensible and essentially conservative”. He noted that this has been accompanied by a potentially helpful tweaking of the role played by the Reserve Bank in setting interest rates.

“companies and individuals will not pay more this financial year. There are no new taxes and no increases; however, she did warn about the possibility of rate hikes to come.”

Kantor added that the minister’s debut budget had been well-received internationally, according to the response of bonds, equities and the Rand in the markets. Expressing concern that the unions have been irresponsible in their demands for higher wages amidst a recession, Kantor went as far as to say that unions have themselves caused unemployment. However, Kantor complained, “These problems are not to be met in a direct way, that is by reducing entry level wages regulated by the state and bargained for by the unions, but with cash subsidies for tax-compliant employers as well as NGOs and municipalities.” Unfortunately, it is the taxpayer, yet again, who will carry this burden. Employment remains a serious problem for government to tackle.

YOU WAIT AGES FOR THE RIGHT BUSINESS SOLUTION THEN THREE COME ALONG AT ONCE Three ways we can make your business smarter

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Kantor is of the opinion that our interest rates should have been raised sooner, and that Reserve Bank’s reluctance to do so brought about the recession in SA. However, according to the finance minister, South Africa’s position before the recession hit limited the human and economic devastation. Unlike many of the countries who entered the crisis with already high levels of debt, Treasury will not have to cut spending or raise tax at the expense of social development and economic growth. However, Kantor stressed, the problem remains not the amount spent, but the value gained for the expenditure. Service delivery is a major concern and, given the track record in this regard, he said we were entitled to “remain sceptical about much improved outcomes”.

SACMDA09-05

March 2010 | riskSA Magazine

The new Companies Act

and King III –

will they reduce corporate failures?

By Alastair Dixon, Director, and Stephen Kennedy-Good, Associate, of the commercial department at Deneys Reitz Inc.

Alastair Dixon Director Alastair Dixon has been a partner at Deneys Reitz since March 1994. He practises in the commercial department of the firm and has considerable expertise in company law, mergers and acquisitions and corporate restructurings, with particular emphasis on JSE transactions. He holds a BA (Hons) and LLB (Wits) and also obtained an HDip Company Law (Wits) and HDip Tax Law (Wits).

Stephen Kennedy- Good Associate Stephen Kennedy-Good joined the Cape Town office of Deneys Reitz as a candidate attorney and was appointed as an associate in the commercial department in 2007. Stephen’s areas of practice include company law, mergers and acquisitions, preference share funding and general transactional work. Stephen holds an LLB (cum laude) from the Nelson Mandela Metropolitan University and a Master of Laws in commercial law from UCT. He moved to the firm’s Sandton office at the beginning of this year.

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hareholders may invest significant funds into business ventures, be it private companies or public companies, even those listed on the JSE. But the day-to-day running of the company is the responsibility of the directors, not the shareholders, and there is a need to shelter investors from reckless behaviour that has led to the collapse of companies such as Enron and LeisureNet. The new Companies Act of 2008 (new Act) and the third King Report (King III) seek to curb these failures.

March 2010 | riskSA Magazine

better business

A significant development in regard to the management of companies and the protection of investors relates to the tightening up of liability provisions. The board must act in the best interests of the company. In terms of our common law, this would have equated to the best interests of shareholders but the new Act’s stated purpose is to promote compliance with the Bill of Rights as provided for in the Constitution (thereby widening what should be understood as the best interests of the company). Section 76(3) of the new Act also provides that directors must exercise their powers and perform their functions in the best interests of the company. King III reminds the board to act as a focal point for corporate governance by providing effective leadership based on ethical foundations, ensuring that the company is a responsible corporate citizen. But King III relies on self regulation, except for listed companies where the JSE Listings Requirements compel compliance with certain governance principles. The new Act partly codifies the existing common law duties of directors. Section 77 provides that a director may be held liable for any loss, damages or costs sustained by the company, in accordance with the principles of the common law: 1. relating to breach of fiduciary duties – as a consequence of any breach by the director of certain of the codified duties; or 2. relating to delict – as a consequence of any breach by the director of a certain codified duty or any provisions of the Act or the company’s Memorandum of Incorporation. Although this may sound similar to our present liability provisions, the devil is in the detail. The new Act states that a “director” includes a “prescribed officer”. The draft regulations to the new Act, which were released by the Department of Trade and Industry at the end of last year, provide that a prescribed officer includes a host of individuals who may not actually have been appointed as directors. For all purposes of the new Act, a person

is a prescribed officer if that individual has general executive authority over the company; is responsible for financial management or the legal affairs of the company; has managerial authority over the company’s operations or otherwise exercises control over the management and administration of the business of the company. The result is an extension of liability to individuals who were previously not held to account. Chief executive officers, chief financial officers, chief operating officers, head in-house legal counsel and company secretaries will be grouped with directors for purposes of the duties and liabilities of directors under the new Act.

“Business must, however, be alive to the fact that the playing fields have changed and that steps will need to be taken to manage exposure.” These new provisions are positive in the sense that the public will be better protected from unscrupulous management. Business must, however, be alive to the fact that the playing fields have changed and that steps will need to be taken to manage exposure. Likewise, insurers will need to determine their appetite for risk and whether they are willing to extend cover to indemnify all prescribed officers and, if so, the terms upon which such insurance will be offered. Individuals will also need to carefully consider accepting not only directorship appointments, but positions that will land them in the public officer camp. Both the new Act and King III are in line with international trends. Whether they will succeed in protecting investors and curbing corporate failures in South Africa is yet to be seen.

March 2010 | riskSA Magazine

The bigger Viviene Pearson | SAIA Manager: Image and Reputation.

was dramatically reminded recently that we are all connected and dependent on each other in all aspects of life. I recently attended, together with a SAIA colleague, a dinner with the Financial Intermediaries Association (FIA) and Acord, when I choked. If it werenâ&#x20AC;&#x2122;t for Justus van Pletzen from the FIA who dislodged the troublesome piece of steak by hitting me really hard after realising that I was in serious trouble, I would probably not have been able to write about this experience today. (Well, maybe this is a bit over-dramatic as Seamus Casserley was also waiting in the wings to perform the Heimlich manoeuvre if necessary.) The point is, of course, that had I been alone, I may not have survived the experience. The same is true in our industry. All stakeholders have a role to play, including insurers, brokers, underwriting and administration agencies, the authorities, the consumers and many more. Although the perception of who depends more on whom will vary from role player to role player, and from circumstance to circumstance, and even from time to time, this does not really matter. The fact that every stakeholder has a role to play, and each role and/or contribution influences any given process and the outcome thereof, is the important point here. It is for this reason that the SAIA has been following a policy of collaboration whenever we can. There are so many issues that we believe cannot be dealt with on an individual company â&#x20AC;&#x201C; or sometimes even on a specific sector within the industry â&#x20AC;&#x201C; basis. These include the sustainability of insurance, including motor insurance and environmental issues; transformation; the fight against crime and the campaign to improve road safety and consumer education for current and future policyholders. Additionally, the Solvency Assessment and Management initiative;

March 2010 | riskSA Magazine

legislation and regulation issues that impact all parties in the insurance business process; the image and reputation of the industry; and many other issues are dealt with at industry level and include other stakeholders as and when required. This is also why the upcoming Insurance Conference 2010, a joint conference of the SAIA, the FIA and the IISA, makes so much sense. It was easy to agree on the topics for the programme, the potential speakers and many other topical issues simply because many of these issues are of equal importance to all of us. Even with a very unique SAIA issue, the new SAIA Code of Conduct, we were quite aware of the fact that a new code with new requirements will impact on the business partners of our members. For this reason, the FIA, Institute of Loss Adjusters (ILA) as well as the Ombudsman for Short-term Insurance (OSTI), were invited to participate in the process of drafting a new SAIA Code. Another excellent example of the need for collaboration is the data sharing or data connectivity initiative that is currently being dealt with jointly by the SAIA and the FIA. In fact, the dinner that I attended when I received the much-needed help from Justus was an event that centred on the need for data sharing and finding a solution to address this issue to the benefit of insurers and brokers alike. We are all parts of a bigger picture, parts that are inter-dependent and interconnected, and we need to recognise this and work together when necessary to the benefit of all stakeholders involved, not least of all the customers of the products that we design, underwrite and market.

