RiskSA Magazine September 2014

RISKSA Magazine SEPTEMBER 2014

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Publisher & editor Andy Mark Contributing editor Christy van der Merwe Production editor Nicky Mark Copy editor Gemma Redelinghuys

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

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Admin & software - getting integrated

SAUMA 15 years strong

CPD here to stay

Climate change It’s complicated

All App-ed up

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Opinions expressed in this publication are those of the authors and do not necessarily reflect those of the Publisher, Cosa Communications (Pty) Ltd, COSA Media, and or RiskSa (Pty) Ltd. The mention of specific products in articles or advertisements does not imply that they are endorsed or recommended by this journal or its publishers in preference to others of a similar nature, which are not mentioned or advertised. While every effort is made to ensure accuracy of editorial content, the publishers do not accept responsibility for omissions, errors or any consequences that may arise therefrom. Reliance on any information contained in this publication is at your own risk. The publishers make no representations or warranties, express or implied, as to the correctness or suitability of the information contained and/or the products advertised in this publication. The publishers shall not be liable for any damages or loss, howsoever arising, incurred by readers of this publication or any other person/s. The publishers disclaim all responsibility and liability for any damages, including pure economic loss and any consequential damages, resulting from the use of any service or product advertised in this publication. Readers of this publication indemnify and hold harmless the publishers of this magazine, its officers, employees and servants for any demand, action, application or other proceedings made by any third party and arising out of or in connection with the use of any services and/or pro-ducts or the reliance of any information contained in this publication.

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contents SEPTEMBER 2014

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Getting integrated RISKSA speaks to administration and software providers for insights on the industry, and how to make IT work for you.

22 |

short term

ST

22 / Climate change: it’s complicated…

28 / Natural disasters: building resilience 32 / Leading lady: at the helm in a man’s world 36 / SAUMA-15 years strong 50 / Tech talent

56 |

medical

ML

64 |

long term

56 / The high price of medical tech

64 / Plotting the course

60 / The benefits of Banting

68 / Trusting the market 72 / Planning for a life lived longer

LT

Like us on FACEBOOK / RISKSA

78 | managing risk

FOLLOW US ON TWITTER @RISKSA

MR

78 / Understanding disaster 82 / Boardroom Mechanics 84 / What the future holds…

86 |

CR

career

86 / All App-ed up

96 / CPD here to stay 100 / Tips for conducting great interviews 108 / Working parents 112 / News 120 / Events 122 / Insurance Conference

134 |

ASSETS

142 |

AS

TL

142 / Get app and go

134 / Ford EcoBoost review – Drivers Impression

144 / It’s a revolution!

136 / Curved: Samsung U9000 140 / Not a one-trick pony!

Garmin’s Fenix 2 Watch

travel

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

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Dearreader A

friend, a real one, not the cyber kind you find just on Facebook, posted a message on her wall the other day that resonated with me on so many levels. Her message read, “If you’re the kind of person who says one thing, but whose actions mean another, then you’re probably an asshole”.

God knows there are a lot of them around these days aren’t there? Like the politicians who preach peace but bomb children in the Middle East for instance. Or their counterparts who fire rockets indiscriminately into urban areas from behind the civilian security of their own people, and who then pound their chests, gnash their teeth and point fingers in an elaborate show for the press and TV channels.

And what of the president of that other superpower, who condones the bombing of a commercial airliner with the loss of all the souls on board, saying it wasn’t his fault – but whose country manufactured and supplied the Ukrainian rebels with the rockets they used. And what of the ongoing mayhem in Syria where another president uses poison on his countrymen. saying it is all in the name of defense? And then there are the growing numbers of religious fanatics who deem it okay to kidnap schoolgirls and pillage villages all in the name of their particular god.

Against this backdrop, the Ebola virus seems as benign as a mild bout of flu, and South Africa’s corruption issues something akin to answering “No, of course not” when asked by a spouse or significant other if their bum looks big in those pants. The world may slowly be going mad.

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Your brand could be an schmuck too, by this definition.

If what you say it does and what it actually delivers are out of kilter, then you’re going to have a hard time convincing your customers otherwise.

One way (perhaps the only way) to deliver on your brand’s promise is to manage information to such a degree that you can tailor effective and appropriate solutions to your clients needs. We take a look at tech in this issue, and even chat with a child prodigy who has built an insurance app while still in school.

I apologise if my Ed’s letter this month is a rant at the world’s evils – or evil men running the world. When compared to the rest, isn’t it lekker being South African, where despite our flaws and challenges we have a public protector that actually protects the public, and a free press to see to it that the wilder acts of rampant corruption and opportunism are quickly brought to the attention of the public, and that we work in an industry that is a massive force for good. After a month on expedition in Africa it’s good to be home. I didn’t miss the news feeds and TV though. Not at all.

I hope you enjoy the read.

integ r Getting

Christy van der Merwe

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g rated Technology, and how you harness it, has the potential to be a great market differentiator.

However, information technology (IT) can be a frightening thought for insurance firms and brokerages that rely on it for business functions, but don’t possess IT-whizz skills as a core competency. RISKSA speaks to administration and software providers for some insights on the industry, and how to make IT work for you.

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Accessing and acquiring data accurately is vital for brokers, and a large contributing factor to the success of software providers.

Brokers are expected to be able to access their business 24 hours a day, seven days a week, through various access points, and competitive advantage is often driven through the technology used.

Brokers need a solid, dependable and fast way to do business, with a reliable back-end process. However, alignment with various types of administration can be complex and costly. Assistance with administration is indeed one of the major benefits and value propositions put forward by larger franchised brokerages, which offer assistance with systems integration and administration.

Insurers that have a piece of their business on external platforms are not afforded the luxury of having all the information they require on hand, to dictate more accurate pricing; better control of claims; spending; and more structured processes that come from having that information in-house, and hence the push for more integration with the third party external systems. Cardinal Insurance Management systems reiterates that the broker today needs a system that has some insurer integration and can provide the data that all involved parties require.

Drivers of change It is well known that brokers and underwriting managers want to spend more time acquiring new clients rather than on administration, says Ashley Thomas, GM at Innovation Group South Africa. This need, Thomas adds, has been met on new system architecture by partnering with underwriters, developing customer portals, multi-computing, aggregator models, streamlining processes and capitalising on generic business models through automation.

“Insurers want greater control of financial and underwriting aspects. While these are mostly achieved on in-house underwriter systems, brokers typically own facilities with a number of underwriters,” Thomas says. Systems should offer products and solutions, approved by multiple underwriters, with an additional option that the same system will be usable to underwriters, brokers and UMAs without any conflicting aspects between any of the involved parties.

Craig Olivier, solutions architect at Genasys Technologies explains that software platforms currently in the market are expected to perform the day to day tasks, such as: batch processing to reduce manual intervention and room for error; self-service and straight through processing; providing tools and access points (supporting mobile) directly to the end user or insured to facilitate self-service; and data

sharing and compliance – however, focus must be on efficiencies and compliance.

These requirements mean that clients are insisting that their solution providers put emphasis on mobile presence allowing clients to self-manage changes, requests, quotes etc., as well as real-time integration with third-party platforms to ensure data accuracy and quality, and data sharing capability to support industry compliance requirements.

Mobile presence is considered vital, and gives clients some of the power. The result of this evolution and whether the information gathered is better, and is used better, is a work in progress.

FSP Solutions marketing director Pierre van Huyssteen remarks that everyone wants an app.

“But these have to be good, and interactive.

Clients are savvy. Behavioural analytics and geo-location capabilities are the future,” he adds.

Another issue driving system upgrades is that there is a consensus across the short-term insurance industry that a more sophisticated approach to understanding underwriting risks is required. Cindy Beets, head of marketing at Lightstone, highlights that there is also a race for insurers to be able to cherry pick the best customers, given a better understanding of the risk profile of potential customers, their

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daunting when this is not your core business,” reiterates Olivier.

Costs, timelines and change of focus are the biggest concerns for companies when implementing new systems and software, particularly as the day to day operations still have to continue. Based on historical statistics most IT projects run horribly over budget and take much longer than expected or planned.

risk assets and their pricing behaviour. And, of course, the complexity and sheer volume of data and the growing need to capture more of it and use it dynamically is one of the major drivers forcing upgrades of systems and software, adds Jonathan Holden, managing executive: insurance, at Innovation Group South Africa.

Holden notes that the value in insurance businesses of the future lie in their ability to harvest the data assets they have now, and ensure that it generates sustainable income streams for the future as well as underpins more sophisticated risk management techniques.

Not right now…

Van Huyssteen points out that some companies were ‘sweating their assets’ prior to the economic downturn, and some because of it.

With the rapid advancement of technology, they have no alternative but to upgrade and this may pose serious challenges for some.

While it is never viewed as a good time to undertake a systems upgrade or overhaul, Olivier says that running on outdated legacy platforms hinders opportunities to innovate with new ideas.

“New technology and platforms facilitate day to day requirements and also enable B2B transactions to facilitate sharing of pertinent information, single view of a customer, selfservice and various integration points to ensure data accuracy and data sharing capabilities,” Olivier states.

“Upgrading systems is always a big decision as it has a massive impact on your current day-to-day processes, however there is never a good time. With the correct planning and management the process can be relatively seamless and provides excellent future opportunities. Upgrades and software changes are often referred to as ‘servicing the Boeing’s motor while in flight’ which can seem quite

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“The key is to understand the process and what is required, and proactively plan business involvement to manage the usual day-to-day tasks together with providing the key inputs to the project from the specification phase all the way through to user acceptance testing,” outlines Olivier.

He adds that most IT projects underestimate the training and change management processes with upgrading and or implementing new systems. “These points need to be the biggest risks within any IT project and managed and mitigated accordingly. You can never spend enough time on training and change management,” Olivier emphasises.

When it comes to the costs associated with implementing systems, this, and the associated risk that it brings is often the greatest concern for a company. Holden explains that the cost is several-fold, not only in monetary terms, but also the cost of time wasted on failed implementations, the opportunity cost of having gone down one path and not another, and so on. Upgrades can bring similar complexities, though sometimes are a necessary evil and can, of course, bring enhanced functionality if successfully implemented.

Thomas adds that market conditions, through legislation, sales and so on are constantly changing, and systems developed with configuration as a core component will enable faster and cost effective deployment and upgrades.

Cardinal states that a big challenge for software providers is to constantly stay up to date with the latest regulation changes, hence the massive requirement for software to be flexible yet remain robust.

Another challenge is to communicate to the different insurance systems, notes Cardinal. The new STRIDE initiative does just that by allowing systems to communicate between insurers and brokers seamlessly while maintaining data integrity and structure. Cardinal has welcomed this initiative. 

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Striding toward a common language STRIDE CEO, Deon Olckers, tells RISKSA that STRIDE was created by the industry with two purposes in mind: firstly, to implement a single data standard across the industry, and secondly, to provide a single technology platform to enable secure communication between stakeholders. Combined, these two solutions will enable numerous opportunities for process efficiencies and innovation.

“STRIDE is managed by the industry through various forums and committees, ensuring that we are always aware of the industry needs and that these requirements are prioritised and delivered appropriately. We are there to service the needs of the industry, and we will do what the industry requires of us, to ensure that the capabilities of the industry develop for their future needs,” says Olckers.

By implementing one data standard, industry players can seamlessly talk to anybody else in the industry without additional interpretation or mapping effort required. This means that processes, programs and apps can be designed around this single data standard.

Complete datasets in a single technology also enable compliance to Binder Holder and SAM legislation, reiterates Olckers.

In the initial stage, STRIDE reduces the reporting burden for binder holder regulation from the broker and system provider as the insurer has full access to the data. For the insurer, the benefit is receiving data in a single format on a single platform, enabling them to comply with legislation and do better business. When moving to real-time, brokers and insurers will be able to manage quotes, claims, renewals, amendments and cancellations almost immediately.

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The future vision is a short-term insurance industry where all the players in the industry, including those service providers in the claims environment like panel beaters and plumbers, will have apps to complete their forms electronically and the data sent to the insurer in real-time on a single data standard.

Enabling the industry as a whole to have access to big data – from providing the SAICB with more and better data to identify fraud, to enabling communication between banks and insurers regarding insured risks, to allowing accurate SAM calculations – the possibilities are endless once the groundwork is in place, says Olckers.

Because insurers are missing the big portion of their data that is being outsourced, the role of STRIDE is to enable them to receive this data in a manner that they can work with.

“Currently we do not believe that insurers are doing everything they can with the data, but they are seeing the potential value of this data, and all the major insurers are committed to increasing the quantity and quality of the data through the focused rollout of STRIDE to their brokers and system providers,” explains Olckers.

He adds that as a minimum, all systems should be ACORD compliant since this allows all in the industry to capture data in a single standard and reduce the cost of data conversion. The process consists of three stages, firstly to change and update the existing software or secondly develop integration software between the existing data models and the ACORD data structures.

Lastly, there are companies that understand that their future core system will be ACORD based without the need for middleware that needs to be constantly updated.

Olckers says that the biggest challenge is that everybody is busy implementing new systems, upgrading existing systems or rolling out new rating engines. This makes it difficult to roll out a new solution across the industry and challenges the income model as everybody is in different stages of implementing STRIDE. “We overcome this through a great support team within our technology partner, Astute, that helps our clients through the various steps of investigation, development, testing, implementation and roll-out, regardless of where the specific company is in the process.

This is like coordinating the Comrades marathon while all of the participants are not starting from the same place and some are running a road marathon while others are doing an Iron-man. All I can say is that there are runners, cyclists and swimmers in this race and IT and water don’t go too well together,” quips Olckers.

Remaining relevant Olivier reiterates that technology changes on a daily basis, to the extent that many articles refer to infrastructure and systems as a type of stationery to be replenished regularly. Research and Development (R&D) should be a key focus area in any software deployment company.

“Various training programmes and investments into young enterprising individuals see the emergence of new technological trends and developments,” adds Thomas.

Lightstone highlights that within its product development team, the company encourages a culture of research. The product owners are industry specialists who support the sales team in different market verticals. This forces them to understand both generic and unique customer requirements.

Understanding new technologies and having the ability to apply it to your focus industry makes for a truly innovative provider or partner.

“At Genasys, we suggest at least a 40 per cent investment back into the product, and innovation should be the driver in any software provider. If focus is not put on R&D, the platform will soon be out-dated and not leading in the industry, and in turn not provide clients with competitive advantages,” indicates Olivier.

Holden and Thomas note that Innovation Group benefits from being able to leverage its global footprint and expertise, and combine that with local experience. The company receives input from a diverse client base which spans multiple industries, not only insurance.

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They interact with the development team who are tasked with picking the relevant technology delivery mechanism to ensure that the incoming data, as well as the delivery of the systems, are in the most appropriate form for the customer to consume.