Franklin Dikgale | FISA Chairman

Graham McPherson | FISA Executive Committee Member

Where there’s there’s a way a will

he Fiduciary Institute of South Africa (FISA) estimates only ten per cent of the county’s population has a will – a mere five million are currently estimated to be in circulation and many of these are duplicated, being prior wills from the same testator. Speaking at a presentation in Johannesburg, FISA executive committee member Graham McPherson said South Africans were fortunate to have freedom of testation and yet it was hardly used. Not only for the wealthy McPherson said, “A will is not only an instrument in estate planning for high net-worth individuals. If every South African had a will, this would reduce the number of intestate estates to be administered. A will can furthermore be a guide to trustees of retirement funds in determining dependants when deciding on death benefit distribution in terms of Section 37C of the Pension Funds Act. Section 37C does of course have specific guidelines set out for distributions under that section of the Act. Over time, this could make an impact on the large number of unclaimed benefits in the country.” Of total reported adult deaths, an estimated 70 per cent comprise estates worth less than R125 000. These are dealt with in terms of Section 18 (3) of the Administration of Estates

March 2010 | riskSA Magazine

Act, and do not require a professional executor unless stated in a will and even if nominated, the Masters Office will still prefer to appoint a family member for good reason. The majority of these reported estates have no will. However, the remaining 30 per cent of adult deaths are estates worth in excess of R125 000, and the Master of the High Court requires a full executor appointment for them. Even in these estates there are perhaps 5% of estates reported without wills. Consumer education Through its practitioner training and consumer awareness programmes, FISA is tackling the need to educate and inform the public about the importance and intricacies of a will. Individuals need to know that their marital regime takes precedence over their will and that ongoing legislative and tax changes mean that a will needs to be reviewed ideally once a year. McPherson outlined the dangers of do-ityourself wills, and advised individuals seeking advice to consult accredited practitioners. He also noted that executor’s fees are determined by statute but can be negotiated, and the public needed to be made aware of this. Fiduciary responsibility Wills are merely one aspect of estate planning and administration. FISA, which grew out of the Association of Trust Companies, has a

broad mandate within the fiduciary industry in South Africa to raise standards and protect the public. FISA members include any practitioner with a fiduciary responsibility, such as lawyers, accountants and trust companies active in estate planning, and taxation and financial advisers looking after clients’ assets.

“A will is not only an instrument in estate planning for high networth individuals. If every South African had a will, this would reduce the number of intestate estates to be administered.” FISA chairman, Franklin Dikgale, said FISA is working at improving standards in estate administration. It is working with the South African Law Commission to streamline and update the Administration of Deceased Estates Act and attending to processes that delay the winding up of estates. In this regard, FISA is working with each of the Master’s Offices countrywide to standardise requirements and improve turnaround times as well as with institutions such as SARS, banks and Computershare.

better business

Ian Middleton Masthead Managing Director

for an economic upturn?

igns of global economic recovery point toward a possible market upturn in South Africa during 2010 despite the recent volatility. With the prospect of potentially better times ahead, Ian Middleton, Masthead managing director encourages independent brokers to position themselves and their practices for an economic upswing.

can make your services more appealing, or how to offer your services to different groups of clients. Conduct thorough research and reposition your business where necessary,” added Middleton. Through its practice management offering, Masthead has assisted brokers to successfully reposition all the elements of a practice.

“Practices weakened by the recession may face a risk of failure when the economy rebounds and their business volumes again increase,” warned Middleton. “Cut-backs in all aspects of a business during the past 18 months to reduce costs may result in a poor client service experience due to work overload, lack of resources and insufficient processes. In addition, brokers may face cashflow problems as they step up activities without immediate returns.”

by the recession may

As these factors can significantly impact a practice, it is vital to be prepared for the economic environment,” Middleton continued. “This includes revisiting your business plan, in which you identify where you want your business to be over the longer term. Refocus on that goal and critically revise whether your short-term strategies are still relevant.” “When planning, consider whether your staff, processes and offering are sufficient for your clients. Question whether it would be advantageous to expand the practice and diversify,” he said. This may mean setting up strategic alliances with other brokers or financial service providers. “Also review your sales methodology to ensure it remains effective. Think about how you

“Practices weakened face a risk of failure when the economy rebounds and their business volumes again increase.” Although the South African landscape may look different post-recession, clients’ basic financial needs remain the same. They still need to consult a professional, trustworthy independent broker to manage their investments and reduce their risk. They still want ongoing communication and excellent service. “One of the key changes among clients, however, is development of a greater value consciousness – they want the most suitable financial product at a highly competitive rate,” said Middleton. “While finance is now top of mind for clients, it is the broker’s responsibility to ensure customers don’t lose out by choosing price at the expense of quality.”

upswing, they should follow up on whether clients’ needs have changed sufficiently to warrant another needs analysis. “As you identify their needs, assist in prioritising solutions. Also highlight their risks and suggest how to manage these.” “By boosting your activity within your existing client base, you enhance your client relationships and generate additional opportunities. By keeping your clients satisfied, you can comfortably request their referrals.” An upswing also brings opportunities to grow a practice simply because more people have money available. For this reason, it is important to ensure a high visible presence, both physically and online. Increase the time spent networking and simultaneously use technology to be more productive, reduce downtime and cut the administration burden. According to Middleton, 2010 will not be plain sailing by any means and there is a far way to go to acquire the highs experienced over the past years. But with careful planning, reviews, more client contact, higher visibility and a strong partner such as Masthead, brokers can enhance their chances of success this year. For more information or to become a member of Masthead, visit www.masthead.co.za

For this reason, Middleton encourages brokers to remain in regular contact with clients. As clients begin to feel the benefits of the

March 2010 | riskSA Magazine

STATISTICS SAY IT ALL

MPS has just released its Annual Screening Report. This report is a statistical analysis of all preemployment screening checks conducted from January 2009 to December 2009. These statistics cover a variety of industries within the South African business sector including but not limited to retail, FMCG, fast food, transport, motor, security, courier, legal, hospitality, entertainment, recruitment, finance and insurance. The trend across all the checks run on applicants prior to employing them in 2009, shows an upward movement.

KIRSTEN HALCROW Managing Director: EMPS (PTY) LTD (011) 678-0807 | kirstenh@emps.co.za visit www.emps.co.za

When analysing criminal record checks, name/ ID searches revealed five out of 100 applicants with a criminal record. Using newly released fingerprint technology (AFIS) to check criminal records proved three times more reliable, revealing as many as 14 in 100 applicants with a criminal record. Further analysis of the criminal record checks showed that the most common convictions picked up included theft at 28 per cent, road traffic act offences at 19 per cent and assault at 18 per cent. House-breaking and fraud each as high as seven per cent. Even more frightening was the fact that 22 per cent of applicants with a criminal record are repeat offenders, nine per cent have three convictions and four per cent have four convictions. A further five per cent have between five and nine convictions each. EMPS also took a look at the date of convictions picked up, with records dating as far back as 1968. The relevance of this is that many employers are now not only looking at the type of conviction to establish relevance to the job, but they are now also looking at the conviction date of applicants. Convictions older than 1020 years are often overlooked in order not to discriminate against individuals who may have

March 2010 | riskSA Magazine

been rehabilitated. The majority were, however, from between 1993 and 2007. The percentage of applicants with credit records has remained quite constant over the years, at between 21-25 per cent. At least one in four applicants has been listed with a credit bureau. This may show a further increase in 2010 due to tough economic circumstances experienced in 2009. Although the trend is on the up, driversâ&#x20AC;&#x2122; license verifications improved from 2008â&#x20AC;&#x2122;s staggering 20 per cent to 13 per cent in 2009 of invalid licenses. This change is most likely due to the fact that people are renewing licenses more as invalid licenses not only refer to ones that donâ&#x20AC;&#x2122;t exist, but also those that have expired or not been renewed. 2009 was a tough year for many job applicants. Many companies placed a moratorium on any recruitment and it would seem that many felt desperate as we saw 8.5 of all qualifications submitted for verification as unverified. It would seem that maybe desperate times led to desperate measures. Remaining the same as 2008, eight per cent of ID documents in 2009 were also invalid or unverifiable. Finally, for those measuring integrity, 10 of 100 applicants did not show integrity levels suitable for employment. A further 20 per cent of those tested using the pre-employment polygraph failed on the issue of previous theft or dishonesty. There are so many tools at the disposal of any company recruiting staff, and the statistical evidence is overwhelming that these checks are not done in vain but do in fact reduce the risk of companies who screen.

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it’s in your best interests Esmé Davies | Head of Celestis Practice Management

n China, this is the year of the Tiger. It may not be on other continents where following a little white ball over hill and dale is the preferred pastime. And in our circles, I would like to suggest that we make this the year of value. Now that the doomsayers are beginning to fall silent as the economy sluggishly throws off its recessionary mantle, it is necessary to ensure that you make the most of the opportunities that present themselves. It is precisely this challenge that makes the principle of value so important to us. Without doubt, the recession has burnt fingers and heightened caution. Expect your clients to be looking for value and to be asking questions where previously much was taken for granted. Be aware that competitors offering better service may take business off you and that the decision driver is a perception of value – not necessarily a standard of delivery. Revisit your client propositions and make sure that

they incorporate value as a feature; value that is clearly understood by your clients. Equally important is the value you derive. Warren Buffett said, “Price is what you pay. Value is what you get.” Everything comes at a cost, even if the price is not levied in monetary terms but, for example, is in the currency of time or effort. In the same way as you can expect your clients to weigh up their perception of value against cost, you need to do the same. We are on the brink of conflict of interest legislation that will finally remove any doubt one might have harboured that there could still be such a thing as a free lunch. When enacted, this legislation will require that as a financial adviser, you pay a fair value for any benefits received and the definition of the term ‘benefit’ is vastly comprehensive. How will you react? There will be those who will cut down on the ancillary benefits and services that have become part and parcel of the offerings of

product and service providers and their associates. Both you and your clients could suffer over time, and there is a different way in which to approach the future. Now is the time to seriously consider the investment you make in your business, your people and yourself. No, it is not sufficient to say that most of the expenditure is likely to be a tax deduction. You would be wise to question costs and then base your decision on net, ultimate value. While you might be a survivor, having endured the trials of the last two years, treading water for the year ahead is not an option. The time for consolidation was yesterday. You should be looking for growth and development – to grow sustainable value in your business which is likely to be the biggest asset you ever own. More than ever, the time is right to take your practice to the next level. There will be a price to pay but far more important is the value you will receive.

Best business practice. It’s every professional Financial Advisor’s aim. But who’s helping you achieve and maintain it? Celestis is a company committed to enabling Financial Advisors to remain at the cutting edge. Over a number of years we have put together a practice management program that is focused on enhancing profitability and the development of sustainable value in financial advisory practices. • Experience. We’ve drawn on the experience of leading practices in South Africa and abroad in shaping and building our program. What works best for them can work for you.

Greenroom 01.2009 JB14835

• Research. Extensive local and international research provides the foundation for the concepts and business practices that are included in our program. There is no need for you to spend hours searching for information – we have it. • Proven practicality. A large number of clients have already implemented aspects of the Celestis practice management program with significant, measurable results. A quick assessment will indicate how your practice can benefit. Our professionally qualified team is on hand to offer valuable services to Financial Advisors across the length and breadth of South Africa. Call 021 530 5866 or visit www.celestis.co.za for more information. Celestis, together with our business partners, facilitates the SA Best Practice of the Year award.

March 2010 | riskSA Magazine

STARTING A BUSINESS IN A RECESSION Opinion piece by Elian Wiener, MD of Epic Communications

Elian Wiener is the MD of Epic Communications, an agency specialising in providing strategic communications and public relations services to clients across a range of industries, including financial services, property, IT, legal, medical, HR, motoring, travel and tourism and select consumer brands.

“Your timing is out,” they said. “Wait until the economy improves,” they said. “Wait and see what happens,” they said. “I’m going for it,” I decided. Despite the warnings and predictions of doom provided to me from various quarters at the peak of the recession in late 2008, I decided to move ahead with plans to end a successful partnership with a global public relations firm and start Epic Communications - my own, home-grown operation. While there is no doubt that the warnings about the recession were warranted, the success in 2009 of Epic Communications – a full-service public relations company specialising in the professional, financial, property, tourism and other business sectors – is proof that a new business venture can be launched and made to flourish in difficult economic conditions. Since opening Epic Communications in January 2009, the growth of the business has been remarkable. Revenue for Q4 of 2009 was more than 400 per cent up on Q1 and 200 per cent up on Q2. The business has been profitable in every month since inception. In just fourteen months, Epic Communications has signed on fifteen retainer clients, including Old Mutual Corporate, DuPont, University of Stellenbosch Business School, Nedgroup Investments and PPS Insurance. To service these clients, the staff contingent has grown

March 2010 | riskSA Magazine

to ten full-time staff members. Of course, it has not all been plain sailing. There were times, particularly in the first few months, when I seriously questioned my decision to start Epic Communications. While there is still a long road to travel and many other lessons to be learned along the way, I believe that the following practical advice, based on my experiences thus far, will be useful for any aspiring entrepreneur in the service sector. 1.Make sure you have enough capital to start your business – and to sustain it. When entering into a new business venture, many people make the mistake of underestimating their cash-flow position a few months or years down the line. With the banks unable or unwilling to provide finance to most new small businesses, particularly during the current recession, you need to make sure you have enough capital to keep the business going and for living expenses for at least a year. You also don’t want to cut too many corners when it comes to IT and telecoms systems, furniture and staff, as taking on inferior equipment and people will come back to haunt you later on. If you can’t afford to do it properly, don’t do it at all. 2.Define your competitive advantage and stick to it. Right from the outset, I was 100 per cent clear on what I wanted the company to be – and what I didn’t want it to be. We are an issues and content-driven PR company with

a focus on positioning our clients as thought leaders in their particular industries and helping them to engage professionally with the media. We are not a ‘champagne and balloons’ agency. In fact, at all new business pitches, we emphasize to the potential clients from the outset that if this is what they are looking for, they have come to the wrong place. This has helped us to carve a niche for ourselves in the industry as the go-toguys for our particular set of expertise. 3.Be careful about partnerships. When starting a new venture, it is always tempting to bring in a partner, be it for financial, emotional or technical support. My advice, however, is to consider entering into a partnership only if you absolutely have to and if you are convinced that your partner is bringing at least as much to the table as you are. Be especially careful of partnering with big organisations, which are often long on promises and operational requirements and short on input and delivery. Remember – talk is cheap. Set deliverables and targets from the outset and outline the repercussions if these are not met. An alternative to equity partnerships is to form strategic affiliations or associations, which can work to the benefit of both parties. 4.Get your staff mix right. This is probably the most important lesson I have learned so far. Like a well-oiled sports team, not only should each and every staff member be technically proficient

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at their job, but they need to gel as a unit. Every potential new recruit at Epic Communications is interviewed by the other staff members to ensure they meet the company ethos and will work well within the team.

“With a service

If there is one area you don’t want to scrimp on, it’s staff. As the saying goes, if you pay peanuts, you get monkeys. Hire only the best and brightest, and pay them accordingly. Besides the financial aspect, it is also important for staff members to buy into the vision of the company and feel that they are an incremental part of it. Incentivising staff to attract and retain clients is a great way to keep staff motivated and dedicated to growing the business.

out of clients.

5.Keep an iron fist on your debtors’ book. With a service business, it’s always tough to get money out of clients. In a recession, however, it sometimes feels like drawing blood from a stone. Letting your debtors’ book get out of control is the surest way to disaster. If you don’t feel comfortable pushing clients for payment, then hire someone to do it for you – but be relentless and make it clear that no payment means no more work. Not only will clients pay, but they will respect you for it. 6.Maintain a strong new business pipeline. You’ve just brought in three new clients. Time to sit back and relax, right? Wrong. While it is always important to have periods of consolidation and ensure you are delivering great service to your existing clients, maintaining a strong pipeline of potential customers is crucial. No matter how great your service is, you never know

business, it’s always tough to get money In a recession, however, it sometimes feels like drawing blood from a stone. Letting your debtors’ book get out of control is the surest way to disaster.” when something could go wrong with one of your existing clients, such as a change in strategy or a corporate failure. 7.Keep delivering brilliant service. It may sound clichéd and obvious, but in the service industry, it is just about all that sets you apart from your competitors. While PR and advertising are important marketing tools for any new business, you simply can’t beat positive word-of-mouth, particularly from existing clients. It is important that clients see you as a partner in their business and not as just another service provider.

About Epic Communications Epic Communications team has over 20 years’ experience in providing strategic communications for clients across a range of industries, with a specific focus on the financial and professional services sector. The agency is dedicated to increasing awareness and building the profiles of its clients’ brands, people and services. Epic Communications’ South African head office is based in Cape Town, with representatives in Johannesburg. The agency also has a satellite office in Israel, which services primarily US and Israeli-based clients. Visit www.epiccommunications.co.za for more information.

March 2010 | riskSA Magazine

Clive Simpkins - Marketing and Communication Strategist - Author of: •Presenting, Speaking and Facilitating Secrets •Change Your Thinking, Change Your Life •Media Appearance Secrets Visit www.imbizo.com for more information.

Does your business have soul?

he era of e-mail, the Internet and abbreviated communications has brought with it increasing levels of discourtesy in business interaction. Call centre training seems to have been exhausted by the constant ‘churn’ factor (staff changes). The absence of social sophistication in those dealing with queries has led to dreadful social gaffes becoming the norm. Can you or I change the pattern? Maybe not at a macro level, but certainly for ourselves and those immediately around us – the answer is yes. Part of the brand proposition of your business, service or product offering is the social engagement that goes with what you do. Polite may not sound cool – but it’s the foundation from which we need to work. We simply can’t afford to treat a customer (for want of another word) in any way other than with politeness, warmth, appreciation and indeed gratitude for the fact that they’re actually our salary cheque speaking. I recently had the opportunity of staying in an incredibly expensive hotel, courtesy of a client who clearly saw that as the right thing to do since I was working with their people in that city. Bless ’em. For the inflated price I knew they were paying, I had the privilege of being a number. There was a seamless and yet utterly soulless smoothness to the machine that the hotel was. It was a people-