“We also allocate time on a weekly basis for each team member to explore new technologies as part of their growth. We participate in some international knowledge sharing sessions where the latest technology applications are discussed,” adds Beets.

This is an industry where cost always remains the greatest differentiator, and keeping costs down is a constant challenge, as is the time to market, which also has cost implications.

“Our key focus is to partner with our clients rather than just providing a platform or performing as a vendor. If strategic direction

is aligned it allows for a common direction and the ability to be focused in delivering what works for both parties.

The other aspect is to build generic solutions and not custom solutions to provide flexibility.

By building generic solutions that can be configured, this allows rapid configuration and deployment which in turn means reduced costs and timelines to get new ideas and innovation configured and out there,” says Olivier.

The competitive solvency and profitability pressures increasingly being felt by insurers and brokers drives them to seek data solutions that help them price risk assets with greater granularity and certainty, understand their risk profile more accurately and remove unnecessary operational steps, says Lightstone.

This is a huge task, and the biggest growth prospect lies in providing accurate and easy to consume information.

Holden reminds us that the insurance industry remains a vibrant one because of the multitude of touch points for insurance and risk management and the changing world means new risks emerging each day which require a solution.

The intermediary model remains relevant in this changing world, and with technology enabling alternative distribution and data capture, there is enormous growth potential through this model. 

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Now that we’ve got big data…what are we going to do with it?

Craig Olivier from Genasys Technologies notes that ‘big data’ has become the latest buzz word in IT-driven industries. Most people don’t realise how much data is collected from an administration platform and the power in numbers that can be leveraged from such data. Currently, most companies are collecting thousands of transactional data on a day-to-day basis, but not utilising its full analytical power.

Dealing with ‘big data’ can be overwhelming if the correct reporting and aggregation structures are not in place.

“All software innovations or implementations and designs should take the output of data as a key input to the design. If data structures are designed correctly with the outputs in mind and solid actuarial data models set up, this information will become invaluable in any organisation,” emphasises Olivier. It is felt that currently the insurance industry is not using the information it has to the best of its ability.

“Clearly companies are not using all their data to best effect currently, as evidenced by the many projects that are ongoing to harmonise and unify data sets, build data

warehouses for mining, expanding the scope of data that can be captured etc.

What is encouraging is the level of activity that is happening in the market in this space, recognition of the untapped value that lies within,” says Jonathan Holden from the Innovation Group.

Cindy Beets from Lightstone adds that there does seem to be a consensus, particularly in short-term insurance, that a comprehensive big data strategy is required for how to best consume and use the information available. This is not a simple strategy to design and implement and is constantly evolving in order to keep up with technological advances, she cautions.

“Big data is here and we need to embrace this development to ensure that we extract the value locked up on this valuable resource that has been dormant in this industry for a very long time. This will improve our ability as an industry to understand our clients and develop better relationships with them. Secondary benefits include compliance, process efficiencies, cost saving, and being able to deliver ‘wow’ solutions for Treating Customers Fairly,” says Deon Olckers from STRIDE.

Know your goal Overhauling systems can be a daunting prospect, and in ensuring that there has been adequate planning, development and testing, there are a few things, and process flows, to make sure of before coding begins.

What you should be asking when implementing, or upgrading systems and software: • Will the project be within budget?

• Will the project be on time?

• Will it do what it promised?

• Will our processes handle the transition?

• Will it still be relevant if our conditions change? How flexible is the system?

• How quickly will this change the way we do business to our advantage?

Further data-specific questions are: • Is the data accurate and reliable? Can the source be trusted to help make correctly informed decisions?

• Is the data still valid? Is it the latest version of the truth?

• What is the coverage of the data? Does it cover enough of the market to be used every time for decision-making? Do we have the right depth and breadth of relevant data?

• Is the data there when it is needed? What is the uptime of the systems? Can the data be delivered to where it is needed, when it is needed?

Source: Lightstone.

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Climate c It’s complicated…

The business of insurance is firmly rooted in risk prediction and modelling, where past events inform current and future operations. How does this work in a world that is continually experiencing unprecedented events? “It’s complicated” is the answer we got. RISKSA unpacks how climate change is impacting the insurance industry, and the ability of the short-term industry to think long-term.

Christy van der Merwe

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e change M

any industries in South Africa are scrambling to respond to the environmental, legislative and financial changes ushered in by climate change, such as the impending carbon tax and emissions standards. However, it is the insurance industry, with its significant risk expertise, that must focus on the country’s adaptation, and disaster risk reduction in response to climate change.

climate change on the day-to-day business of insurance, is somewhat complicated.

Globally, the insurance industry has proven that economically sustainable disaster prevention works. Risk prevention is an investment in a safer world and long-term partnerships are key to building more resilient communities. This is the main point from the global insurance industry’s ClimateWise statement. ClimateWise is a joint global initiative to respond to the complicated risks and opportunities of climate change, with the aim of reducing these overall risks faced by economies and societies.

It deals with how the insurance industry and governments can work together more effectively to build climate and disaster-resilient communities and economies

“Climate change can not be separated out from the changes already in the system – for example, how much of the hail storm in Gauteng last year was attributable to normal variability or climate change is not possible to know,” explains Santam corporate head of strategy, Vanessa Otto Mentz.

Current impact of climate change While carbon intensive industries such as coal mining and coal-fired power generation have the pressing concern of how to lower their direct emissions and reduce their environmental footprint, the insurance industry’s direct environmental impact is not as significant.

Trying to establish the current impact of

Disastrous hail storms like those experienced in Gauteng in November 2013, or the flooding experienced earlier in 2014, prompted many to blame those extreme weather impacts on climate change. However, the insurance industry is being cautious and is hesitant to jump to that conclusion.

“It is not possible to say with certainty that climate change was responsible for the change in rainfall patterns experienced over the past two to three years. However, it did lead to serious storm damage claims which cost the insurance industry billions of rand. Was it just two or three exceptional years? Was it global warming? It may be either. We’ll have to wait and see if there is a continuing pattern over the next five to 10 years.” says Andre van der Walt, head of Hollard Agri within Hollard Broker Markets.

Mutual & Federal senior manager in the Africa underwriting division, Azhar Said concurs.

“We have had numerous claims as a result of poor weather patterns in the past two years – specifically hail. We do not know for

certain that the weather-related incidents we’ve experienced over the past few years constitute climate change, as the latter is a long-term process. There are many other drivers of claims experience in the shorter term,” he reiterates.

And of course, pricing is based on the claims that are experienced. As weather-related incidents affect the claims experience, prices will be adjusted accordingly. And while weather certainly impacts the short-term industry, there tend to be far more pressing short-term drivers on claims – such as the exchange rate, inflation, labour costs, parts costs, and traffic density.

Said explains that premiums do reflect changing weather conditions, but the jury is still out on whether these changing weather conditions constitute climate change.

“We have been in discussions with reinsurers, meteorologists, and attended several hail conferences to get better insight into the causes of incidents of hail and other weather condition changes we have experienced, and will experience. We have been wary in making assumptions about future weather patterns, but have quantified the past experience, and made a few key underwriting changes and pricing enhancements to better price for it going forward,” explains Said.

ENSafrica environmental senior associate Andrew Gilder highlights that herein lies the crux for the South African insurance industry.

Pricing and future risk is cleverly modeled and

23

innovative from a risk control perspective to create a win-win outcome,” reiterates van der Walt.

Otto-Mentz adds that adaptation is important to all businesses, government and society, and means we need to look at the whole chain of risk management from understanding risk, to reducing it, and only finally considering risk transfer i.e. insurance. If we do not, the economic and social cost (of which insurance losses are only a part) will be significant to individuals and businesses.

It is obvious that the insurance industry will have to adapt to the changing weather patterns and encourage a broad formula for cooperation.“As an industry we need to be investigating, without delay, what kinds of alternative, or changed, cover, products and procedures are required in the agricultural arena and elsewhere,” says van der Walt.

“For centuries the insurance industry has been dynamic; continuously adapting to new and changing needs. The challenge in our industry – and in all businesses – remains to anticipate the future accurately. It is clear that due to changing weather patterns we are facing new and unknown risks,” confirms van der Walt.

At the front line of weather-related events, are the farmers in South Africa, which provide the nation with food security.

based on historic occurrences, however, in today’s fast changing global system, we cannot rely on this historical data anymore. “We are living in a rapidly evolving environment where we experience ‘unprecedented’ events regularly now, and there is more uncertainty than ever before,” he states.

He is concerned that in South Africa, the insurance industry is not fully appreciating the impact that climate change could have on business, as well as the potential opportunities it could bring, such as the development of new products.

Immediate focus As the industry deals with this complexity, business continues, and focus is placed on the areas where there is a bit more certainty, and it can make a difference.

“What we do know, is that climate change will mean more extreme weather. Therefore, how we deal with disasters and prepare to manage risks becomes very important and is where

we need to focus. For example, adaptation,” emphasises Otto-Mentz.

Addressing the complexities, she says that existing vulnerability will be impacted on by climate change, for example, existing poor soil conditions will be affected by more droughts, and buildings that are built in floodlands will be affected when extreme storms become more frequent.

“But even as we know that, current climate models are not yet available in the time frames (three to five years) or scale (individual risk in local catchment level) that we need for risk modelling nor are medium-term seasonal weather forecasts accurate enough to do risk modelling with,” says Otto-Mentz.

However, work is being done to close these information gaps, through studies and greater information sharing.

“We can’t sit around waiting for statistics. We have to act proactively so that we can offer our clients the best cover possible while being

This being his area of expertise, Van der Walt explains that from an agricultural point of view it is clear that crop insurance, or “multiperil crop insurance” (MPCI), is becoming an increasing risk for local insurers. Indeed, reinsurer Munich Re has withdrawn from South Africa as far as this cover is concerned.

Van der Walt believes that for this reason, government will have to get involved in assisting new farmers, and existing commercial farmers, to carry the risk against hail and other perils. The high risk connected to this insurance may force the industry to increase rates to the point where it is no longer affordable for the agricultural sector.

The prices paid to farmers for their products simply do not compensate, even closely, for what they have to pay in increased production costs, he explains.

“It is, therefore, inevitable that policyholders will have to work together with the insurance industry to creatively and proactively prevent claims caused by weather-related occurrences, at least to the point where it is feasible,” adds van der Walt.

He appeals to brokers and insurers to keep clients who are vulnerable to weather-related insurance developments well informed about progress in this area. “It is our responsibility to

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both inform them and advise on how they can manage their risks of loss due to weather events. This will require innovative thinking from all involved.

“We’re going to have to create new ways of doing business. The level of co-operation between insurers, intermediaries and insured clients will have to improve to the point where the three of us accept that we’re full partners – partners who don't compete, but operate together to sustain a healthy insurance industry which literally underpins the businesses that drive the economy and well-being of our nation,” emphasises van der Walt.

Boost resilience Santam is a member of the United Nations Environmental Programme Finance Initiative (UNEP FI) Principles for Sustainable Insurance (PSI) , which started the Global Resilience Project in 2013, to deal with this issue of adaptation to the impacts of climate change.

“Our first findings, in the form of a report, was launched in London in July. It advocates shifting to a proactive risk response and looks at the cost/benefit of a few responses to disasters,” says Otto-Mentz.

The report outlines the role of insurers in disaster risk management, as well as specific hurricane risk reduction measures, earthquake risk reduction measures, and flood risk reduction measures.

We know from the Intergovernmental Panel on Climate Change (IPCC) study and the Santam, CSIR and WWF Eden study, that climate change is driving flood, storm and drought risk up, says Otto-Mentz. But we also know that our own actions and decisions can drive risk up further and increase exposure (for example by the way we develop urban areas, removing foredunes, building in flood plains), or, it can help counter the risk posed.

“We need to shift our focus on what we can do – that is reduce our vulnerability by reducing risk and increasing resilience.

Insurers cannot do this alone as it requires collaboration and good risk management by individuals, businesses, government, for a more resilient physical space,” concludes Otto-Mentz.

www.globecreative.co.za

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Our products are augmented by their distribution through an elect broker network who presents after sales advice to policy holders, based on the content of a comprehensive inventory and risk appraisal obtained from independent industry leaders.

www.zenithinsure.co.za info@zenithinsure.co.za | Tel: +27 21 872 7065 | Fax: +27 21 872 7168 191 Main Road Paarl 7646 | PO Box 3505 Paarl 7620 Registration Nr: 2006/032693/07 Zenith For The Accomplished (Pty) Ltd is a licensed Financial Services Provider, Underwritten by The Hollard Insurance Co. Ltd, an authorised Financial Services Provider. FSB Number: 36469

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The Eden report ‘Risk and resilience in a changing world: the insurance collaboration’, was a strategic research partnership between Santam, the Council for Scientific and Industrial Research (CSIR), the University of Cape Town Centre of Criminology, and the World Wide Fund for Nature (WWF), in collaboration with the United Nations Environment Programme Finance Initiative (UNEP FI).

This report highlights that conventional risk assessment models that focus on predictive power, should shift to systems models that emphasise explanatory power – how a system behaves under different scenarios.

This is because climate change brings about fast-changing, complex systems, with multiple risk drivers.

The findings of the Eden report also indicate that the insurance industry would be better served by complementing risk assessment with proactive risk

management, aimed at those systemic drivers of risk that are within its possible realm of influence.

The risks studied in the Eden district municipality in the Western Cape were wild fires, floods and sea storms, and the researchers were able to identify drivers of change in the local landscape that had the same, if not greater effect on risk, compared to climatic drivers. Proactive management, or ‘ecosystem-based adaptation’ of these local risks could, therefore, offset most of the increased risk associated with climate change.

For wildfires, it was noted that invasive alien plants were fuelling these fires. Control or eradication of these trees is a practical risk management response that has the potential to nullify future increases in risk associated primarily with increased temperatures in the region.

Similar practical solutions were put forward for the risks of flooding and sea storm damage.

The report states that the global insurance industry has immense power to address the significant shared risks associated with climate change and ecosystem degradation, and through this, be a catalyst for creating shared value.

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Natural disasters building resilience Dominic Uys

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ed by Insurance Australia Group, the PSI Global Resilience Project recently completed its first phase, which assessed the effectiveness of a range of disaster risk reduction measures across the three most devastating types of natural hazard – cyclone, earthquake and flood.

The findings are outlined in a new report, Building disaster-resilient communities and economies.

“As we transform the global economy into one that is low-carbon, resource-efficient and socially inclusive – a key topic under discussion this week at the first United Nations Environment Assembly in Nairobi as we look for ways to bring in more capital investment to finance this transition – we must also adapt and invest in making our communities and economies climate

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and disaster-resilient. The Principles for Sustainable Insurance Initiative harnesses the wealth of risk management expertise in the insurance industry and is putting it to work to find solutions for global sustainability challenges,” Achim Steiner, executive director of UNEP and under-secretary-general of the United Nations said.

Endorsed by the UN Secretary-General, the PSI Initiative has led to the largest collaborative initiative between the UN and the insurance industry. As of June 2014, 70 organisations have adopted the PSI, including insurers representing approximately 15 per cent of world premium volume and $8 trillion in assets under management. The PSI is part of the insurance industry criteria of the Dow Jones Sustainability Indices and FTSE4Good.

The need to build resilience UNEP’s report points out that natural hazards have the potential to devastate communities around the world. “Natural hazards are inevitable, but not natural disasters. When a natural hazard occurs, it is the collective societal resilience that will determine whether that event results in a natural disaster. This century, more than one million people have lost their lives to natural disasters. Last year alone around 20 000 people were killed or went missing in natural disasters, the majority in storms, floods and other severe weather events,” the report starts.

According to the report, the impact of natural disasters can reverberate long after the event itself; global economic losses due to natural disasters amounted to $131 billion, which

at-risk communities, supporting governments and the private sector in investing in predisaster resilience and in implementing risk reduction measures.

With phase one completed, the PSI identified two issues which have the potential to stand in the way of an effective response to disaster risk reduction. The first of these is data quality and assessment tools. “There are significant issues with currently available data, which is inconsistent and difficult to compare. Universal data standards are needed to assess the effectiveness of risk reduction measures and to make the case for pre-disaster resilience investment to governments and other stakeholders,” the report states.

In June of this year the United Nations Environment Programme (UNEP) launched its Global Resilience project through its finance initiative, Principles for Sustainable Insurance (PSI). The project aims to tackle natural disaster risk by identifying the most effective measures to combat disasters and helping communities implement them.

represents almost two per cent of gross domestic product (GDP).The costs of recovery from these natural disasters (borne by governments, NGOs, business and communities) consume scarce public and private resources which could otherwise be used to develop social, economic and natural capital.

returns between two and ten dollars in recovery savings. Building resilience to natural hazards requires an awareness of risk, a commitment by all stakeholders to make change happen, and a structured approach to funding and implementing effective measures for disaster risk reduction,” the report continues.

“Much of this can be prevented by building disaster-resilient communities and economies.

Reducing disaster risk before an event can have a direct impact on how well, and how quickly, communities recover. Across many nations, there is a funding imbalance between investing in pre-disaster resilience and paying the costs of post-disaster relief and recovery. Investment in building up-front resilience and hazard preparedness provides a positive return and reduces the need for recovery. It is estimated that every dollar spent in disaster risk reduction

Barriers to risk reduction The Global Resilience project is taking a phased approach to helping build more disaster resilient communities and economies.

The first phase evaluates the effectiveness of risk reduction measures; the second phase will develop a global disaster map which can be used to identify the most vulnerable communities, and the risk reduction measures which can offer them the greatest protection; lastly, the third phase will focus on mentoring

A lack of standardised framework for decisionmaking was also noted. The report states that the adoption of standards for decisions on risk reduction efforts is required for a globally consistent and effective response to the threat of natural disasters. “A standardised framework does not mean a one-size-fits-all approach to risk reduction. Rather, it supports tailored and localised measures by providing a robust framework for identifying the most effective areas of focus for risk reduction.” It adds that the improvement of data quality, use of consistent data metrics and the adoption of standards within a framework would deliver insights to make the case for risk reduction and support a shift to greater pre-disaster resilience investment.

The insurance industry’s role The report notes that the insurance industry has a significant role to play in this process.

“The insurance industry plays a critical role in providing financial protection and security to atrisk communities to support, and preserve the gains of, social and economic development,” it says.

“It [the insurance industry] is finding new ways to respond to the diverse needs of individuals, government and commercial enterprise. Microinsurance provides protection to low-income communities by insuring their crops, livestock or assets, and extends to accident, health, life and funeral insurance. Catastrophe insurance pools and index-based insurance solutions can facilitate the coverage of natural hazard risk in highly-exposed and vulnerable communities.

Insurance-linked securities, such as catastrophe bonds, can bring alternative capital to cover natural hazard risk.

However, the insurance industry’s contribution to managing disaster risk extends well beyond the losses it pays out,” the report continues. The full Global Resilience project report is available on UNEP’s website http://bit.ly/1rVosT3 and outlines a number of strategies that may reduce the risk and impact of natural disasters from a social and insurance perspective.

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KleinKariba

Insurance good and proper when clients need it most The powerful floods that flashed through Limpopo province in March 2014, left a trail of devastation that required a complete reconstruction of a large part of the Klein-Kariba ATKV resort.

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bsa executive insurance adviser Elmarie Beukes is the insurance broker managing the entire ATKV portfolio, and has developed a solid relationship with the client. When she originally received the call from Klein-Kariba, they suspected a dam wall at a neighbouring property had broken, and she personally headed out to the resort.

During her second visit, six days later, a second flood, even more severe in magnitude, occurred.

According to experts, on the afternoon of 7 March, the storm was so severe that three small farm dams failed in the catchment. They said that 90 mm of rain fell within 45 minutes, and 200 mm within one hour during the second incident, on 13 March. The expert report indicated that this was a one in 500-year flood.

The resulting flood claimed two lives, and caused extensive civil and structural damage to the resort.

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Beukes tells RISKSA that all the flats in the lower resort were flooded, the restaurant and pools practically washed away, and the conference centre, offices, and some staff accommodation also flooded. Almost all the infrastructure was obliterated – roads and bridges completely destroyed, metres of earth moved, plumbing and drainage demolished and there is a vehicle that is still missing.

short-term insurer, Santam believes that insurance is about being there for our clients when they are most needed. Insurers must be seen as being in the business of rescuing policyholders when disaster strikes, paying claims with urgency and efficiency. That’s insurance good and proper, he reiterates.

The ATKV has been insured with Santam since 2003, and Beukes says the claims process has run effortlessly throughout. She confirms that from the minute she received the call from KleinKariba, she registered the claim, and Santam assisted instantly by appointing an experienced assessor, who joined her at the resort to support Klein-Kariba with the claim and assess the damage.

The total cost of infrastructural reconstruction is R31 million, although the resort will be paying for a portion of this since the damage necessitated an entire redesign of the resort before reconstruction. The planning and redesign took almost two months, as the natural flow of the river after the flood has been left as is, which means different flood lines, and changing the path of the roads and bridges, and of course, enhancing safety features to diminish the impact, should a flood like this occur again.

Ronelle Pretorius, Santam regional manager Gauteng north, comments that as the largest

Another significant claim was the business interruption, which is projected to be

approximately R27 million, and takes into account loss of rent and income from the restaurant and conference venue from March to the end of August.

a lot,” says Beukes. Necessary and applicable extensions required were extended, and the client was always informed of exactly what cover they were insured for, she adds.

The claim for contents replaced totalled about R4.8 million and included things such as accommodation, bedding and furniture, restaurant equipment and stocks in stores.

Because Beukes and the client were so satisfied with Santam’s response in their time of crisis, the contractors all risk insurance, which has been taken out to cover the construction process, was placed with Santam’s engineering underwriting manager, Mirabilis Engineering Underwriting Managers.

“We actually feel very lucky that the damage wasn’t worse. There was a bus of school children on the way to the resort, and we are so grateful that they had not arrived yet. And if the flood occurred in the middle of the night when everyone was sleeping, again, things could have been disastrous,” says Beukes.

“Before the incident, valuations were done every second year as agreed between insured and insurer, and there was no average applied across this portfolio – these things really helped

“It is an excellent example of how the different Santam products along with the products of their specialist UMA’s complement each other,” says Michelle Hollenbach, North West, Free State and Pretoria area manager at Mirabilis.

Mirabilis covers the client during the construction period, seamlessly. The commercial policy will continue covering the

client once handover has taken place and along with the advice rendered by Elmarie, Mirabilis has tailored a policy specifically intended for this project, carefully considering the insurance product required to cover the reparation from this historical disaster. Mirabilis is also the proud annual risk carrier for the ATKV’s ongoing construction projects, adds Hollenbach.

Beukes has commended all involved throughout the process. Despite the tragedy, all those affected are looking to the upside, and a painless insurance claims process certainly helps with that.

“Listen to your client. Ensure you understand their needs, and negotiate with the insurer on their behalf. Check the policy wording, and more importantly, examine the policy schedule – pay attention to that and adjust it to your client’s needs,” says Beukes as advice to fellow brokers.

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Leading lady:

at the helm in a man’s world As the founding managing director of South Africa’s largest environmental liability and cleanup specialist underwriter, Envirosure’s Sjanine Tanner has made her mark in a particularly male dominated corner of the industry. Vibrant, warm and bursting with energy, Tanner has been ‘leaning in’ since long before Sheryl Sandberg went viral.

Sarah Bassett

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tarting her career in banking, Tanner made the transition to insurance following her family’s relocation to Johannesburg from Durban. Starting out in Regent Insurance’s general motor division, she jumped at the opportunity for a new challenge when a vacancy arose in the trucking division.

“Working in motor, my role was to network with the finance and insurance managers at dealerships in the hope that they would write our product as a result; I had no control over what decision they made. I needed to feel I was adding real value.” The world of trucking and heavy commercial vehicles offered just the diversity and challenge she needed. In trucking, she found that every business was different and each had different risk depending on multiple variants including routes, drivers, loads and

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distance – all of which had to be considered and calculated for any given quote.

It was in this role that she learned the ins and outs of both insurance and the trucking sector – from policies, to underwriting, to claims – and from there moved into a management role.

“We decided to transfer back to Durban and I became regional manager of the Regent Durban branch. I did well because I came back to Durban with a Johannesburg mindset. That was when I started to get noticed as someone excelling and doing well in what is generally considered a man’s world. I was always working in a male dominated environment,” she comments.

When Hannover Re saw the opportunity to develop the Envirosure business, Tanner stood out. “I think they were looking for a woman

to helm the business and set it up. They like something a little different. That’s their tagline after all, something different, and I met all the criteria.”

“It was a huge leap of faith. I was coming from a corporate job with a very stable income and all the perks – and was joining a company without a cent on the book. It was a brand new company. We started from the beginning, building the business from the ground up.”

It wasn’t all smooth sailing either, after an initial hiccup in which Envirosure lost its initial insurance partner due to a change in directorship, Tanner found herself facing unemployment and wondering what to do next.

“We took the concept to Lireas, [the strategic investment arm of Hannover Re] which liked the model and came on board.”

Lireas provided guidance and support through the entire business set up process. “This is where they really excel. They take someone from mid-management and put them in a managing director position. They mentor and guide them through the whole process,” says Tanner. “Of course, the first few years were scary, but I felt I had strong business partners that really supported me in every area of my business.”

it is. So it was just through really hard work that I had to make myself seen. I had to work hard to build my reputation and then, to protect it.”

Working to be seen

“It was a scary decision, but now that I’ve done it, I look back and think, I wish I’d done it sooner.” But, reflecting, she adds that had she done it earlier, as a younger woman, she might not have been taken seriously.

“Some men think it’s amazing and acknowledge women in leadership. And some men are horrified to find a women making the decisions,” says Tanner. “When I started out, it was particularly challenging. If I sensed there would be an issue with a client, I would bring our director, Doug Carmody, to the initial meeting. He would chair the meeting and I would make all the decisions. When he was in the room, they took us seriously.”

“Women in the industry, particularly in the world of big assets, have to earn respect, where a man automatically gets respect. That is just how

This exemplifies Tanner’s approach, which has been to accept the situation and work around it without being distracted by trying to fight it

head on. In the end, she says, the hard work has prevailed. “I was about 35 at the time, and so perhaps it was partly a factor of being quite young. Now, given the success and reputation of Envirosure, this is rarely a problem anymore.” It’s really been a case of just working hard. You keep going and eventually it prevails.

It really does. I’ve fought the battles that I could and the ones that I couldn’t, I’ve stood back and let things run their course. I think that has been my success. You can’t always fight against something that is not going to change, but eventually, if you find a way to stick it out, things will change and people will be left looking silly because you’ve proven them wrong.”

With Envirosure now holding roughly 80 per cent of the local market following the completion of its recent total acquisition of Synergy Targeted Risk Solutions, brokers who

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previously chose not to deal with Tanner will now be forced to return. “There is nowhere else to go. So, success really does prevail. In a way, it’s like getting the last laugh,” she chuckles.

Reputation: build it, keep it Tanner notes that for women, reputation is critical – both to build and to maintain. “You can do something thoughtless and find the reputation and respect you’ve worked hard for tarnished for life, where for men it is easier.

When a guy misbehaves, it’s a good laugh where a woman simply can’t do that,” notes Tanner.

“At functions, for instance, you have to hold your own and make sure you are always coming off as a professional. Particularly if you’re in a senior position, women need to make sure they always appear responsible. It seems terrible to say, but that is the reality. If you’re the last one to leave the party, it gets noticed. If it’s a bunch of men, it’s not. These are the little things that really add up and do count.”

Over her career, Tanner acknowledges that she has seen changes as more women become prominent in business. Here, she suggests that government equity policies having had a significant impact for all women. “I do think business has changed as a result, because companies need to employ women who can move up. You’re not just hired because you have a short skirt and blonde hair and long legs. You’re put there because you’re the right fit for the position, and you qualify for the job.”

Better for business In times gone by, women’s roles as mothers and household managers were seen as impediments

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to their performance in the business world.

Tanner suggests, however, that these roles make women invaluable in the business context.

“Because of their multiple roles, women have a better understanding of what life is all about.

They understand staff needs better and are often more compassionate on these aspects. I see that with my staff. We all have sick children.

We all have stuff that happens at home and women can empathise with this because they have these home issues too. You’re working not just from your head, but also from your heart.”

For Tanner, this has meant that when it came to a recent office move, for instance, she gave careful consideration to how the location would affect staff; the location in relation to schools and public transport. She has implemented a flexitime policy enabling staff to work around the demands of other parts of their life, and focus fully on work without being distracted by trying to fit these aspects in. She also works hard to consider the cultural practices and preferences of all staff, to ensure that everyone feels included in all celebrations and aspects of the business.

In a time where the industry faces considerable skills shortage and continuous poaching, the loyalty this kind of management approach creates is not to be undervalued. “It costs more to employ new staff than it does to nurture and educate the staff you have,” notes Tanner. “When I have an opening, I always look internally to see who is willing to step up.

This inspires staff with the sense that they can improve and benefit within the organisation.

Sometimes, you do take a slight step back for a short time, but overall it takes the company forward.”

This not only ensures she keeps great staff, but improves the quality of work too. “If you’re not

happy, you’re not productive. But if you enjoy coming to work, we’re all going to succeed together. If people hate what they do, they start to take a day off for a headache; they get distracted. Your whole mindset changes when you feel appreciated.”

Into the future

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As the newly expanded Envirosure looks to the future, it is clear that Tanner’s approach has proven more than successful. Of the merger, she explains that there will be no immediate changes. “We have bought the whole company, so we are still able to trade as Synergy. Policy wordings will remain unchanged for the time being,” she says.