March 2010 | riskSA Magazine

processor: perfect service, perfect smiles but literally devoid of a personal touch or a sincere word from the staff. The high in the sky double-glazed windows that insulated my executive suite from the outside world and left me cocooned in a strange silence, was the metaphor for the hotel’s overall approach. The business assignment over, I decided to spend the weekend in Cape Town to recover some energies and give myself a mental break. I checked into a highly personable, way more down-to-earth little hotel at my own expense. The doorman deviated from his job description when he saw my equipment cases piled in the back of the car. He became bellhop and concierge all at once. Inviting me to drive into the parking garage where he met me with a trolley. He then insisted (not with that ‘I know I’ll get a big tip’ manner either) on making my arrival painless and really pleasant. His behaviour was as if he owned the hotel – which he certainly didn’t. Being as tuned into communication experiences as I am, I couldn’t help notice the contrast between the two establishments. The one was almost what I’d have expected at a Swiss euthanasia clinic: professional, no-nonsense but remote; the other – a much more comforting way to die if you’ll excuse the continued analogy. That same trip saw me use a car hire company at Cape Town airport. On a Friday afternoon at 16h20, there was just one

attendant behind the counter. I began to hell-raise, as is my habit when I encounter bad service. I always contrast it with the experience I try to give people when I work with them. Interesting for me was the surly attitude of the supervisor who had been pried out from behind the scenes. Her comment: “I’m not officially on duty yet.” That’s the difference between someone doing a job and someone with a vocation for good service. The irritated customers (yes, there were other but silent sufferers) were not her concern until she was ‘officially’ on duty. The brand and reputation damage wasn’t her bag. Although a supervisor, she was after all just an employee. I asked for the head office phone number and left a message for the MD (she wasn’t available after 16h30). Nobody ever returned my call. So I’m not surprised that the supervisor echoes the so-called leadership lack of service or interest. Have you examined lately, how your customers and clients might be feeling about you, your staff and your business? It’s never too late to start making small changes that make a big difference. Try it. You, your staff and the clients will like it.

life assets better business & investments

“Singleness of purpose is one of the chief essentials for success in life, no matter what may be one’s aim.” John D. Rockefeller, Jr, American business tycoon

orking towards realising a dream and goals makes your work meaningful. Purpose is the meaning of work, the component of work that really matters to you and inspires you. It has to reflect harmony with your personal principles.

Once you have thought carefully about the work you do, spend some time thinking about your working environment. It may be a space where you can be productive and creative, or it may merely be a spot where you drop your briefcase, sit behind a computer or worse still, just sit in endless meetings? We spend many hours of our lives working. If you love what you do, it shows in the end result. It is also vital to love that place that you arrive at. Hopefully too, to really like the people you work with. Make small changes that allow your working space to reflect your personality and encourage creativity. Most importantly, do you work with passion? People with passion have a purpose. Conversely those with purpose have passion. Passion, animation and excitement are contagious; those around you will benefit from your attitude when you bring life into your work. If you are not working passionately, make some changes, starting with the way you think about your work and the impact that it has on others. Job satisfaction shows. Work should never feel like an obligation or a chore, it should make you feel alive. The turning point is when you start to resent public holidays and their impact on productivity. Appreciate the fact that you are employed, or have the ability to employ others. Ask yourself if you are merely making a living, or are you actually living. Everyone has a destiny; do you think you are fulfilling yours? The honest answers to these questions could show you where you need to make changes, and where you are headed. If you do not know, then it is time to write your personal brand plan.

One of the key elements of your personal brand plan is your mission statement. If you have your own business it is essential that your integrity and personal values are imprinted on your business, and your mission statement reflects it. If you are not a business owner and are an employee, you should still have your own personal mission statement. It must echo your values of honesty, integrity and professionalism and give you something to live by. It should be:

Live your values and allow people around you to mirror them. That, in essence, provides a winning team. Use your mission statement as part of your plan to accomplish your goals. It is a foundation and a philosophy, an illustration of where you come from.

• a reflection of who you are; • what you stand for; and • what values you hold. Your beliefs, truth and what resonates as authentic integrity for you guide you in your work. Committing these thoughts to writing makes them tangible, it makes them part of a plan. In a corporate environment, more often than not the executive team brief the marketing department, and they write the company mission statement and vision. It is then delivered to each and every person in the company. It is often not practical to allow the mission statement and vision of the company to be an authentic reflection of each and every individual; however, it is the responsibility of each individual to adhere to the mission of the company and to bring the brand alive.

Jenny Handley is a renowned brand strategist and speaker, author of Raise your Profile and co-author of Raise your Game. For details of her books, courses, talks and personal consultations, visit www. jennyhandleypromotions.co.za or e-mail info@jhpr.co.za

• Have you thought about your own personal values? • Ask yourself what inspires you in other people. What do you feel you have that may inspire others? Core values such as honesty, integrity and trust are non-negotiable in the workplace. If you have these values, you will attract staff and suppliers who hold out for the same ideals. Companies are a collection of people, not just a balance sheet. You need to be able to communicate your values in your work and your behaviour so that the silent language of ‘lead by example’ becomes an automatic one.

March 2010 | riskSA Magazine

lifestyle

TRENDS balance adventure EVENTS NEWS @ Lunch with… This month RISKSA was out @Lunch with Don Tocknell and Murray Wright of Monitor Administrators. Newly refurbished, The Oyster Box Hotel in Umhlanga Rocks has kept its old-school charm and the stunning ocean views provided a charming setting for our chat with Murray and Don.

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What you didn’t know about Carel Nolte Don’t bother popping in to see Carel on his birthday. He probably won’t be there. For if there is one thing Etana’s head of people and brand loves as much as the industry he has immersed himself in, it’s travelling the length and breadth of our planet, especially over New Year’s and birthdays.

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@ lunch with...

Brought to you by

Murray Wright Director of Monitor Administrators

his month RISKSA was out @Lunch with Don Tocknell and Murray Wright of Monitor Administrators. Newly refurbished, The Oyster Box Hotel in Umhlanga Rocks has kept its old-school charm and the stunning ocean views provided a charming setting for our chat with Murray and Don.

What are your food weaknesses? Prawns and pizza. What are you reading at the moment? The Tipping Point by Malcolm Gladwell and The Cold Moon by Jeffrey Deaver. If you could change one thing about yourself what would it be? I would like it if I could become more concerned with attention to detail.

Murray Wright | Director of Monitor Administrators

Which three people would you invite to your fantasy dinner party? Winston Churchill, Adolf Hitler, Nelson Mandela In your opinion how has the South African insurance industry changed over the last five years? The doyens of the industry have been lost and the level of service is deteriorating fast. Name one thing that you believe would improve the insurance industry? Service, service, service. What is your idea of perfect happiness? Spending time with family and friends. What is the trait you most dislike in others? When people are braggarts. What was the defining moment in your life? The birth of my children. One personal goal you would like to achieve this year? I would like to get really fit again. Tell us about your best travel experience? Travelling the Mediterranean on a cruise liner with a group of friends, stopping at various cities on the way. You cannot live without yourâ&#x20AC;Ś? I have nothing material that I cannot live without. How do you relax? I enjoy playing sport or reading What is your greatest extravagance? Sports equipment. I love toys!

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lifestyle

with...

Don Tocknell Managing Director of Monitor Administrators

Name three bands you can’t live without and why? U2, Dire Straits and Deep Forest – because of all the memories. What are you reading at the moment? Financial Mail and Fin Week. If you could change one thing about yourself what would it be? My age. Which historical figure do you most identify with? Howard Hughes – before the mad part. Which three people would you invite to your fantasy dinner party? Sandra Bullock, Richard Branson and Mandela. In your opinion how has the South African insurance industry changed over the last five years? I have seen that the big players do not want to – and cannot – service the small players. The grey hairs are being marginalised and are leaving the industry. Over regulation has hampered investment and discouraged young recruits. Name one thing that you believe would improve the insurance industry? Businesses should be set up to use the grey hairs to service the small players, while training young people to load the business onto world class IT systems. In a nutshell –encourage entrepreneurship and information transfer in the industry. If you had to change careers, what would you do? Skipper my own marlin boat in the Seychelles. What is your idea of perfect happiness? Sunny afternoons swimming with my girls in the pool, quaffing Chardonnay. What is the trait you most dislike in others? Greed. What was the defining moment in your life? When I realised that ‘risk creates hope’. One personal goal you would like to achieve this year? Completing the Comrades Marathon. Tell us about your best travel experience? Hitchhiking in Ireland with my wife. You cannot live without your…? Mountain bike and laptop What is your greatest extravagance? Time by myself. What are your favourite restaurants in South Africa? Friday Island in Langebaan and Sirocco in Knysna.

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Don Tocknell | Managing Director of Monitor Administrators

What are your food weaknesses? Oysters, steak and wooded Chardonnay.

Head of People and Brand at Etana insurance company.