The goal is to gradually consolidate the two entities by the end of this year, in time for the December treaty renewals season. “There are some differences in the two companies’ policy wordings. We are looking at merging the two, taking the best elements of both,” Tanner explains. Synergy managing director, Peter Hodgson, will oversee this review process. “He is an expert in underwriting and has incredible knowledge from his 40 years in the industry. I am blessed to be able to work with him. I’ve learned a lot from him already.”

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For clients, a key benefit of the merger is precisely this merging of expertise under one roof. Synergy clients will also benefit from Envirosure value-adds, including its excess insurance offering and its 24-hour call centre.

“This was something not available through Synergy, but it’s really stood us well. Clients don’t have to wait for the next morning to start the claim and response process. So, these are all things that can make their lives easier,” says Tanner. “We’re going to put together the best of all our expertise and offerings and create a dynamite package.”

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Protecting Your Reputation

HAPPY 15TH BIRTHDAY Go on, live a little, light up your birthday candles & party like the rock stars you really are.

TO SAUMA (SOUTH AFRICAN UNDERWRITING MANAGERS ASSOCIATION)

FROM LEPPARD UNDERWRITING

We know how it feels to be 15, so we’ll be on standby in case the celebrations get a little wild.

Leppard Underwriting Protecting Your Reputation

Contacts Tel: +27 11 459 1640 Fax: +27 11 268 5887

Professional Indemnity Stuart Sinclair stuart@leppard.co.za

General Liability Insurance Caroline MacNair caroline@leppard.co.za

www.leppard.co.za Leppard Underwriting FSP 274 Underwritten on behalf of Lombard Insurance Company Limited (FSP No. 1596)

Chartered Accountants Sherelle Horsfield Sherelle@leppard.co.za

SAUMA 15 years strong

Established in 1999, the South African Underwriting Managers Association (SAUMA) this year moves into its 15th year of operation, and the organisation is stepping up a gear – celebrating record membership numbers, and the appointment of its first permanent CEO, Tersia Davey.

Christy van der Merwe

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avey tells RISKSA that SAUMA has much to reflect on and proclaim from the past 15 years. “It has been a phenomenal 15 years, not only in terms of growth, but in terms of what we, as a board, have achieved with limited funding and capacity.”

Underwriting managers have now officially been recognised in the Short-term Insurance Act. “We have created an understanding and awareness in the industry of the definition and position of an underwriting manager, and what we stand for. During the first year as SAUMA, the term ‘underwriting manager’ was not well-known or understood, and the valuable contribution in terms of underwriting specialised risks and arranging short-term structures to compete with the international environment on niche products was not fully recognised or understood,” says Davey.

At the very heart of its mandate, the association has created a professional body which gives underwriters a platform to generate awareness and stand together in a strong alliance to deal with regulatory reform and decisions affecting our market.

Indeed, the increased legislative requirements and insurance platforms also necessitated a new role within SAUMA to assist with the regulatory feedback, member views and contributions through a holistic approach.

Through the appointment of a full time CEO, the organisation has the opportunity to focus on more initiatives, to get closer to its members and to create more awareness of the underwriting fraternity and the huge role it plays in the insurance market.

Members have responded well to this development, and are more willing to share information. It has brought about a renewed enthusiasm for the association.

The changes in SAUMA were all positive strategic decisions made by the board, based on the ever-increasing need to provide more value-added services to members, explains Davey.

Raising the profile The major focus at SAUMA in 2014 has been to get members to realise the importance of their contribution to the industry, not just in their own companies, but in their capacity as

entrepreneurs and specialists in the very niche lines of insurance business. “We try to involve members more throughout the industry and to re-emphasise the importance of their views and knowledge, specifically when it comes to regulatory changes and implementation of new practises, which are not always in line with the practises of niche short-term specialists like underwriting managers,” says Davey.

In 2014, the association has attracted some of the most senior and prominent individuals in the industry to represent the industry on the board, and SAUMA appointed the first female chief executive in a short-term association in South Africa.

During the last five years, SAUMA has created an awareness of its members through the introduction and participation in various industry awards, which were previously only awarded to the intermediary market or to insurers.

SAUMA has also developed great relationships with various industry bodies and associations. It is an active partner and participates in most of the industry committees and workshops.

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SAUMA - 15 YEARS the increase in new membership and support for negotiation with regulators on new laws which may impact or bring in changes influencing the sustainability of the underwriting environment, will always be a priority.

SAUMA is fully supported by the Financial Services Board (FSB), and also represents members at the Insurance Institute of South Africa (IISA). The association has open lines of ongoing communication with the short-term insurance ombudsman, and the Financial Advisory and Intermediary Services (FAIS) ombudsman. SAUMA board members have also represented members in Parliament in the past, to state the case of UMAs to the Cabinet.

The association has a very active board and although the board members are all entrepreneurs in their own domain, they voluntarily give their time to ensure the sustainability of the UMA market in South Africa. The organisation is certainly bolstered by a strong board, and will shortly announce the board that will carry the association through the latter part of 2014, and into 2015.

Raising the profile of UMAs and reiterating their contribution to the insurance industry will remain SAUMA’s priority for 2015. However,

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Underwriting managers are respected as experts in their niche fields, and the minimum criteria to becoming a member of the association includes: professional indemnity of R5 million, and fidelity cover of R1 million.

Conference The yearly SAUMA Conference took place in May 2014 this year, and Davey says that the event was a huge success with over 400 delegates in attendance. It is quickly becoming one of the most prestigious conferences in the short-term industry, she adds.

“The main focus of SAUMA conferences will always be on the underwriting managers and our associate members, giving them the opportunity to network, to come together in an environment where professionals can receive an update on the economy, politics, local and international legislation and global trends,” notes Davey.

She confirms that SAUMA has already confirmed most of its line- up for the conference next year, and these details will be announced once approved by the newly elected board in September.

Hosted by prominent business journalist Bruce Whitfield, the 2014 conference featured speakers including political analyst Eusebius McKaiser, CEO of the Association of Certified Fraud Examiners South Africa Jaco de Jager, and South African Insurance Association technical GM Suzette Strydom. Delegates delved into the local impacts of international and domestic regulation, and issues such as forensic claims management.

“We aim to have a more interactive conference in 2015, following the new format of our round table panel discussion for our 2014 AGM. We definitely want our members to be more active and involved in all our activities,” she states.

As strong as your membership Davey highlights that as an association, SAUMA is very proud of its members and the crucial role they play in the insurance industry.

As we celebrate 15 years, we also celebrate 15 years of their success in providing innovative specialist insurance products to a market that is not always aware of new risks and global trends affecting us financially in a risk environment, and the impact of that on our daily lives.

SAUMA promises that it will continue to improve its service to members and its professional status. The association is committed to being the spokesperson for the underwriting fraternity and to lead by example in sufficiently and effectively dealing with industry issues, regulation and sustainability.

“After 15 years we would like to thank each one of our members that have supported the association and continue to support the association.

Without our member’s contribution and passion for the industry we would not have been in a position to stand here today as a professional body representing more than 80 UMAs,” concludes Davey.

Congratulations on 15 years.

READ READ US US FIRST FIRST

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SAUMA - 15 YEARS

THEY SAY A GREAT ORGANISATION WILL STAND THE TEST OF TIME. THIS MONTH, AN EXCEPTIONAL ONE WILL CELEBRATE ITS 15TH ANNIVERSARY. Congratulations to SAUMA on their 15th anniversary celebrations.

Thank you for your ongoing commitment to the industry. We wish you continued success for many years to come.

Insurance good and proper

Santam is an authorised financial services provider (licence number 3416)

ADV 4260_Congrats Ad.indd 1

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2014/07/07 02:08:59 PM

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KEU congratulates SAUMA on their 15th Anniversary

years

KEU Underwriting Managers CC underwritten by Centriq Insurance Company (RF) Ltd, will partner only with registered short-term brokers to ensure your risk is covered. KEU is a member of SAUMA.

Authorised FSP: KEU 5076 Authorised FSP: CENTRIQ 3417

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SAUMA - 15 YEARS

Congratulations... ...on this special day of achieving a list of appreciations, and many wishes for more great years ahead.

Wishing SAUMA a very Happy 15th Anniversary!

www.aum.co.za PANTONE

Powered by

CMYK

An authorised Financial Services Provider

BLACK

WHITE

SA Underwriting Agencies is an authorised financial services provider | FSP No: 281

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SAIA

Congratulations on reaching this remarkable milestone.

The South African Insurance Association wishes SAUMA continued success in business.

The South African Insurance Association www.saia.co.za Tel: +27 11 726 5381

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Plain sailing Christy van der Merwe

Now standing at the helm of South Africa’s largest marine underwriter – Associated Marine, David Keeling has found the meaningful change he was looking for, and is settling into his new role as chief operating officer of the Santam marine division.

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eeling says it has been a busy few months since he took over in April 2014, with much analysis and catching up taking place. However, he has the utmost confidence in the team at Associated Marine – a division that has been running for 20 years, now with a staff complement of approximately 40 people.

“Some of the practicalities and systems are new, but there are no major changes required.

I am happy with the staff and the approach taken, and I think the clients are being served well,” he adds. Described as a well-respected and knowledgeable admiral of the marine insurance industry, Keeling’s maiden voyage in the business of marine underwriting was at his home-base in Liverpool, in the early 70s with the Sun Alliance Insurance group.

By the late 70s, Keeling had made the journey to South Africa and started working for Protea Assurance Company. After a brief float in Durban, he returned to Johannesburg and worked for Concord Insurance (Now Ace Insurance) until 2000, whereafter he opened the UMS Johannesburg office.

David Keeling

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In 2012, UMS and FMA merged to form Horizon Underwriting Managers, which is where Keeling was until seeking a new challenge at the start of this year. Over the years he played an active role on the Association of Marine Underwriters of South Africa, a division within the South African Insurance Association and has been a part of the South African delegation to IUMI since 1995. He has also been the Master of Ceremonies at the Marine Forum for almost 20 years.

With the rich history of marine insurance dating back to the 1600s and the well-known Lloyd’s coffee shop, or 55AD if you include the Phoenicians, Keeling reiterates that marine insurance is one of the most well-established and traditional markets in the industry.

While the basics remain, this does not mean that things are not changing, and constantly evolving technology and criminal tactics keep marine underwriters on their toes. “Technology is certainly the most rapidly changing aspect of the business today. It has an impact on our response times, meaning we can be instantly in contact. The speed and efficiencies brought in with technology give us a competitive advantage, and mean that we can generate more business,” explains Keeling.

He adds that the increasing mobility brought about by technological advances means that people no longer need to be tied to their desks, and can spend more time face to face with clients and out in the field, understanding the risks and issues.

While the major risks for goods in transit remain the same, it is the nuances that change, and particularly with high-value goods, the criminal element wishing to appropriate these goods continually alter their modus operandi.

Hijacking of high-value cargo is a concern that requires daily attention. One of the major issues on this front is that there is no access to worthwhile statistics. There are general stats reported, however these cannot be drilled down into, to reveal more valuable information.

Companies tend to work with the information

they receive internally, making it difficult to get an industry-wide picture.

Trucks holding consumables or any reasonably valuable cargo, from copper to cellular phones are a target for hijacking, and certain hotspots such as Middleburg, Marble Hall and Heidelberg have emerged.

Hijackers have proven their prowess at taking vehicles, disabling tracking devices, disguising vehicles, and disposing of goods rapidly. “In fact, if all containers at terminals could be packed and unpacked at the speed used by criminals, the productivity of the maritime industry would increase immeasurably,” quips Keeling.

He explains that many of the insurance underwriting risk management and risk control techniques emerging are linked to technology to combat crime. New safety and security products are continuously under development, and as well as being able to track cargo, being able to get it back is a top priority. Often it seems as if criminals have their own research and development departments and keeping ahead of them means that there is no time to rest easy.

“Our number one priority in terms of risk management is to ensure the product arrives safely, and the client’s interests are served,” reiterates Keeling. Associated Marine works with clients to mitigate risks as much as possible to pro-actively prevent claims. It will look at the client’s history, and examine systems and security, and assess whether there is a low, medium or high risk. Gaps and

weaknesses will be identified and remedied where possible. Static surveys, including fire risk for storage areas are commonplace, and recommendations will be put forward to clients to implement and improve risk ratings.

On open waters, piracy is a concern, and one that Associated Marine watches and pays attention to. However, it has not yet had much of an impact on South Africa and generally the cargo destined for the country does not traverse the routes known for piracy, such as those passing Somalia. Recent activity on the West African coast, and a few incidences around Southern Africa have not been widely publicised.

Having in-depth knowledge on matters beyond South Africa has always been important as Associated Marine needs to be aware of restrictions and sanctions in foreign countries that could impact the handling, regulation and transportation of cargo.

This is becoming ever-more important as about 10 per cent of Associated Marine’s business is now written outside of South Africa’s borders.

This extends even beyond Africa, where Santam has an international presence through Sanlam Emerging Markets.

The prospects for growth in Africa and other emerging markets are very exciting, says Keeling. “My top priority is to ensure Associated Marine continues to be the major marine underwriter it has become over the years – with the largest footprint, product offering, and premium driver of marine insurance in South Africa,” he concludes.

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A relook at

Plant All Risks

Insurance With new entrants into the engineering sector increasing competition, as well as a perception of higher underwriting profits, clients taking out Plant All Risks cover have benefitted from lower than usual rates.

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owever, the truth is that insurers are under pressure due to the increased competition and lower rates, as well as the higher cost of claims due to rand depreciation affecting imported items and replacement parts, and the poor training received by operators, leading to a higher frequency of claims.

Traditionally, machinery is imported from Europe, the United States and Japan, but we are now also seeing an increase in items imported from developing countries, especially China, where the cost is considerably less. However, this can lead to problems for clients at claim stage – especially if there is a total loss – as this less expensive equipment is yet to build a track record in the local market and still yields low market value.

Fergus Mc Namara, managing director FDM Engineering Underwriters (Pty) Ltd on behalf of Renasa Insurance Company Ltd

There are generally three ways in which a plant owner can insure their plant: new replacement value, market value and agreed value: • New replacement value – when a client elects to insure on this basis, the schedule will reflect the value of the plant item as if it was purchased today. For example, even if the insured machine was a 2007 model, the schedule would reflect the 2014 model price. If the client then suffers a partial loss, such as from an accident, insurers would pay to repair the machine with new parts and the client would only be responsible for the excess. However, if the client suffered a total loss or write-off, the insurer would only pay at the machine’s current market value – for example, a machine in similar condition in terms of hours and age. So, even if the item was insured for R600 000, but a 2007

model with similar hours sells in the market today for R300 000, insurers will only indemnify the client for R300 000.

• Market value – here, the schedule would reflect the current year’s market value of the machine in question and in the event of a total loss the client would receive a payout equal to that. In the event of a partial loss, insurers would repair the machine with second hand parts.

If second hand parts are not available, the plant item would be repaired with new parts, but the insured would have to pay the difference between the new part price and the second hand part price had it been available for each new part replaced. For example, if a plant item requires a replacement door and a new one costs R60 000, and the second hand part costs R30 000 but no used part is available, the client would have to share the cost of the parts with the insurer with 50 per cent average applied to the new part so that the insurer and the client would each bear a cost of R30 000.

• Agreed value – on this basis, the insurer and client agree to the value of the item.

However, insurers would only consider an agreed value policy if the client can demonstrate value. For example, the client may have fitted a new body and engine to an old machine. The plant item itself may have had little or no market value, but by fitting the new parts and engine, the machine is now demonstrably worth R120 000. The insurers could then agree the value of the plant item at R120 000.

In the event of a total loss, insurers would then pay out the agreed value of product, the market price may only be R120 000 less any applicable excess. In R600 000. In terms of the policy , the insurer the event of a partial loss, indemnification will only pay R600 000. This will surely result in would apply on exactly the same basis as an unhappy client. it does for market value.

As mentioned earlier, a problem may arise for clients when they bring in a lesser known brand plant item to save on the upfront cost of acquisition, and they suffer a total loss.

For example, a lesser brand item may be purchased for R1 700 000, but after thirteen months, as a less well known or demanded

There are numerous challenges going forward for both insurers and clients to be satisfied regarding plant all risk insurance. Appropriate rates that are fair to both, rand depreciation and shifting client preferences regarding plant item sourcing, the basis of cover and other issues will be increasingly relevant. Certainly some innovation is required.

You and your business have come a long way. So get

Marine Insurance

from the bank that’s been around for more than 150 years.

We can provide you with the right cover for your business needs. We have customised solutions in the form of open marine, once-off marine, stock throughput, inland transit, freight liability policies and a whole lot more. Call us on 0860 999 334.

Let’s talk business.

Standard Bank Insurance Brokers (Pty) Ltd is an authorised financial services provider (FSP224).

A member of the Standard Bank Group. Moving Forward is a trademark of The Standard Bank of South Africa Limited. Standard network rates apply.

Products are underwritten by Standard Insurance Limited. SBSA 171002-12/13

Moving Forward

TM

47

Fraud The question I was asked most over the past few months was: “Did you experience an increase in insurance fraud due to recent strikes in the mining sector?�

Servaas du Plessis Censeo CEO

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Tech

Talent

Twelve-year old Sam Berger fidgets as any kid would when expected to keep still and discuss things around the RISKSA boardroom table.

He dunks biscuits in his tea, sneakily downs his father’s cup as well, and tells us about the apps he has developed and the programming languages he is learning, as if they are really no great shakes.

Christy van der Merwe

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The great geyser challenge It is estimated that between 400 000 and 600 000 geysers are replaced each year by the insurance industry in South Africa. There are often huge resultant damages when a geyser bursts. The geyser replacement value is in the region of R3 billion a year while resultant damages can amount to figures in the region of R4 billion a year.

For home insurers and body corporate insurers, ‘geyser replacement’ is almost a swear word.

It is referred in the insurance industry as a ‘loss leader’.

Most geysers have a five-year guarantee, and some manufacturers have a high failure rate within that period and the insurance industry is often caught up in the initial inspection. This is where the app comes into play.

There is also a large fraud factor where contractors remove the serial and date code of the geyser and the insurer then has to replace the geyser, because no one can prove whether the geyser is in or out of warranty. Good for the manufacturer, bad for the insurance company.

The cheaper the geyser is made, the quicker it bursts, the more the claims. “It is only getting worse and the manufacturers are competing in this space. I know the app will make their book more profitable,” affirms Berger senior.

I

n many ways, Sam represents the future of insurance. Or what it could be. He heard about a problem, and developed a solution.

Simple.

It all came about when he heard his dad, Larry Berger, who runs the geyser claim specialist company, Claims Assist, instructing old Mrs. Jones (already in a state because her geyser had burst) to climb into her roof and check the warranty on her geyser to see whether her claim was valid.

Sam was surprised that his dad expected an elderly woman to climb up into the roof herself.

Although this is fairly standard practice for homeowners. Alternatively, insurers often send out and pay a contractor to go and investigate whether a geyser is in or out of guarantee.

Sam came up with a simple solution. A geyser gets a QR code when manufactured technology that can hold information about the product, such as when and where it was manufactured, which will show whether or not it is still in guarantee. One QR code gets stuck to the geyser, and one can get stuck on the electrical distribution board in your home so that it is easily accessible.

Should you suspect something is wrong with your geyser, all you need to do is scan the QR code with your smart phone. The QR code will give the warranty status of the geyser. If the geyser is still within its warranty period, you will be notified of this and the app then requests you to enter your address and contact details.

The app will then automatically send an email from the phone to the manufacturer informing

them that a warranty call needs to be lodged and request the manufacturer to contact the client to arrange a warranty service call.

This process removes the insurance company from the equation and streamlines the manufacturer’s warranty process. The manufacturer does not need to receive or make any phone calls to undertake the warranty call out.

At a very conservative estimate, Berger senior calculates that the app could potentially save the insurance industry over R100 to R200 million a year, which could go up by 20 per cent each year, as more geysers are rolled out with QR codes. Taking these calculations further, he adds that about 36 000 unnecessary contractor call outs would be avoided, which would save about 144 000 litres of petrol, and in turn a substantial amount of money, resulting in fewer carbon emissions.

The potential for this app to be applied to any product that has a warranty period also exists.

The option of implementing the system among existing operation geysers, where the biggest benefits could be felt, is also being investigated.

Sam has patented the app, with expensive help from a patent lawyer at Edward Nathan Sonnenberg. Now the Bergers face the challenge of getting the app to market.

Because it has the potential to benefit the entire industry, the issue of who pays for it has arisen.

The possibility of having it funded by multiple players, from the insurance industry as well as geyser manufacturers, is being investigated.

Insurers have a lot to save, as do geyser

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manufacturers. The benefits to the industry would be best felt if there is a collaborative effort among these players, however, the likelihood is that it will be rolled out by one leading company willing to take it forward.

The Bergers are in discussions with one of South Africa’s largest short-term insurers as well as one of the country’s largest banks.

Unfortunately, they are discovering that the cogs turn slowly at huge corporations, and the red tape requires patience and expert manoeuvering.

Welcome to the 21st Century This highlights one of the major problems often heralded within the insurance industry. Solutions driven by technology are readily available, however the insurance industry is slow on the uptake. While the insurance industry is now running full steam ahead with apps, it lags when compared with other financial services industries and is not driving innovation.

Almost every insurance industry event is filled with delegates bemoaning not just regulation, but also the high average age of intermediaries, and how to attract skills and make insurance ‘sexy’? This is no small task for an industry famed for selling a ‘grudge purchase’. But developing apps that take some of the grudge out of it – ensuring your clients don’t have to climb up into the roof on a cold winter night to check the geyser for example – go a long way to win people over.

Technology is evolving at such a rapid pace, and to gain the most advantage from it, it needs to be driven forward with a certain amount of energy.

Multiple hit wonder Sam assures RISKSA that developing apps is ‘really easy’. However, speaking to someone who still uses pen and paper to take notes, and may be considered a bit of a dinosaur, he needs to do a bit more convincing.

He explains that the geyser app has the potential to be applied to any product that has a warranty, and chats about another app that he has developed, a fun competition app, as well as another developed for the medical industry.

This medical app would effectively be a QR code acting as the old medic alert bracelets, which would hold a person’s medical information and history, so that in an emergency, first responders would have vital information that could help save a life.

This is also useful for when a patient arrives at a hospital and may not be able to talk. Sam was unfortunately informed by his patent lawyer that a similar patent, held by one of South Africa’s largest medical schemes, has already been registered. While it means that Sam may have to step back from taking this app forward, he continues to think that the app could have far reaching humanitarian benefits if it could be used by everyone, and not only certain paying medical scheme members.

The medical scheme has offered to give Sam the license to sell the app to the public sector, and the Berger’s are now looking for a partner to assist with discussions with government and the Minister of Health.

Developing apps is a skill Sam has from his ability to code and programme, and his love for information technology (IT). It is a passion he has pursued, with help from his dad, from an early age. When Sam was just seven years old he joined a robotics class. Soon thereafter, the robotics teacher stopped the class but invited Sam to attend one on one lessons and taught him Python – which is currently the most popular coding language.

When Sam was in grade four at school he was placed in the grade eight computer science class, and has received numerous IT awards from school.

By the time Sam was ten he attended a threeday course held by NGO Umonya, which teaches high school children how to code using Python. A few days after the course, Python US held a two-day conference in Cape Town, and having recognised Sam’s talent, Umonya paid for Sam to attend the conference. “That was really cool. That was the first time I bunked school. I told my teacher I was going on an IT conference. I don’t think she believed me. My dad came with to the conference, he said he had to babysit me,” quips Sam. He met the conference coordinator in Cape Town, who subsequently invited him to attend Python’s biggest conference in Silicon Valley in the US – all expenses paid. This was an incredible opportunity for Sam, and opened up his eyes to the enormous potential that technology holds.

Back home, Sam goes about his everyday school life, and continues to develop his IT skills. Every Tuesday he is mentored by David Campey from Cape Town-based IT company, Information Logistics.

This is just what Sam does. Coding is simply

“ That was the first time I bunked school. I told my teacher I was going on an IT conference. I don’t think she believed me. My dad came with to the conference, he said he had to babysit me,” 52 8 6

7

another language he speaks fluently.

Sam takes out his beat-up Macbook – explaining that he has a bit of a “hardware challenge” and could use a machine that stays charged for longer than 20 minutes at a time – and tries to explain exactly what he does. Unfortunately, the lines of complicated coding are lost on me.

It’s when his eyes truly light up as he starts talking about drones – the capabilities of these machines, such as Amazon using them to deliver packages, and the potential they hold when it comes to transforming the way the world operates, that I too start to understand the possibilities held within these future technologies. Sam is also involved in a project building and testing hydrogenpowered drones to monitor rhinos and assist in the fight against rhino poaching.

These are the technologies that will shape our future – bringing in new risks, that will need to be insured against, but also a plethora of opportunities, which could be taken advantage of to change even the way insurers interact with their clients. The talent that will help companies harness this technology is 12 years old, and he has his eye on your cup of tea.

You and your business have come a long way. So get

Engineering Insurance from the bank that’s been around for more than 150 years.

We can provide you with the right cover for your business needs. Our customised solutions cater for engineering risks such as: machinery breakdown and interruption; deterioration of stock; computer and electronics; construction plant; contract works; dismantling; transit and assembly contract liability. Call us on 0860 999 334.

Let’s talk business.

Standard Bank Insurance Brokers (Pty) Ltd is an authorised financial services provider (FSP224).

A member of the Standard Bank Group. Moving Forward is a trademark of The Standard Bank of South Africa Limited. Standard network rates apply.

Products are underwritten by Standard Insurance Limited. SBSA 171002-12/13

54 8

Moving Forward

TM

New Stilus policy covers body corporate levies

S

tilus Underwriting Managers, introduced its unique levy protection policy to the sectional-title industry in August 2010, which has provided invaluable assistance to body corporates experiencing liquidity problems.

Because body corporates are obliged to prepare annual budgets on a break-even basis, any loss of income or excessive expenditure will invariably create a cash-flow problem where creditors remain unpaid and property maintenance is neglected, to the detriment of all members and tenants.

Despite recent improvements to the Sectional Title Act No 95 (1986) the Achilles heel of the sectional-title industry remains the failure of members to pay their monthly levies timeously. Stilus insurance policy is designed to overcome body corporate liquidity problems by insuring cash flow against the loss of income experienced when members’ default on monthly levy payments.

All proven claims are invariably settled

by Stilus within seven working days from registration. Prompt payment of claims is instrumental in maximizing the potential monthly cash-flow of the body corporates.

policy will enable body corporates to benefit and cash in their ‘prior debt’, which was not previously possible.

When a claim for ‘prior debt’ is forwarded to Stilus, it will normally already have been handed over to a collection attorney. Before Stilus can process the claim, the body corporate is required to obtain possession of the collection attorney’s file and settle their fee. Stilus will only pay legally taxed collection costs together with the claim, once the assessment process is complete.

Stilus’ new levy protector policy allows all body corporates to restore their present and protect their future cash-flows derived from levy payments. The benefits accruing to the sectional-title market are of immense value to the entire industry.

Stilus policies can only be purchased from registered Stilus insurance brokers, ideally specialists in the sectional-title industry.

Stilus’ policies are also available for Home Owners Associations from brokers on similar terms, subject to prior approval of their constitutions.

Stilus premiums are minimal as policies are a form of guarantee insurance, not indemnity insurance. Claims paid are outright payments, not loans subject to repayment.

Stilus endeavors to recover the subrogated claims thereafter at its own risk from levy defaulters.

Stilus’ latest policy, marketed from July 2014, insures all legally recoverable levies payable, both prior and subsequent to the inception date of the policy. Whilst no excess is payable in respect of claims made subsequent to the inception of the Stilus policy as previously, claims for ‘prior debt’ will bear an excess equivalent to 10 per cent of a claim with a minimum of R1500. The enhanced Stilus

Michael Garvin, marketing department, Stilus

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The high price of

medical

tech

Laura Owings

Photo: Gabriela Hasbun

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Medical aid does not cover the most innovative health care technologies available. Developed and marketed abroad, these technologies are unregulated in South Africa and come with a prohibitive price tag.

B

ionic limbs, robotic skeletons and organs grown in a petri dish. It all sounds a bit sci-fi, but these advances are quickly emerging as the future of what ordinary people call medicine.

to stand upright and walk. It is the only exoskeleton with FDA clearance via clinical studies and extensive performance testing for personal use, however, the product comes at a price.

One of the biggest breakthroughs in advanced medical technology came in late July, when the US Federal Drug Administration (FDA) approved the ReWalk electric-powered exoskeleton suit for commercial use. It is already available for sale in Europe.

ReWalk will set you back $69 500, and health insurance in the US doesn’t cover it. For the time being, access is limited to those with significant financial resources.

“Innovative devices such as ReWalk go a long way towards helping individuals with spinal cord injuries gain some mobility,” Christy Foreman, director of the Office of Device Evaluation at the FDA’s Centre for Devices and Radiological Health, said in a statement.

ReWalk is a wearable robotic exoskeleton that provides powered hip and knee motion to enable individuals with spinal cord injuries

The comparable Ekso Bionic exoskeleton suit is another option for patients. Used primarily in a clinic or rehabilitation setting, and always under the supervision of a physical therapist or as part of research studies, the suit costs nearly R800 000.

The cost constraints of such technology are highlighted in the story of Andrew Merryweather, who was assaulted in Claremont in 2006, incurring injuries that left him paralysed from the chest down. Merryweather was uninsured.