Carel Nolte

on’t bother popping in to see Carel on his birthday. He probably won’t be there. For if there is one thing Etana’s head of people and brand loves as much as the industry he has immersed himself in, its travelling the length and breadth of our planet, especially over New Years and birthdays. Carel has worked in the industry for ten years and is currently finishing his final round of insurance exams via Unisa (inbetween all his travel escapades).

fari in Dubai. Post a dune sa Who needs shopping in the Emirates? So where have you been? That’s a question that doesn’t have a short answer. I’ve done Africa, Europe, the Americas, Australia, Asia and most places in between. A better question would be, “Where have you not been?” This is easier to answer. I haven’t been to Cambodia, Vietnam or Laos, any of the ‘stans’ that make up the

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93 year old Snooks

the prohibition. maker of moonshine since

lifestyle

former USSR. And even though I’ve flown over both poles, I’ve never spent any time on either of them. But I’ve done all the states in America except Alaska, and North and South Carolina. And your best airport? I don’t really have a best airport. I enjoy somewhere where I can be kept occupied if I have to spend a long time there. Schipol is one that springs to mind immediately with its arcades, slot machines and shops. But I also love an airport with character – particularly if you get to walk out on to the apron – my best is smelling sun and tarmac at an African airport. The Okavango airport is memorable. It’s tiny – the facilities are outside the airport building and across the road there’s a fabulous bar. More and more airports now look the same (note the Gaborone and Maputo ones being built by the Chinese), so ones which keep their character still win. Come to think of it, the airport at Coober Pedy (think Priscilla Queen of the Desert – the place where people live underground as it is too hot) was awesome … a zoo-type hut behind a fence next to a very hot and dusty strip. The worst? The worst airport in the world has to be Charles de Gaulle. It’s dirty, chaotic, badly laid-out and full of French people asserting their superiority. For a country with such a major tourist industry, they deserve better. What’s the latest you’ve ever been for a flight? I NEVER miss flights. Ever! I’m the nerd who arrives four hours before I need to so that I can check in, try for an upgrade if I want to, choose a good seat (sometimes window, sometimes aisle, never next to the chatty single person), have a relaxing cup of coffee – or something stronger – and chill, checking out the vibe (like the start of the movie Love Actually, I love the vibe at airports – mainly to see people as they leave or arrive and their different expressions). I don’t like to stress when I travel. (Although there was that one time they changed the clocks in Europe while I was there ... but that’s a story for another day.) The most miserable customs officer you’ve had to deal with? The most miserable customs officer I’ve ever encountered was in Namibia. This woman was so grouchy and unhelpful that I stormed through customs in a huge huff without even getting a stamp. “That’ll show her,” I thought ...until I had to return to SA and they couldn’t find my entry stamp. After many more grumpy officials and fervent protestations that I was not a spy, I was eventually allowed to pass through. And

yes, I have been back since, and yes, it is a fantastic place to visit. What about people you’ve met? One of the things I like most about travelling is the anonymity. I don’t really go anywhere to meet people or make new friends. Although having said that, I have met some amazing people on my travels despite myself – particularly as part of the World Universities Debating Society and at Burning Man in the Nevada Desert. I actually have eight godchildren in as many countries. No love children, though. How do you research your trips? I read a lot about the places I travel to (before and after). Apart from guide books, I thrive on finding novels, out of the ordinary autobiographies of famous people in a country and travel writing. I also buy lots of books when I am in a place, often discovering new authors; like on a recent trip to Istanbul and Venice when I discovered a love of communist poetry. You must have at least one ‘lost luggage’ story... I have the best luggage karma of anyone I’ve ever met. No matter how dodgy, inefficient, corrupt or criminal an airport, I have never lost a piece of luggage. I hardly ever lock my suitcase and I believe that baggage wrapping service is a huge joke. That much plastic doesn’t work for Pamela Anderson and it surely ain’t coming anywhere near my luggage. Of course, as I say this, I am shouting TOUCH WOOD! Have you ever been ill abroad? I also have brilliant travel bug karma. I have never been sick away from home. Okay, I’ve broken a bone or two (my own and other peoples’), but I haven’t ever had anything serious. A group I once travelled with all got chicken pox, except me. I had a great time in Orlando spending their money for them while they lay in the hotel with cold cloths over their faces. I did all the rollercoaster rides many times (Which reminds me - the rollercoaster at the Stratosphere in Las Vegas is my best … the scarier, the better.) Best gift you have ever brought home for someone? Buying gifts for people while you travel is an overrated custom. If I see something that someone would like, I get it for them. If I don’t, I don’t. Simple. It’s very personal, actually. I recently bought some LPs in a cool downtown San Francisco store (recommended by a barman the previous night) for a friend who also works in insurance. It may seem quite random except he’s a big fan of LPs, so it was a win. It wasn’t his birthday. It just made me think of

him, so I got it. There have been many such gifts and is much my general philosophy in life – if you see something that you know someone would want or need, get it if you can. Don’t wait for a ‘special’ day – make that person’s next day special. Your scariest flight? The most scared I’ve ever been in a plane was on a flight from Uganda to Rwanda. With smoke billowing out of the engines, we made an emergency landing while the cabin crew assured us there was nothing to worry about. My deep-seated belief that I will die in a plane crash (in fact, that’s exactly how I want to die ... eventually) kicked in and I was convinced that this was it. I’ve had worse boat rides; going from Galway Bay to the Arran Islands once, I was seasick beyond belief. As for getting in some taxis in India and Italy, or driving narrow roads on the way to Tipperary which indeed is a long, long way. And the best airline you’ve flown? To me, the best airline is the one that gives me the most points. Right at the moment, that’s SAA. I’ve also found that travelling business class on any airline is not bad. The worst airline I’ve been on is Delta from Johannesburg to the US. I think their cabin staff members are trained alongside the Namibian customs officials: same attitude, except without the stamp and more camp. Best travel deal you’ve scored? A lot of my travels are excellent deals. In fact, some of them are free – either in return for a bit of writing here or there, or simply by using points to get a ticket. Upgrades: ever schmoozed one? Have I ever schmoozed for an upgrade? Have I ever! And I’ve done a lot worse than schmooze besides. Like all good travel whores, I’m not afraid to stoop to alarmingly low tactics to secure the mother lode of travel booty – the upgrade. Travelling through the US a few years ago after some eye operations, I used a very successful ploy to ensure an upgrade on every flight I took. It turns out an eye patch is a brilliant prop to get out of coach. I don’t know if it was a sympathy thing or if they did it out of fear that I would take the thing off, but my patch worked like a charm on check-in clerks across the States. As an added bonus, it ensured that cabin crew didn’t hover unnecessarily around my seat while in flight. Travel tips for intrepid travellers? Travel tips: Plan broadly, but be flexible. Experience everything! (There’s no point doing the same things you do at home.) Try to learn some local words, try anything at least twice. Take lots of photos. Write lots. Leave your phone and be on holiday.

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but am happy to hook up with anyone as long as they don’t whine and realise they are guests in another country. I travel often with my great mate, Kate Turkington, the travel writer. Our best trip has been Ethiopia where Kate nearly got us kidnapped and was very upset when the Afar rebels let us go and took some British tourists. She is 75 going on 20 and we always travel with Laphroaig – my favourite tipple – and loads of laughs. The best sunset you’ve experienced? Best sunset spots: Maui, the Rift Valley and Easter Island. The best sunrises: Uluru (aka Ayers Rock) where I played tour guide to some Dutch girls. And, of course, the bush right here at home.

Flying high in Mauritius.

Your best adventure trip ever? Last year, I travelled to Rwanda to see some friends and visit the famous gorillas (and be humbled by the country’s ravaged history). There were many times, schlepping up that interminable hill in the mist and rain to reach the gorilla nest, that I nearly packed it in. The physicality of it was something I was not expecting or prepared for. Finally I couldn’t take it anymore. I sat down in the mud and started to sulk ... which is precisely when I sensed the silverback’s presence and felt him move in until he was right next to me. My travel companions thought I was being very brave sitting there silently communing with the beast and nature in general. In truth, I was too exhausted to move. But I took the kudos for being brave and decided to get fit. Now I can run away from wild animals if need be. Worst travel companion? I don’t remember any specifically bad travel companions. I don’t mind travelling alone,

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I often go overseas for weddings, birthdays and other occasions. I have been bridesman at an ex fiancé’s wedding with two gorgeous bridesmaids, rope tier at a catholic wedding in Manila, MC at a fortieth in Europe for some ex-BBC colleagues, and the date at a 21st in Los Angeles. Then there was the wedding in Puerto Valharta, Mexico, where I nearly burned down the estate after the bachelor’s where I did give the locals a run for their money with the tequila (much like an IISA conference). I travel on adventure trips: white-water rafting in Canada; climbing mountains; chilling in Mauritius or Kenya on a beach; going to the Mardi Gras in New Orleans (or helping to build homes for Habitat for Humanity there); campaigning for Obama in Washington, etc. Bottom line, I like different travel experiences all the time. I love going to events, whether a Modigliani exhibition in Paris (my favourite artist), the Burning man Festival in Nevada, the Masked Festival in Burkina Faso, a literary Festival in Hay in Rye, Wales, or the Rugby Sevens in Hong Kong.

What’s in your carry on bag? My carry-on bag is never without my iPod, complete with audio books; a book or two; and my travel jersey, which doubles as a pillow or a blanket just in case. What not to pack? I never travel with my best stuff. Whatever I take with me I am prepared to leave behind, usually to make space for new stuff (which often becomes my best stuff or ‘odd’ stuff. I love buying local clothing items, often oneof-a-kind pieces; like the trousers I bought New Year’s Eve at Ponta Malongane in Mozambique. By the way, since 1991 when I left school, I have spent only three New Years at home.

Crazy stuff you’ve done while travelling?

Life lessons? Travel has taught me the value in learning from other people and cultures. It also makes me extra proud to be South African and to always look forward to coming home no matter how good the trip has been.

African in sandstorm in Blackrock

Desert, Nevada The best cuisine on any trip, ever? The best food I’ve ever had while travelling was, ironically, at an airport in Malaysia after having spoken at a conference in Singapore (basically just a large shopping centre and a pretty dull place in my opinion) on South African author, Bessie Head. We wandered off in search of our flight and landed up in a hangar with the service crew. Language was a problem, and it was tricky trying to explain where we came from and what we were looking for. Eventually they just fed us – I guess in apology for not being able to help us find our plane. I don’t know what it was, but it was absolutely delicious – wrapped in banana leaves. I try to eat sushi wherever I go – best global spots are Zuma in Hong Kong, Sushi in Sydney and a fabulous little place in Houston – little in comparison to the rest of Texas, that is – the name of which I can’t remember but if anyone’s willing to get me to Houston, I’ll gladly take them to the restaurant.

In summation? I have been very lucky to travel for work over the years; I have been to the World Cup soccer in Germany (a good forerunner for our Etana soccer involvement now). Our involvement with rowing has taken me to many countries including Milan for the World’s. All in all, I have travelled extensively around the world as well as on our own continent. My career in insurance has even allowed me to visit Beijing for the Olympics. Clearly our niche in the financial services sector offers a lot as a career and I would recommend it to anyone. What is the best place I have been? I’ll let you know when I find it. Travel destinations for the next few months include Afghanistan, Alaska and the Maldives. Make friends with Carel on Facebook or Twitter (carelnolte) to see more photos and to swap travel and insurance stories.

Business travel in

Uganda Hendrik du Preez

Head of Business Development for Africa & the Middle East

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ganda is one of the smallest countries in Africa and yet it is one of the most beautiful and diverse. It is home to the birth of the Nile as well as the highest mountain range in Africa â&#x20AC;&#x201C; that of the Mountains of the Moon in the Ruwenzori National Park. Uganda has the highest concentration of primates on earth, and this includes the majestic mountain gorilla which is one of the rarest animals on the planet. It is also host to a growing oil industry that is bringing a lot more business travellers to the country as well as some much needed foreign investment.

Getting there and around All travellers need a visa to enter Uganda, which can be obtained at all the major border posts, as well as Entebbe International Airport. Expect to pay around 30$ for a single entry and $60 for a double entry visa. Both are valid for three months. There is also a 48-hour transit visa available for $15.

lifestyle

The capital city is Kampala and the international airport, Entebbe International Airport (EBB), is about 40 kilometres south of Kampala, close to Lake Victoria. This will be the entry for most travellers to Uganda. You can get a taxi to Kampala for around US$25 and there are a number of car hire companies available at the airport. There are also shuttle busses to the major hotels in Kampala. Alternatively, there are chaufferdriven cars available or ‘special hire’ taxis in the capital. The roads are good in most of the metropolitan areas in the Southern parts of the country; however, the further north you move, the more unusable the roads become. If you decide to drive yourself around, you’ll learn quite quickly that there are unique unwritten rules to driving in Uganda, as in most African countries. Remember to stay alert and be courteous as there are times that vehicles are often encountered on the wrong side of the road, or the road can accommodate only one vehicle and you might be expected to give way even though you may think you have the right of way. Uganda is GMT + 3, it has a population of 27.6 million and its international dialling code is 256. The outgoing code is 000 followed by the relevant country code (e.g. 00027 for South Africa). The official language is English and it is prevalent throughout the country and relatively easy to communicate with locals, though in some of the more rural areas this may not be the case. Uganda is safe overall, though it is best to keep away from the hotter spots of the country to the

north and far northeast and in cities such as Gulu and Lira. Money matters Uganda uses the Ugandan shilling (USh) which is made up of 100 cents. Cash as well as travellers’ cheques can be exchanged at most major banks and foreign exchange bureaus within the capital. You’ll find that exchange rates are considerably better in the capital than in other areas of the country. There are ATMs in a few cities such as Jinja, Mbale and Mbarara and credit cards are accepted at only major hotels, shops and restaurants in the cities. Kampala Kampala is an interesting and vibrant city, filled with the feeling of progress and rebirth. It is the heart of Uganda; its commercial and intellectual hub. The city is a child of progress and new buildings and ventures are mushrooming all around it. The people are friendly and always willing to assist travellers, and from the city travellers can venture out to some of the most beautiful scenery on the planet. Kampala has a host of hotels and accommodation, ranging from upmarket options to budget hostels. Remember, however, to book in advance in order to be sure that you’ll get a place to stay for the night.

Always remember that when visiting different countries, cultures vary drastically and actions that are acceptable to one culture may be frowned upon in another. Be wary of taking photographs too openly or of military or official sites such as Owen Falls Dam. Also remember to restrict open displays of affection in public. Health Recommended vaccinations include hepatitis A and typhoid. All travellers entering Uganda will need to have a yellow fever vaccination. There are occasional cholera outbreaks which do not pose too much of a risk. Keep in mind though that there are limited medical facilities outside of the capital Kampala. Communication Cellphone coverage is good and available practically throughout the country. Sim cards are relatively cheap, about $2.50 and networks include MTN and Zain. There are Internet cafés peppered throughout the country and just about every town will have one. In conclusion Uganda is a very friendly and welcoming country, with some truly breathtaking scenery. As long as travellers stay wary of the hot spots, they can expect a safe and hassle-free trip through the country. Uganda can only grow in popularity and economic strength as the country stabilises, progresses and improves with each passing day.

Kampala is a truly African city and things do not operate by standard Western rules. Except for the larger establishments, a lot hinges on barter. This may not only apply to goods but even meals. Also remember to carry around enough change for purchases as on many occasions you could be told that change is not available.

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Etana REDS play Liberty in corporate league opener

he Etana REDS right winger and claims champion, Aaron Mrabalala gave a passion-filled air punch as the REDS winning goal hit the back of the net. The goal won them the game against the Liberty team with a score of 5-3, as the two teams kicked off the 2010 season in the Super Sport 7-a-side Corporate Soccer League at Johannesburg’s Zoo Lake Sports Club early in February.

Zurich SA is ‘right-sizing’

urich’s South African general insurance business has announced plans to transform its business in order to achieve future growth aspirations. Decisive action will be taken across all areas of Zurich’s business to enhance the focus around brokers and customers and improve operational capabilities. The hope is that this will strengthen its market position and build a solid operating platform for the future. Guy Munnoch, CEO of Zurich South Africa, said, “We will grow and develop the organisation and, to do this, it is essential that we take the necessary actions now to create a solid foundation for the future.”

As part of the transformation programme, all core business areas have been reviewed, from processes and technology, through to people and locations. Confirming that Zurich expects to lose between 15 to 20 per cent of roles from the company as a result of this process, Guy Munnoch stated, “These changes are all about right-sizing not downsizing our organisation. We are focused on getting the right people in the right roles and, whilst we appreciate this will be a difficult time [for some], for most it will represent an opportunity to pursue their career aspirations and to be part of an energised and focused organisation.” Zurich is now entering into a period of engagement with the relevant employee representative bodies. Subject to consultations, the processes will be completed by the end of April.

Lion of Africa Post-budget Breakfast

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he Lion of Africa Post-budget Breakfast was held at Kelvin Grove in Newlands, Cape Town on Thursday, 18 February. Attended by about 300 guests, including clients of Lion of Africa, invited media and the finance minister himself, the event facilitated a lively Q&A session on the 2010/2011 budget proposals.

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Arch Underwriting at Lloyd’s opens SA office

rch Underwriting at Lloyd’s has launched Arch Underwriting at Lloyd’s South Africa (Pty) Ltd, headquartered in Johannesburg. It will join the platform which is now comprised of branches in Europe, London and Australia. The South African outfit will be managed by Steve Fogarty, regional director, and will have an initial focus on commercial property business. Fogarty most recently held regional responsibility for the Chartis (formally AIG) commercial property and terrorism products in Africa.

Santam’s disability efforts acknowledged by INSETA

n 3 December 2009, INSETA’s National Disability Awards honoured workers with disabilities who are making a difference in the insurance sector, as well as individuals and organisations supporting the advancement of people with disabilities.

Santam was honoured as joint winner with Glenrand MIB, in the Company Award category. In 2008, Santam introduced a learnership programme exclusively for black people with disabilities – 14 learners were placed on the programme of which nine graduated and seven became permanent employees of Santam. (Graduates attained a full insurance qualification registered with INSETA and SAQA.) Julia Dyssell, head of human resources at Santam, said, “The biggest challenge we faced was that most of the learners did not have maths; so we needed to run a bridging course to get their level of understanding from NQF level 1 to a NQF level 4 before delivering the mathematical literacy unit standards. This year, we decided to combine able-bodied learners and learners with a disability on the learnership programme which proved to be effective.”

Commenting on the opening of this new office, Arch Insurance Europe’s president and CEO, James Weatherstone said, “The establishment of an Arch owned and managed underwriting platform in Johannesburg is another significant development for our Lloyd’s syndicate. Together with the recent opening of the Arch Sydney office led by Adam Matteson, the new Johannesburg office complements our strategy of developing indigenous business which does not typically come into London. With Steve on board, we have an experienced technical underwriter with over 20 years’ experience in the African market.”