Thanks to donations, funds were raised to obtain the Ekso suit from the UK for Merryweather’s therapy and others at the Cape Peninsula University of Technology. The suit is currently not available for commercial sale in South Africa.

Even for those covered by most extensive healthcare plans, the Ekso suit price tag would be prohibitive. As medical aids are designed to provide the highest quality of care to a pool of subscribers, these advancements are simply too expensive.

“Medical aids are tasked with managing their funds in order to provide the necessary coverage to all their members. They often have to rely on the principle of providing as much as possible to as many as possible of their members,” says Peter Jordan, principle officer of Fedhealth. “Unfortunately, as the scheme funds are limited in order to keep member contributions affordable, some treatments

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57

and technologies have to be excluded from funding. Fedhealth considers the overall scheme affordability, cost-effectiveness and medical evidence for new technologies when deciding on if and how these should be funded,” he says.

Beyond the cost, these technologies may also be viewed as value-added care. Indeed, individuals who are in a wheelchair, for example, and feel trapped by their situation could find great hope and joy in the possibility of therapy with a robotic exoskeleton that might allow them to walk again or bionic limbs to assist in regaining mobility. However, the necessity of such technologies may not be considered urgent care.

Furthermore, these advanced technologies are usually developed in and for overseas markets and brought to South Africa at expensive prices which are exacerbated by currency exchange rates. The absence of regulation of price, appropriateness and quality on medical technologies in South Africa further fuels these rising costs, says Jordan.

According to him, these factors combine to create a health care cost that has a negative effect on medical expenditure. “Despite the benefits of some new medical technologies, the fact remains that technological innovation is a major source of increase in medical expenditure that also undermines efforts to spread resources more fairly and keeps medical scheme contributions affordable without cutting available benefits,” Jordan says.

“Some technologies are developed and sold at significant costs, but don’t add significant value to the health outcomes of a person undergoing treatment for disease or illness. Medical schemes are tasked with the assessment of new technologies in order to decide on funding, thus they also need to decide whether the cost is justified by the value it may add to the health of their members. For these reasons, some new technologies may be excluded from medical scheme funding,” he adds.

That is not to say things will not change in the future. As technologies further develop and demand grows, prices may settle to more affordable rates. According to Len Deacon, strategic consultant for medical schemes and administrators in South Africa, the medical device industry may mirror trends seen with mobile devices. “Like all new innovations like computers and cell phones, there are those who

become the first adopters. However, the price they pay is much higher than later on when the technology is more acceptable and not seen as experimental and too expensive,” he says.

“All new technology is expensive and in most cases prohibitive to the general public. But over time, as these technologies become more commonly used, as we have seen with cell phones and tablets, the cost will drop dramatically,” he adds.

Deacon says the medical innovation world is one of the fastest growing areas in research and one expected to see massive growth over the next few years. It is likely that funding options will follow, however, those developments will take time.

“I believe that medical schemes will only fund this type of innovation in about five years upwards and not before,” he says, adding, “There is not much happening right now within the funding areas and markets in South Africa.”

Medical schemes already investigate the possibilities of funding new medical technologies as they become available.

However, Jordan says that for some technologies, such as robotic exoskeletons, there have been no requests.

“For Fedhealth, companies bringing in new technologies to the South African market follow a formal application process for consideration of funding. To date, Fedhealth has not received an application for the reimbursement of the robotic exoskeleton from any company in the industry,” he says.

If interest from technology suppliers were to surge in South Africa, it might have an effect on the funding approach of medical schemes.

Jordan says that when technologies are proven to be safe, effective and affordable, as well as an improvement on current treatment options available, partial or full funding may be provided by schemes.

For the ReWalk exoskeleton, commercial availability in Europe and now also in the US may increase awareness about the technology and its application in South Africa. According to Larry Jasinski, CEO of ReWalk, the company is “working with insurers and other healthcare coverage providers to ensure individuals eligible to use the ReWalk are able to purchase a system.”

“All new technology is expensive and in most cases, prohibitive to the general public. But over time, as these technologies become more commonly used the cost will drop dramatically.”

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The benefits of

Banting Melissa Anne Wentzel

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Professor Tim Noakes’ latest collaborative book, The Real Meal Revolution (TRMR), which advocates a low-carbohydrate, high-fat (LCHF) diet, has been a runaway success in South Africa. The book has sold over 90 000 copies to date and has offers from publishers in the US, UK, and Australia. RISKSA chats to Noakes about the benefits of his meal plan, and investigates whether medical aid health and wellness programmes are paying attention.

of hunger that is characteristic of the HCLF diet. “The biology is simple,” says Noakes, “carbohydrates drive hunger. The Real Meal Revolution promises, no meal times, no portion sizes, no kilojoule restriction. Let your body tell you how much to eat.” Noakes says that one of the things people are reporting is how grateful they are that they can now have a mature relationship with food.

D

espite following accepted wisdom on nutrition for athletic performance, which is a high-carbohydrate, low-fat (HCLF) diet, and maintaining a lean physique, Noakes, in his 60s, discovered he was prediabetic.

Perplexed, Noakes, a highly respected South African professor of exercise and sports science at the University of Cape Town, began to look for answers. In his quest he learned that the majority of individuals today are insulin resistant (IR), a state caused by a reduced capacity to metabolise ingested carbohydrates, safely and efficiently.

He expands on this in The Real Meal Revolution, “Because of our genetic make-up, the majority of us are IR to some degree. So when we eat carbohydrates, our bodies react.

IR is the common but overlooked cause for obesity, diabetes, hypertension, and perhaps elevated blood cholesterol concentrations.”

Far from being a weight loss fad, the LCHF lifestyle was created in response to the misconceptions that consuming saturated dietary fat has an adverse effect on cholesterol levels. The book addresses the many health concerns stemming from an elevated carbohydrate intake first prescribed by the US Dietary Guidelines for Americans (USDGA) in 1977. “The focus of The Real Meal Revolution is to deconstruct the bad fat myth and return us to the attitude of ancient times where fat was prized.”

In his 2012 book, Challenging Beliefs, Noakes explains that the death knell for any diet is hunger. “In time, even the most motivated dieter must succumb to his or her hunger, begin to eat more, and return rapidly to his or her former weight.”

The first, and most significant benefit of the LCHF diet, also known as the Banting diet, is disease prevention. Specifically, it tackles the twin epidemic of diabetes and obesity that has plagued developed and developing countries since the release of the USDGA and the introduction of low-fat eating.

Bringing home the bacon Different to the low-carb diet popularised by Dr. Atkins in the 1970s, the LCHF diet is not a high-protein diet but instead a high-fat diet with a moderate level of protein consumption.

The key to successful Banting is to restrict carbohydrate consumption to 25-50g daily (also known as a ketogenic diet) and to eliminate sugar altogether.

The result of depriving your diet of carbohydrates is the reduction of insulin in the body. Your body then switches to a very high fat-burning state, known as ketosis, using ketone bodies (energy molecules in the blood converted from fat by the liver) as fuel for the brain. This switch is what reduces your appetite considerably. “Your calorie consumption drops 30 per cent,” says Noakes. Which brings us to the second, and most appealing, benefit of Banting – it eliminates the constant sensations

“Once you get the addictive sugar or carbs out of your diet, your brain will automatically regulate the number of calories that you need so that your body eventually becomes the weight it is meant to be,” says Noakes in the article, 10 Golden Rules Of Banting. The part of the brain he is referring to is the appestat, which controls appetite and regulates human body weight.

The Real Meal Revolution promises weight loss, higher (youthful) energy levels, and prevention against ‘serious killers’ like obesity and diabetes on the LCHF/Banting diet. All while still eating the ‘good stuff’ – flavourful foods like steak, eggs, roast chicken, and bacon.

Challenging progress A recent study by the University of Stellenbosch challenging the health and weight loss benefits of Banting (Plos One, July 9, 2014), claims that there is similar weight loss found between the low-carbohydrate and the isoenergetic balanced diets and ‘little or no difference in cardiovascular risk factors’.

Noakes responded to the article about the study, by pointing out that the study did not

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even an important cause of ill health,” said Noakes, “The lipophobia took off and it’s going to take a long time to change that.”

One healthy fast food outlet that has jumped on board with the low-carbohydrate revolution is Kauai. Kauai is the first national brand to introduce cauli-rice, found in TRMR, onto its menu.

Medical incentives In the documentary, Noakes explains that most people on diabetic medication are overmedicated. “If we could get all diabetics to eat a high-fat, high-protein, low-carbohydrate diet, we would cut insulin requirements so dramatically that it’s estimated that six pharmaceutical companies would go out of business tomorrow. The reality is that medicine is a business and the last thing you want as a doctor is to have fewer patients.” study Banting. “Their analysis was not of lowcarbohydrate diets as defined in The Real Meal Revolution and elsewhere,” wrote Noakes. The key finding here, though, is the fact that they found little or no difference in cardiovascular risk factors.

A documentary called Cereal Killers was funded last year through Kickstarter, a popular project-funding platform. It stars Donal O’Neill as the guinea pig who turns the American food pyramid on its head and follows a meal plan consisting of 70 per cent fat, eliminating wheat and sugar, for 28 days under the strict supervision of Prof. Noakes. The project was borne of questions surrounding O’Neill’s father’s heart attack after an active and healthy lifestyle following a balanced diet as prescribed by the USDGA. After four weeks on this controversial meal plan, O’Neill’s resting metabolism went up, his body fat percentage dropped 0.7 per cent, there was no inflammation to be seen in his body, and his large particle LDL cholesterol had increased – which is a good thing. He has essentially beaten his genetics by consuming the exact opposite of what is prescribed in a balanced diet.

With growing evidence suggesting that information we have been led to believe for decades may actually have been detrimental to our health, are our health and wellness programmes taking note?

A mind shift Discovery advocates healthy eating through their Vitality nutrition guidelines but despite the findings on the health benefits of saturated fat in the diet, Vitality rewards its members for purchasing low-fat products from stores like Pick n Pay. “I was party to that,” admits Noakes, explaining that he contributed to those dietary guidelines about five or six years ago, before

62 6 8

the discoveries that led him to denounce the HCLF diet he previously prescribed in The Lore of Running. “As I’ve changed I’ve encouraged others to change,” says Noakes. He mentions that there are some senior members at Discovery who are on the LCHF diet and dieticians who will prescribe it. Despite this, Noakes reports no real shift on any of the health and wellness programs.

Dr. Craig Nossel, head of Vitality Wellness at Discovery, comments, “There are certain common elements of the low-carbohydrate, high-fat diet, which Professor Tim Noakes advocates, and the Vitality nutrition guidelines align with such as limiting refined starches, added sugar, and processed foods. However, the two areas of nutrition that are contentious include the type and quantity of dietary fat and carbohydrates.”

Pick ‘n Pay dietician, Leanne Tee, says that Pick ‘n Pay sells products that cater to many individual groups’ specific needs and this includes those products that form part of a typical Banting/LCHF eating plan. “Examples include free-range meat, fish, eggs, vegetables, nuts and nut butter, nut oil, as well as a wide range of organic products,” says Tee. Jaco Oosthuizen, CEO of Momentum’s Multiply Wellness & Rewards, also acknowledges that the LCHF diet may be recommended for specific individuals, but as a wellness and rewards program, it chooses not to recommend it to the general public. “When, if ever, does the one-size-fits-all theory actually work for us all?” asks Oosthuizen.

In Cereal Killers, Noakes explains the work of American scientist, Dr Ancel Keys who, in a 1958 study, manipulated data to form a linear relationship between increasing fat in the diet and the increasing rate of heart disease. “Now the science is clear that there is absolutely no evidence that saturated fat is the primary or

“I despair for the future of medicine under control of pharmaceutical companies. That’s where the criticism will come from.”

“This book (TRMR) should be prescribed reading for all diabetics,” states Noakes, who is wary of the fact that no doctor at Groote Schuur hospital will prescribe it. “They’re not allowed to.”

Prof. Noakes advises any skeptics to read the book, Big Fat Surprise by Nina Teicholz. He says that book will destroy any argument against fat.

“Don’t fear fat, just start eating it and see what happens.” He also recommends seeking the guidance of an open-minded physician.

5

fast facts from Cereal Killers

• Novo Nordisk, the biggest producer of insulin, outperformed the share price growth of Apple between 2009 and 2012.

• The International Diabetes Federation (IDF) aims to ‘develop national policies for the prevention, treatment, and care of diabetes.’

• The IDF’s commercial partners include insulin manufacturers Novo Nordisk, Eli Lilly, Sanofi, and the processed food giant, Nestlé.

• Diabetes organisations worldwide continue to advocate carbohydrate consumption as part of a healthy eating plan.

• Diabetes currently kills more people than HIV/Aids.

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7

64 8 4

Plotting the course The financial needs analysis tool is a crucial piece of equipment for any advisor, but could these tools also become a broker’s crutch?

Dominic Uys

T

he financial needs analysis (FNA) tool is an indispensable resource for the broker when looking for life and disability cover for his or her client. Of the many software packages available, both for private and commercial users, the vast majority have proven their worth as tools for calculating long-term cover or retirement needs, as well as effective management of client information.

While it cannot be argued that the vast number of calculations these tools use to arrive at a solution significantly reduces a broker and clients risk; the question becomes whether a broker can become too complacent with a tool that seemingly does everything. According to Schalk Malan, executive director at BrightRock, brokers need to beware of viewing an FNA tool as a black box system.

“The FNA process is very important for what we do in the life, retirement and disability space. It is a very good way of establishing the client’s current financial position, and then to track a course to help the client save the amount that he needs. Ideally it should also help the broker and client deal with whatever issues or risks that may arise,” Malan starts.

“There are many elements to the typical FNA programme and I think that many advisors use it quite effectively as a client management tool.

They obviously also help in the compliance part of the broker’s work, and help them to ask the right questions about the client’s financial situation. In this sense I wouldn’t regard these tools as a crutch – rather a guide to help the

advisor be thorough and consistent,” he continues.

Black box FNA tools can effectively calculate a client’s current premiums or the amount that needs to be saved, to arrive at the required lump sum or income, taking into account what the client is insuring against. The system operates on a vast number of assumptions around current and future growth rates, risk, inflation and the like.

Even though these calculations are done scientifically, different programmes could potentially produce varied results, according to product specialist at Altrisk, Andre Froneman.

“The underlying assumptions around things like growth rates or inflation may differ from program to program. Most advisors are probably not aware of the discrepancies because most of them only have one software package in use at any given time, therefore they would use whatever advice this package provides,” he says.

simply trusts the default option, which could potentially be unrealistic. It is very dangerous, for instance, to expect a too high interest rate,” he says.