Hedge fund industry unites

fter having worked closely with the Association for Savings and Investment South Africa (ASISA) Hedge Fund Standing Committee during 2009, the board of the local extension of the London-based Alternative Investment Management Association (AIMA) has decided to resign and join forces with ASISA. The former board members have joined ASISA’s Hedge Fund Standing Committee to continue their work as one group. Leon Campher, CEO of ASISA, said that since the majority of local hedge fund operations already hold ASISA membership, it made sense to combine efforts with the former Board members of AIMA SA. Hedge fund operators, as well as all service providers closely linked to the hedge fund industry, who are not yet members of ASISA are encouraged to join.

Rezco fund rages on

ezco Value Trend Fund has won a prestigious Raging Bull award for the second year in a row after outperforming its competitors in the flexible asset allocation sector. The Raging Bull award acknowledges a winning combination of risk adjusted returns, consistency, down-side risk and managerial skill. The fund has shown a return of 19.6 per cent a year over the five years since its establishment to December 2009. Wally Gray, Rezco fund manager, said the fund has shown consistent positive performance well ahead of the overall market and quite uniquely, continued to deliver a positive performance during the substantial meltdown in the year to March 2009.

The need for a flexible approach is illustrated by the sharply contrasting performance of various global markets, according to Gray. For example, while the US Dow Jones index showed only an insignificant return for the first 10 years of this century, the JSE All Share index appreciated more than threefold over the decade. “The buy and hold philosophy spawned by a 25-year bull market is clearly no longer a secure strategy. The need for flexibility to invest where growth is best is vital,” he concluded.

“The international environment has changed fundamentally in recent years, necessitating a much more flexible approach to managing investment risk while taking hold of investment opportunities. Simply staying relatively fully invested in either equity funds or index options is now a higher risk strategy,” Gray said.

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Blue Ink Investments Aloysius Jacobs has been appointed as a non-executive director on the board of directors of Blue Ink Investments – the Sanlam-owned manager of fund of hedge funds in South Africa. Jacobs, who has also been nominated to participate in Blue Ink’s Investment Committee, is currently the financial manager of Ubuntu-Botho Investment Holdings (UBIH), a black empowerment investment company. He has more than five years’ experience in the finance industry and was previously employed as an analyst at Sanlam Investment Management Global.

Astute board welcomes two new members Astute, the exchange used by financial advisers to integrate data from product providers, has announced the appointment of Riaan Dreyer as non-executive director and Gustav Jenkins as alternative non-executive director. Dreyer has a Masters Degree in information technology (Cum Laude), a BCom (Hons) in economics and a BCom in actuarial science. He is currently employed by Liberty Group where he is mandated to ensure that all business change initiatives are executed in line with strategy. Before joining Liberty, he was a value engineer at SAP and was responsible for identifying, quantifying and articulating the business value of implementing solutions in order to assist organisations in justifying technology investments. Previously, he spent eight years with Deloitte Consulting, one year of which was in the US where he specialised in CRM, system integration, IT architecture and IT strategy. He was involved in a number of projects in delivery and management roles for both local and international clients. Gustav Jenkins is a qualified actuary and holds a BCom (Hons) degree in mathematical statistics from the University of Stellenbosch. He is currently mandated by the Liberty Group to execute on various strategic initiatives. Before joining Liberty, Jenkins held positions at Swiss Re Life and Health Africa both in South Africa and the UK. These included various technical as well as client management roles. Before moving to Liberty, he headed up the client markets role for Swiss Re Life and Health Africa. Biddie Biddulph, managing director of Astute, said, “It is a great pleasure to welcome Riaan and Gustav to the Astute board. Their academic backgrounds combined with experience across industries, including financial services, provide them with a strong understanding of the challenges that need to be dealt with in today’s dynamic environment.”

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CIB Insurance Solutions Lisa Teixeira has been appointed general manager of personal lines underwriting at CIB Insurance Solutions. Teixeira has been in the insurance industry for the past 19 years, 15 of which have been in management positions. She previously held the position of director at TopExec Management Bureau, utilising her experience with distribution, underwriting, claims, procurement and quality assurance. In 2008, she was a finalist in SA’s Most Influential Women in Business and Government category for CEO magazine.

Etana South Africa’s recipient of the Businesswoman of the Year at the annual Black Business Quarterly (BBQ) Awards in December 2009, Nomahlubi V Simamane, has become an independent board member of Etana Insurance. Simanane is CEO of Zanusi Brand Solutions, which has offices in Kenya and Zambia and clients throughout Africa, Europe and the USA.

Mutual & Federal Mutual & Federal has appointed Paul Hancock, BCom., BCompt (Hons.), C.A. (S.A.), C.I.A. to the position of general manager for risk, with effect from 1 January 2010. He formerly held the position of group manager for risk finance. Hancock is a member of the South African Institute of Chartered Accountants (SAICA) and the Institute of Internal Auditors in South Africa (IIASA). Paul joined Mutual & Federal in 1998 as the chief internal auditor.

Business Continuity Institute The UK-based Business Continuity Institute (BCI) has appointed Louise Theunissen, GM of Consulting Services at ContinuitySA, as its first board member from the African continent. At the end of last year, Theunissen was appointed as the organisation’s regional representative in South Africa. Theunissen will be in a position to ensure growth of the institute’s membership on the continent and act as a catalyst to the expansion of business continuity best practices throughout the region.

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on the track and TV

up sponsorships for Etana in 2010 Etana places huge value in the power of sponsorships as a brand-building mechanism, as long as they are representative of the company's philosophy and image. Important sponsorships for the company this year include the motor racing Legends Series as well as their sponsorship of the FA Cup and Carling Cup on SuperSport. "Our brand has been in the power seat in the first months of 2010 and will stay centRED around activities where specialisation, passion, experience, focus, skill, performance and fun are requiRED," said Carel Nolte, head of people and brand at Etana. "Our sponsorship of Sarel 'Supervan' van der Merwe and his famous Red Galaxie at the Zwartkops leg of the Legends Series was one example of our commitment to speed, precision and high octane performance." "The vehicle we sponsoRED in the Legends Series is a recreation of the actual Chevrolet Chevelle built by the

best mechanic of his day, Smokey Yunick, and raced by Curtis Turner in 1976 at Daytona - and it's still going strong! As a company that was founded in 1938, and which has successfully weathered many significant internal and external changes, Etana knows the value of recreating yourself to ensure longevity." Visit www.etana.co.za for racing reports and pictures of the phenomenal Red Galaxie and Chevrolet Chevelle, inside and outside, including the engines of these legendary mechanical masterpieces. Etana chairman and Chevelle driver, Paolo Cavalieri, said: "Etana's affiliation with motorsport in South Africa symbolises our high-revving commitment to precision in all that we do. It also underpins our ability to negotiate tight corners at high speed."

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For the past few months, Etana brokers have been gathering their teams and clients to view Etana sponsored FA Cup and Carling Cup games and the Etana marketing team helps them to make it a special occasion. So check out the game times on www.etana.co.za or e-mail gianlucat@etana.co.za for assistance to rev up the fun at your football gettogether. "Our name and logo are associated with power and passion on the SuperSport screens, so make the most of it and join in the fun. Our ambition is to benefit the businesses of our brokers by providing an opportunity to cement ties with their clients in memorable ways, with strong support from the Etana brand," said Nolte.

SPONSORSHIPS CHOSEN TO BENEFIT BROKERS All Etana's sponsorships, including the broadcasts of the FA Cup and Carling

Sarel van der Merwe, multiple South African Rally and Saloon car champion (left), Paolo Cavalieri former BMW factory team driver and Etana Chairman (right).

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Cup on SuperSport, are carefully chosen to provide opportunities that will benefit Etana brokers throughout the country.

Ferrari 250 driven by Paolo Cavalieri at Zwarkops Legends of the 9 Hour race 2010.

Etana sponsors racing legends and their legendary wheels

Paul Rotherham 94.7 Radio DJ (left), Sarel van der Merwe multiple South African Rally and Saloon Car Champion (centre) and Darren Whackhead Simpson 94.7 Radio DJ.

Sarel van der Merwe with his Galaxie 177 before the Etana Legends of the nine-hour race.

Roaring engines, hot wheels and classic, high-poweRED cars from the early 1960s scorched around the Zwartkops Racing Track near Pretoria in January, in a day of races sponsoRED by Etana.

support for other sports, including soccer, cycling, rowing and, of course, the company's most oftenplayed sport (which is yet to turn professional) - foosball.

Entitled the Legends Series, it wasn't only the cars that were legends on the day, but some of the famous drivers of yesteryear were there too, including Sarel van der Merwe, Ian Scheckter, Ben Morgenrood and Willie Hepburn.

Etana's head of people and brand, Carel Nolte, added, "The reason Etana sponsors motor racing is because petrolheads are passionate people. We love to get involved with people who are passionate about what they do because we are passionate about what we do!"