Malan adds that the assumptions that the tool utilises are extremely sensitive. “You can imagine if you just adjust your interest rate by 1 per cent, it compounds to 10 per cent over the course of a decade. It translates to a 10 per cent decrease on the pay-out that you thought you were going to receive,” he says. He adds that over the span of a 30-40 year period, this small change has a significant impact.

“Now for instance, the tool may project the client’s premiums and lump sum based on an optimal interest rate of something like 40 per cent. On paper, this calculation could look sound but in reality it would mean that 100 per cent of the client’s portfolio will have to be invested in equities.

Realistically, there will be quite a bit of uncertainty over whether you would be able to achieve that. One has to evaluate that relative to the risk that the client takes.”

The risk of turning an FNA tool into a black box, according to Malan, comes when the broker merely accepts the figure that the tool calculates without understanding the risks or the assumptions themselves.

Another significant mistake that Malan often sees is that the broker neglects to take the investment fees and costs into account when calculating the investment growth.

“It is critical that you choose to input assumptions like duration, inflation and whatever else can affect the calculation, manually. More often than not, the broker

The solution, according to Malan, is to gain an intimate understanding of how the FNA tool’s assumptions affect the client. “You need to familiarise yourself with the extreme points of

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the calculation. You don’t know what the market is going to do in the next 10-15 years. And in that case it is healthy to test best and worst-case scenarios. Then you can also see if there is any space to build a bit of fat into the system for your client. At this point no insurer has given you that guarantee so it is difficult to manage but the fact remains that you and your client are taking a risk; it is in your best interest to see how much could be gained or lost,” he says.

“The other risk is that many don’t think about is the fact that the risks and variables change throughout the life of that investment. Even if your investment has achieved consistent results that were in line with the FNA tool’s calculations for the past four or five years, still doesn’t guarantee that the tool’s calculations will be correct 15 or 20 years from now.

The market may perform badly or inflation may soar. Those factors will affect the lump sum amount that the FNA tool may have predicted and one’s financial needs analysis has to be updated often enough.”

Covering needs Where the use of an FNA tool becomes more of an art, according to Malan, is when the results from a financial needs analysis need to be applied. Finding and matching the right cover to the client’s situation, could become a tricky process.

“The calculation of the lump sum amount that one would need is an actuarial formula – science. If the formula is done right, then the results from the different tools should be within the same range. The big question is what assumptions you choose to make, and what product you underpin it with,” he says.

Froneman says that a common mistake is experienced when advisors are required to input details of existing policies into the FNA software manually. “Due to the tremendous amount of variations and permutations between old and new products as well as differences between product providers, these

details could be captured incorrectly and may have a massive impact on the eventual advice,” he says.

According to Malan an advisor often calculates the FNA based on the lump sum expectation. When he finds that a client cannot afford the premiums for full cover, he often suggests changes to the cover.

“It seldom happens that the broker goes back to the FNA with the tweaks that he just made to the cover. Now the market assumptions may stay the same but the benefits change for the client and with that, his lump sum would in all likelihood also be affected,” Malan says.

“Unfortunately, irrespective of what the clients’ needs are, most policies are still being sold based on affordability. Therefore, most clients are insured to the extent that they can afford it. Advisors and brokers would do well to prioritise what is being insured,” he adds.

Brightrock’s solution Malan states that his company has done extensive work shaping its income based cover products according to the results of individual FNAs. “The cover profile for our income product changes over time, which makes affordability less of an issue. Where cost is still a problem, the cover is shaped to still achieve as close as possible to a client’s initial goal. We essentially do on-going FNAs to assess where the client is at the moment, and where he wants to be,” Malan says.

As an example, Malan points to a client who needs to pay R1500 for full cover. “But let’s say the client cannot afford to pay this much at the moment. We then see what the client can be covered for with the money that he can set aside – perhaps only R1000 to start with. The important thing here is to at least put the available money on the platform,” he says.

“How the product works is that it makes it very easy for you to upgrade or change your cover as your affordability gets better. The following year we may consult with the client again, to see if we can upgrade his cover.

We can do this over the course of the next

W tru GP he su

three or four years until the client arrives at the cover and the premium that he initially wanted,” Malan continues.

Malan points out that the model has worked well for BrightRock so far. “Clients tend to like this plan, and it gives the advisor reason to go back to the client and keep up to date with his situation. The client may have received a few raises or paid off some debt, and the advisor could stay on top of where the client stands.”

He adds that the advisor could also use the opportunity to streamline the client’s finances even more over the following years.

“The advisor could keep working with the client to get even more out of a policy. Over the next few years he could help put some of his client’s assets into a trust, for instance – to further alleviate estate taxes and the like.

All those plans can be laid out over the next three or four years.”

“This is where FNA is useful, because it gives you the goal and what you need to get it.

That is not to say that you can already get there today. But it is a goal and we work towards that. This is where many of these projection tools have very good value,” Malan concludes.

Ch

Why w are the we bel (from t us nich specia

For m

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7

Trusting the market

The latest legislation and retirement products aside, retirement saving has remained largely unchanged over the years. Longer lifespans, higher medical costs and the general cost of living however, means that something will have to change in the way we think.

Dominic Uys

I

n the last edition of RISKSA, Steven Nathan, chief executive of 10x Investments shared his views on the common mistakes that brokers and their clients make when working with retirement savings. Aside from the obvious mistakes such as taking a portion of their retirement funds when changing jobs, Nathan also mentioned the fact that hidden costs and fees have the ability to bring a retirement fund’s growth to a complete halt.

While broker and investment fees seem small when expressed as percentages of the fund’s annual growth, Nathan points out that a saved amount of R 1 million can grow to almost R 200 million at 15 per cent compound growth over 20 years. However, once we bring inflation into the equation, that number may drop to around R20 million. Another 3 per cent drop in growth owing to broker fees, and that number quickly drops to a mere R7 million. Taking into account that retirees can now reasonably expect to live well

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Nathan points to a number of solutions; the first of these being education. With that in mind, 10X recently launched an online tool to educate individual investors as they plan for retirement.

that there are simple steps that they can take to ensure that they are able to comfortably retire.

“As a user goes through the various modules, each of these steps helps to ensure that investors have a full understanding of actions that they can take to achieve their retirement goals,” he says.

The Retirement Planning Guide was developed in partnership with online coaching company, Cognition. In discussing the tool, Nathan notes

“The guide consists of four coaching guides and is designed to engage the user as much as possible. They are encouraged to write their

into their 80s, the threat of outliving one’s retirement fund becomes ever more certain.

personal aims into boxes and the guide shows them where they stand in terms of achieving these,” he explains.

What makes the tool particularly useful is that it helps older clients calculate the amount of money needed to start saving to get on par with those who started saving earlier. The old warning of people not being able to start saving earlier may be true, but it still does not do much for those who have no choice but to start later in life.

With the basics covered, there are also a few other points that the broker needs to keep in mind.

Trusting the market The concept of age appropriate investing is nothing new in the retirement game. A younger client sets up an investment portfolio with a high percentage of his savings invested in high risk, high-yield equities and a minority share in securities. As the client ages and gets closer to retirement, the percentage of his savings invested in equities becomes less and more money is poured into the lower yield securities.

What is new to the retirement business, is the longevity of clients. Mike Estment, CEO of NFB Financial Services Group points out that with clients living longer, the broker should consider keeping their investment share in equities at a larger percentage for longer.

“The client can certainly benefit from the higher yield and if he started at the ideal age, he now also has longer to let his investment grow,” he says. The sentiment is echoed by Nathan, who points out that the market has historically done nothing but grow in a positive direction.

“Over the short term, equities are a high risk, that’s true. But, in the long term they will, in the vast majority of cases, produce a very positive yield. The entire market has shown an upward trend over the last 100 years, even with the occasional dips due to depression. The trick is to make sure your client understands this and doesn’t withdraw his money from equities the moment that the market starts to sag,” he says.

Estment adds that along with this, it is important to watch out for brokers who think that they can beat the market. “You always hear about the investment brokers who can beat the market and bring in higher returns. In my, and many others’ opinion, this is in large part due to luck. For every broker who beats the market, there are hundreds who try and fail,” he says.

Nathan agrees with this, stating that, while safe investing in the market may be boring, it will faithfully produce growth. “Investors will receive superior investment returns with less risk using index-tracking funds. Together with low investment fees, this means a return

of as much as 60 per cent more over an investment period of 40 years,” he says.

“No matter how smart a retirement fund manager might be, they only have a 20 per cent chance of beating the index when actively managing a fund,” Nathan concludes.

The habits of effective retirees While one can debate how to save for the client who plans on retiring in 20 years, it is still important to look at how current retirees are finding their retirement years. The results from Sanlam’s fourth annual retirement benchmark survey provided valuable insight into the saving habits of 50 affluent pensioners compared to an average core group of 250 participants.

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A core group of participants from across the spectrum was measured against an additional sample of participants representing the affluent sector with incomes in excess of R25 000 per month.Of the core group, 52.4 per cent believed that they have not saved enough capital to last them through retirement.

However, only 24 per cent of the affluent group reported not having saved enough.

The survey results show that the core group’s retirement age increased slightly from 59 in 2013 to 60 in 2014, and their average period of contribution increased to 29.8 years. By comparison, results from the affluent group showed approximately 33.2 years of contributions, with individuals both starting formal employment and long-term savings at an earlier age.

The number of core group individuals who stopped their retirement contributions at some stage during their employment, through withdrawal at either resignation or retrenchment, increased from 17.1 per cent to 20.8 per cent. Of the individuals who made a withdrawal, 63.5 per cent withdrew their full benefit in cash as opposed to 48.8 per cent taking the benefit in cash in 2013.

The cash was used to pay for the rising living expenses for 52.4 per cent of respondents in 2014 compared with 29.4 per cent in 2013.

This trend is significantly different among affluent retirees, with only 12 per cent of respondents indicating that they withdrew from their retirement savings at resignation or retrenchment. From those that withdrew, 50 per cent preserved part of their benefit or purchased a retirement annuity, while the other 50 per cent opted to withdraw their full benefit in cash. Only 20 per cent of these individuals used the cash to pay for living expenses with 80 per cent either saving or investing in investment instruments or business ventures or settling or reducing their mortgage bonds.

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For the

ladies Today, women are often equal contributors to household income and play a crucial role as the primary caregiver in many families. Incongruously, women remain significantly underinsured, despite submitting almost twice as many critical illness claims as men.

W

ith August being women’s month, it’s an opportune time to share some insights with your female clients about the female critical illness landscape which is dominated by cancer, and the importance of having the right insurance products in place to protect their financial, physical and emotional security.

Hayley Taylor, managing underwriter at Altrisk

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The big ‘C’ represents a frightening diagnosis where the outcome is mostly uncertain.

And even though survival rates are up dramatically due to medical advances and

earlier diagnosis, surviving cancer is no less harrowing than it was years ago. A new report by the World Health Organization’s International Agency for Cancer Research (IARC) suggests that while survival rates are up, the incidence of cancer worldwide will still grow by 75 per cent by the year 2030.

Altrisk’s own claims statistics show that almost 70 per cent of all claims by women are for cancer, with breast cancer specifically topping the list, by a large margin. The burden on healthcare systems, both public and private, is already evident

in South Africa as cancer is massively more expensive to treat than infectious diseases.

The emphasis on pre-emptive screening and early diagnosis and treatment cannot be reiterated enough in the fight against cancer, backed up by a solid financial plan to protect income, assets, prepare for any lifestyle changes and afford the best possible treatment.

Beating cancer comes at a cost – emotionally, physically and most definitely financially. In Samantha Gray’s own words, she found out that the ‘Big C’ really stands for the ‘Big Cost’ of surviving cancer.

Samantha’s story “I was a stay-at-home mum with two children for the best part of 23 years.

During this time I raised two beautiful daughters and managed to indulge my passion for food photography with an abundance of freelance assignments for various magazines and book publishers.

I went through a bitter divorce in 2010 but was able to buy a townhouse with the cash from my settlement. During this time, my financial situation took a hammering with pretty much only my medical aid and life policy remaining in play – at this stage my only worry was making sure that my daughters would be taken care of if anything happened to me. I would sort out the rest of my covers as soon as I was properly back on my feet, or so I thought.

Both my daughters had moved to the UK to study and work. I focused on getting back into the photography game fulltime as my now sole source of income, while dealing with the empty nest syndrome and my newfound status of middle-aged divorcee took an incredible emotional toll.

I worked hard to get back on my feet again and thought I was making it, until a tumour was discovered in my breast in October 2011.

I began my new full-time job of being a cancer patient with a brutal treatment regimen that left me entirely incapacitated.

Radiation treatments every week, chemo drugs pumping straight into my chest all day through a chest port and a pump left me in so much pain, too sick to work in any capacity and just too tired to care.

Over a year of cancer treatments and an even longer recovery period to deal with the side-effects, and I hit the wall financially and emotionally. Sure I had medical aid, but there were still copayments, not to mention living costs, municipal bills and so on. I paid for out of pocket medical and living expenses

on credit cards and loans and came very close to selling my townhouse to generate some money to live off while I was too sick to work.

Like so many other cancer patients, I am still up to my eyeballs servicing my debts.

My daughters support as much as they can financially, but it hardly seems right or fair to have this responsibility hanging over them.

Given my challenges, I have also not managed to secure any prospects of steady employment. It just never occurred to me that I would ever be in this situation.

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I feel like I have been through the mill with a heavyweight boxer – punch drunk from the struggle to survive this insidious disease which has the ability to derail even the strongest person, then having to fight for my financial survival too. It’s incredibly hard to digest and deal with the amount of stress I have faced since my diagnosis, and I know that had a major impact on my physical recovery.

No one truly understands the financial and emotional devastation of a journey through cancer treatment and recovery until they have been there.

If there is one bit of advice I always give people when they ask me about my struggles, it’s that there is absolutely nothing more important than doing something right now, to protect yourself financially while you still can, against the implications of surviving a serious illness like cancer. Don’t ever assume, like I did, that you can sort it out when you’re ‘back on your feet’.

Strictly speaking I have survived my cancer, and chances are I have a good many years ahead of me if all goes well.

I learned first-hand that dealing with the ‘dread’ of cancer is a heavy burden that will throw your life into turmoil if you are not properly prepared for the consequences.

It will strip you of your sanity, your dignity and your will to carry on. Surviving this disease goes well and truly beyond how good your oncologist is and your chemo and radiotherapy treatments – those are just the start of the toughest journey you will face emotionally, financially and physically.

I know that I would have been imminently better able to cope with this disease mentally and physically without the financial crisis hanging over me. As a woman, take absolute charge of your own financial destiny, and do it today.”

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Planning for a life

lived longer Laura Owing

People worldwide are living longer, according to new data from the WHO. However, when it comes to supporting this aging population, planning differs between the developed and developing world.

72 8 4

A

ccording to 2014 statistics from the World Health Organisation (WHO), the number of people aged 65 and older is projected to increase from an estimated 524 million in 2010 to nearly 1.5 billion in 2050.