Some famous names of more recent times were there to join them, including 94.7 Highveld Stereo's funny man Darren 'Whackhead' Simpson, and car-loving member of the station's breakfast show, Paul Rotherham. We asked Whackhead, dressed in smart RED Etana driving gear right down to nifty shoes and a sexy female pit crew member hanging on each arm, how he had done in his race (bearing in mind he had 'Learner Driver' pasted boldly on the back of his car). "Um, next question?" Then he admitted, "Okay, ninth out of 20. But I did get a special start of two minutes." So why does Etana sponsor motor racing? Isn't that a bit of an odd thing for an insurance company to do? Andrea Cavalieri, Etana's head of motor sponsorship, explained, "Like our company, racing is all about precision, engineering and teamwork. Just as in this sport, in insurance, it takes lots of time to make your team a great one." Cavalieri also pointed out Etana's

Etana chairman Paolo Cavalieri, himself a fervent petrolhead and accomplished motor sportsman, said his personal passion with racing goes way back. "My dad used to race and had a passion for the sport. I used to go to Kyalami and watch him as a kid." He adds that classic car racing is a fast-growing sport, and that "it's akin to veterans in other sports." (Although, he says, there's a growing trend to get young drivers to drive the classic cars). In the United Kingdom, a race called the Goodwood Revival attracts 250 000 spectators each year, all dressed up in 1950s gear. "You can't come in if you're not dressed to the theme," said Paolo. "The race day at Zwartkops is modelled a little on the Goodwood event, though at Zwartkops there were more people in Etana RED than in bobby socks and blue jeans." What's Paolo's favourite car?

"It's got to be a Ferrari - the 250 series," he said. He races a blue 1961 Ferrari, as well as a BMW, which won the South African Championship Group 1 Production Car in 1985. "It still has its original paintwork and, of all the teams here, we probably have the most original crew, too, with many of the original guys from the 80s crew still working on the car today." But the most famous car at the Legends Series event at Zwartkops was undoubtedly Sarel van der Merwe's large, RED Ford Galaxie. Racegoer Shaun Clunie can remember seeing the Galaxie race at the Killarney Racetrack in Cape Town when he was a boy in the early 1960s. "I was often next to the track, watching that car. It was driven by Bobby Olthoff - he always used to drive with his arm out the window. I remember seeing the legends back then - Bobby, Peter Gough, Basil van Rooyen, Koos Swanepoel and John Love. I really love this car and this whole day is very nostalgic for me." The Zwartkops race day was the first of four events in the Etana-sponsoRED Legends Series. Other Legends Series events took place in Cape Town, East London and Kyalami.

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Nikki Lordan | WINE.CO.ZA

One tall, double oaked Pinotage

with yeast, please

It happens quite often that uniquely handcrafted wines are overlooked in the chase for best value, yet quality wines. While the coffee-styled Pinotage is handcrafted by impressive scientific measures, the question remains - how unique is it?

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ertus Fourie aka Starbucks Fourie (which makes him sound a little bit like a movie star) is the MD of Val de Vie Wines and creator of the infamous coffee-styled Pinotage, particularly invented to demystify wine, making it more accessible to the people. Fourie’s coffee Pinotage career, of which the ‘recipe’ lies in a specific type of oak and toasting combined with specific yeast, took off at Diemersfontein and has since left a trail of coffee beans at KWV causing much controversy and tons of cash. Currently employed in a purely management capacity, Fourie is in charge of the Barista Pinotage while his brother, Martin Fourie, is the official winemaker of Val de Vie Wines. Despite lots of criticism from the industry, the reaction by the public has so far been extremely positive not only in South Africa but also countries such as Singapore, the UK, USA and Canada. It is generally believed that Fourie practically invented this style of Pinotage, but apart from using Pinotage, this method isn't so new Down Under. Although not with Pinotage, Australian wine company Wolf Blass already exhibited some of these characters back in the late 70s, said senior wine judge and KWV consultant, Ian McKenzie. Although the focus has never been on these coffee-like characters, he continued, they have always been recognised and described as barrel ferment artefact and have been utilised to varying degrees by different winemakers as a complexing agent". McKenzie has been working as a consultant to KWV since 2005. According to Prof Sakkie Pretorius of the Wine Research Institute in Australia, even though one cannot rule out the possibility of another (yet to be discovered) Pinotage-specific compound which is driving those coffee characters it is more likely that those characters are not exclusively associated with varietal Pinotage wines and can in fact be used with any varietal.

"We have found these coffee-like characteristics can be achieved in almost any red wine," McKenzie further explained, provided the grapes are fully mature with ripe sweet fruit characters and importantly, ripe tannins. Yellowtail and Little Penguin are among a couple of currently available Australian brands that have similar but not as pronounced characters in many different varieties including Shiraz. The basis of Fourie's research however, was not done on the enhanced coffee aromas, but the effect thereof on Pinotage due to the aromatic profile of this variety. Yes it can be done with any varietal, he explained over a cup of (real) coffee, but not nearly the same result is achieved as with Pinotage.

Coffee Pinotage was not created in an attempt to camouflage the varietal characteristics but purely a decision of supply and demand thereby giving the consumers what they want.

Although he has caused much controversy (albeit not on purpose), he remains a firm believer in the success of the Pinotage grape and believes that Pinotage handled correctly in the cellar and the vineyard can produce a world class wine even without the added coffee aromas. Though widely criticised, the 2009 Barista does show lots of fruit, soft tannins and a delicate yet very much recognisable hint of coffee and mocha indeed, a very drinkable wine. Fourie, however, is slightly disappointed in the 2009, for which he wished even more coffee intensity and scores the KWV Café Culture the highest point of the three - a wine described by Tim James as "squishy". Proving there is no such thing as bad publicity, the Diemersfontein 2008, KWV Café Culture 2009 and Barista Coffee Pinotage 2009 were voted top of the polls (in that order) during the Cape Town RMB WineX, the popular wine show organised by Michael Fridjhon.

Pinotage certainly isn't a crude grape that makes for unbalanced and unsophisticated wines but merely asks for refinement; finding the elegance and the sophistication in the grape as proven by Abrie Beeslaar, Beyers Truter, Neil Ellis, Danie Steytler and Johan Malan. Almost like moving along the edge of a steel-point knife, every winemaker has to strive for balance - an important point that relates to any other varietal. McKenzie feels the level of the coffee-like characters found in Bertus's versions and the KWV Café Culture would in Australia, in all probability be regarded as overoaked.

The KWV Café Culture, sweet and sticky with overwhelming flavours of coffee and chocolate, seems to be the characteristics most non-lovers of wine prefer when drinking wine. However, Fourie is quick to assure that the

Pinotage Association vice-chairman and acclaimed winemaker De Wet Viljoen believes the key to any successful Pinotage lies in knowing that winemakers work with a living thing (the vineyard) where there is no fixed recipe and the starting point is never the same. He prefers a Pinotage of which the primary fruit is not completely overwhelmed and feels the most important part of winemaking is to recognise and stick to the varietal characteristics of the grape.

The truth is veteran winemakers have seen many vintages of Pinotage (and other varieties) make their way through the cellar and have by now recognised what they call concept wines. The danger comes, De Wet explained, when critics and people start to place Pinotage in a box, associating it with one particular style. "Different styles come and go but some things are timeless and will never change." Timeless or not, people seem to love a good trend and Bertus Fourie is most certainly enjoying the ride on this wave of success.

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fluke S

ome golfers go their entire golfing lives without ever achieving this miracle. However, I can say in the same breath that total beginners have been lucky enough to record one. A hole in one, that is. The ‘perfect fluke’ is the achievement every golfer wants to brag about.

A hole in one is generally a 1 on a par 3. However, players have recorded the elusive 1 on par 4s and par 5s. If you are lucky enough to record a hole in one as a professional golfer during a professional golf tournament, this fluke often brings with it a car, cash or even a thousand cases of whiskey. The first question a lot of fellow golfers ask is, “Was it a good shot?” to confirm whether it was the best shot you have ever hit. This numbs the pain that they are feeling celebrating another golfer’s lucky shot. We even have a sign in our office, one of Dale’s many, which states, “I have never shot a hole in one and I anxiously await the day I can give this silly sign to someone else.” In my 26 short years of playing the game, I finally opened my account in March of 2002.

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“I can say in the same breath that total beginners have been lucky enough to record one. A hole in one, that is. The ‘perfect fluke’ is the achievement every golfer wants to brag about.” The scorecard verifying the achievement has long been lost or possibly thrown away accidentally during one of my many relocations. Luckily for me, my second hole in one will not be lost as some date in the past, as the achievement had been box framed for me, by Serengeti Golf and Wildlife Estate. I aced the fifth hole on Sunday, 17 January 2010 using an 8 iron. If you are one of the lucky few, join the SuperGolf Hole in One club by contacting Margaret at Dale Hayes Golf Events on 012660 3640.

Ivano Ficalbi is a full member of the PGA South Africa and is the managing director of Dale Hayes Golf Events. He has spent a number of successful years at various top golf estates, and has occupied the position of head golf professional at the Sun City Resort. Alongside the South African golfing personality Dale Hayes and his dedicated event coordinators, the company offers the complete golf event management package. It is based in Pretoria, operating from the original Otway Hayes house at Zwartkop Country Club. Class AA Member | PGA South Africa| Contact Ivano Ficalbi on 082 992 1459 or email ivano@hayesgolf.co.za. | Website: www.dalehayesgolfevents.o.za

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