By 2016, the predicted number of people aged 65 and older will outnumber children under the age of five. The WHO figures show this lengthening of lifespans is particularly prominent in developing countries. In the African region, for example, their data has recorded a jump in life expectancy from 50 years of age in 1990 to 58 years in 2010.

Considering the United Nations in 1950 recorded about 200 million people aged 60 and over worldwide, it is clear this phenomenon has been going on for some time, and can be expected to continue.

There are numerous reasons attributed to living longer, including improvements in post-natal care that increase the number of children surviving to age five; the point at which they are expected to live into late adulthood. The likelihood that we will be living a little longer is certainly good news, but when it comes to the infrastructure and capabilities to manage an aging population, the news is less welcome.

In this respect, Steven van Niekerk, head of Momentum Myriad calls the WHO figures alarming.

“The numbers are quite alarming if one considers the impact of longevity on national infrastructure where, for example, a government must fund and support retired individuals with a continuously shrinking tax revenue,” he says.

“Also, longevity can severely influence corporate bottom lines where they are responsible for sponsoring retirement and health insurance to former employees. That risk elevates even more when individuals with no support from any other source must fund their own retirement for as long as they live,” he adds.

Almost in response to these risks, Australian officials in June announced consideration of an increase in the age of retirement to 70 years old. If enacted, it would be the highest retirement age in the world. However, with 2.4 million state retirement age pensioners drawing about AUS$40 billion a year, it would be necessary to protect reserves.

While the Australian system is a developed world example and different from the South African context, it is an example of a worldwide trend, says Craig Aitchison, Old Mutual corporate GM of member solutions. “A lot of people think ‘it won't happen to me’, but when we do the research and look at the statistics, they show that in South Africa, like we’ve seen elsewhere in the world, we are living longer.

And that means the savings we need to put aside for retirement are going to have to stretch  longer,” he says.

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73 5

While South Africa does have a state While South Africa does notnot have a state While Southsystem, Africa does not have a state pension it does offer a State Old Age pension system, it does offer a State Old Age pension system, it does offer a State Old Age Grant (SOAG), which provides a small stipend Grant (SOAG), which provides a small stipend Grant (SOAG), which to provides a small stipend living expenses those who qualify.

“It’s forfor living expenses to those who qualify.

“It’s notnot for meant living expenses to thosebut whoa qualify.

“It’s not to be a pension, poverty alleviation meant to be a pension, but a poverty alleviation meant to be to a pension, but awith povertyother alleviation measure allow people income measure to allow people with nono other income measure to allow people with no other income to afford basics,” Aitchison explains. to afford basics,” Aitchison explains. to afford basics,” Aitchison explains.

The SOAG supports millions people The SOAG supports millions ofof people in in TheSouth SOAG supports millions of people in for the Africa and a sustainable benefit South Africa and is is a sustainable benefit for the South Africa and is a sustainable benefit for the foreseeable future.

Now, government has foreseeable future.

Now, thethe government has foreseeable future.

Now,by thereducing government has extended that benefit eligibility extended that benefit by reducing thethe eligibility extended that65 benefit by reducing theA eligibility age from years age. step further, age from 65 toto 6060 years ofof age.

A step further, agethe from 65 to 60 is years ofdoing age. away A stepwith further, government also the government is also doing away with a a thepreviously government is also doing away test. with a mandatory qualifying previously mandatory qualifying test. “In the previously mandatory next year or two, wequalifying will havetest. a situation where the “Ineveryone the next who year isorover two,60 wewill willqualify have afor situation “Ingrant,” the nextAitchison year or two, we willI have athat’s situation “And right.” where everyone whosays. is over 60 think will qualify for where everyone who is over 60 will qualify for the grant,” Aitchison says. “And I think that’s theAs grant,” Aitchisoncountry, says. “And I think that’sface a developing South Africans right.”a As a developing country, South Africans right.”

As aset developing country, SouthtoAfricans unique of problems compared developed face a unique set of problems compared to face a uniquelike setAustralia of problems to countries and compared the US developed countries like Australia andand theEurope, US developed countries like Australia and the US which havewhich spent have decades building a social and Europe, spent decades building andsecurity Europe, which he have spent decades building system, says.

South a social security system, he“In says.

“In Africa, South like a social security system, he says.

“In and South other developing countries Brazil India, for Africa, like other developing countries Brazil Africa, like other developing countries Brazil example, weexample, are still working our working way towards and India, for we are still andthat,” India,hefor example, we are still working says. our way towards that,” he says. “In fact, you’ll our way towards that,” he says. “In fact, you’ll find developing countries go in the opposite find“In developing countries go in the oppositego fact,ofyou’ll find developing direction Australia, in that theycountries want to make direction of Australia, in thatofthey want toinmake in the opposite direction Australia, that sure everyone can access assistance.

As the sure everyone can access assistance.

As the they want to make sure everyone can access amount is so small, it may take decades before amount is so small, may take decades before assistance. theitamount is so small, it may it becomes anAsaffordability issue,” he says. it becomes an affordability issue,” he take decades before it becomes ansays. affordability issue,” he says.

This that means, however, that the This means, however, the retirement Thisretirement means, however, that the retirement savings South Africans have, they savings South Africans do have, theydohave savings Africans do have, have the need have South collected themselves.

In they that collected themselves.

In that way, theway, need to collected themselves.

In that way, the need to to establishing a retirement savings establishing a retirement savings plan plan – and– and establishing a must retirement savings plan – and stick to it – be emphasised.

“Responsible stick to it – must be emphasised. “Responsible stick to it – must bekey emphasised.

“Responsible planning that could ensure that planning is is thethe key that could ensure that planning iscover the key that could ensure that clients’ provides them with opportunity clients’ cover provides them with anan opportunity clients’ cover providesofthem withliving an opportunity enjoy a lifetime quality toto enjoy a lifetime of quality living in in aa to enjoy a lifetime of quality living in a Niekerk. financially care-free way,” says Van financially care-free way,” says Van Niekerk. financially care-free way,” says Van Niekerk.

Down the line, the possibility of the government Down thethe line, thethe possibility of the government Down line, possibility of the government raising the retirement age may also make a raising thethe retirement ageage may alsoalso make a a raising retirement may make difference. This may become a reasonable difference.

This may become a reasonable difference. may become a reasonable option as we This continue to see people who reach option as we continue to see people who reach option as we continue to see people retirement age continue working. “Whatwho we reach retirement ageage continue working. “What we we retirement continue “What find is that more and moreworking. people, when they findfind is that more andand more people, when theythey is that more more people, when reach retirement age, don’t stop working but reach retirement age, don’t stop working butbut reach retirement age, don’t stop change the way they work.

They goworking for contract change thethe wayway theythey work.

They go go for for contract change work.

They work or start their own business, but they contract carry work or start their own business, butbut theythey carry or start their own business, carry onwork earning income and contributing to society,” on on earning income and contributing to society,” earning income and contributing to society,” says Aitchison. sayssays Aitchison.

Aitchison.

Considering this, and the long-term Considering this,this, andand thethe long-term Considering long-term development of social security support in South development of social security support in South development of social security South Africa, there may be lessons to besupport learnedinfrom Africa, there may be lessons to be learned from there may lessons tocoverage be learned theAfrica, Australians.

“Theberetirement of from thethe Australians.

“The retirement coverage of of Australians.

“The retirement coverage full-time employees in Australia is 96 per cent full-time employees in Australia is 96 perper cent full-time employees in Australia is 96 cent and in South Africa the coverage is estimated andand in South Africa thethe coverage is estimated in South Africa coverage is estimated to be around 50 per cent,” says Aitchison. to be around 50 perper cent,” sayssays Aitchison. be around cent,” Aitchison.

“IftoSouth Africa 50 increases its retirement fund “If “If South Africa increases its retirement fund South Africa increases its retirement fund of coverage rate, it will create a substantial pool coverage rate, it will create a substantial pool of coverage will create savings.

Therate, highitsavings rateainsubstantial Australia has savings.

The high savings ratesavings in Australia pool of savings.

The high rate inhas created more shareholders and entrepreneurs, created morehas shareholders andshareholders entrepreneurs, Australia created more which we also need in South Africa in orderand to which we also need in South Africa in order to entrepreneurs, we also need in South create more jobs which and grow the economy.” create more jobs and grow more the economy.”

Africa in order to create jobs and grow

8 6 874 6 8 6

Highest Life Expectancy





WOMEN

MEN

1.

Japan

87

1.

Iceland

81.2

2.

Spain

85.1

2.

Switzerland

80.7

3.

Switzerland

85.1

3.

Australia

80.5

4.

Singapore

85.1

4.

Israel

80.2

5.

Italy

85

5.

Singapore

80.2

6.

France

84.9

6.

New Zealand

80.2

7.

Australia

84.6

7.

Italy

80.2

8.

Republic of Korea

84.6

8.

Japan

80

9.

Luxembourg

84.1

9.

Sweden

80

10.

Portugal

84

10.

Luxembourg

79.7

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Retirement

is changing.

Are you ready?

New savings products for a new landscape From 1 March 2015, government is expected to introduce tax-friendly discretionary (after-tax) savings products, designed to encourage additional savings.

Jean Lombard, head of business integration and research at Glacier by Sanlam

W

e can expect a number of changes from March 2015 and beyond and the landscape around these changes is complex. Increasing longevity means savings need to last longer and government’s proposals around retirement reform aim to encourage investors to act in their own best interests.

Retirement reform objectives include ensuring that: • All employees contribute to some form of retirement savings vehicle; • Savings are preserved for retirement funding only; • People are able to save through reasonably priced investment products; and • Investors have a sustainable income for life, post-retirement.

South Africans, generally, do not save enough for retirement. Many tend to cash in some or all of their retirement savings when changing employers – evident in the low savings rate of the country. To increase the level of retirement savings, government believes tax incentives can play a valuable role.

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The intention is that these savings vehicles will not attract capital gains tax or tax on income and dividends. However, there will be an initial annual contribution limit of R30 000 and a lifetime limit of R500 000.

These amounts will be inflation-adjusted on a regular basis. Once this product has been launched, the current interest exemption (R23 800 for persons under 65, and R34 500 for persons 65 and older) will no longer be adjusted for inflation.

A new alignment of retirement savings products Also on 1 March 2015, the deduction of contributions and the lump sum payable in respect of pension and provident funds will be aligned. Benefits will also be treated the same way for contributions made from this date. Currently, members retiring from a company are able to withdraw 100 per cent of their contributions in a provident fund.

From 1 March 2015, the member can only access one-third of the amount and will be compelled to use the remaining two-thirds to purchase an annuity – as is the case with a pension fund. Members can still withdraw all contributions (and the growth thereon) made to a provident fund prior to this date.

If the total amount in the provident fund, pension fund or retirement annuity (RA) is less than R150 000 at retirement, then the member may withdraw the full amount in cash.

The new cap on tax benefits on retirement fund contributions In an attempt to simplify current tax incentives, employer contributions to retirement funds will become a fringe benefit in the hands of employees for tax purposes.

Employees will be able to claim a tax deduction of up to 27.5 per cent (currently 15 per cent of non-retirement funding income) of the greater remuneration and taxable income on contributions to a pension fund, provident fund or retirement annuity. A ceiling of R350 000 per tax year will apply, and unused deductions may be rolled over to the following year.

This means that investors have a last opportunity – between now and 28 February 2015 – to make additional ad-hoc contributions to their retirement annuities to enjoy the tax benefits up to this ceiling. Excess contributions can be carried forward and as of 1 March this year, can even be utilised after retirement. For example: If a client’s non-pensionable income is R5 million, 15 per cent (R750 000) of this income can be contributed to an RA and is tax deductible. Tax will be calculated based on an income level of R4.25 million, assuming no other deductions. This translates to a massive tax saving.

From 1 March 2015, the tax deductible amount will be calculated as 27.5 per cent of the greater remuneration or pensionable income but the amount which is tax deductible in the same year as the contribution is capped at R350 000. Under the same scenario, the taxable income will be R4.65 million – decreasing immediate tax advantages.

understanding

disaster Repairing the environmental damage done by a client’s business goes far beyond paying out liability claims and cleaning up the mess. RISKSA hears from an expert what brokers and clients need to know.

Dominic Uys

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A

wareness of the environmental damage caused by industry has skyrocketed over the past decade. On the liability side, both the legal, insurance and industrial sectors took notice of the landmark ruling against Blue Platinum Ventures earlier in the year. The case has caused some debate thus far, and more court battles of this nature are likely.

Nikki Juma, casualty head at Zurich South Africa points out that environmental legislation and insurance are set to become a lot more complex. “Businesses need to prepare for the unthinkable and ensure that they are adequately equipped to deal with any environmental incident, especially those that can severely impact the environment itself and, therefore, brand reputation. The fact is, when it comes to environmental liability, the past, present and future needs to be explored,” she starts.

Juma notes that a broker and their client need to ask some crucial questions right from the start: • Was there a previous operation on the site of a new business that may have caused damage?

• How will contamination risk and compliance be managed today?

• Can we see what potential future legislation may impact cover?

Reputation is paramount According to Juma, companies often consider the financial losses that an environmental incident can cause but rarely think about the consequences of almost certain reputational damage. How quickly and how well a company recovers is dependent on preparation.

There is no doubt that an environmental incident can draw attention to a

company’s activities, increasing scrutiny from members of the public and the press, especially local or community media. “Scenario planning is key – a crisis can be solved quickly but reputations can be damaged for years to come,” she imparts.

Juma points out that the rapidly evolving technology may hurt a client even more.

“Criticism is further driven by social media as more and more citizens and activists are able to voice their opinions online. Any business that the public feels is not taking environmental compliance seriously enough can easily be targeted and an online onslaught can become viral in a matter of seconds,” she says.

Cleaning up Another important question that Juma fields, is whether a business can recover costs from a neighbour that caused the

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“If an environmental concern is found down the line, it may be too late. This is particularly relevant in light of the recent enactment of the contaminated land provisions in part 8 of chapter 4 of the National Environmental Management Waste Act. These provisions, which were delayed for some five years, came into effect on 2 May 2014 and among other things, redefine the meaning of ‘contaminated’ and require that an owner of contaminated land and/or the polluter notify the competent authority as soon as they become aware of an incident.

As such, a robust due diligence process is essential to help mitigate responsibility for historical pollution before entering into any type of property transaction, merger or acquisition,” she says.

damage over time. “Most liability products focus on sudden and accidental pollution but sometimes leave out issues like this – as well as those that come about as a result of gradual pollution, past incidents and responsibility to remediate the insured’s own premises.

In addition, policies will need to include the cost of investigative work, determining the cause of an event and ascertaining responsibility. In many cases, even when cleanup costs are covered, related investigations are not,” Juma says.

She adds that companies must also ensure that the funds needed to restore biodiversity after a spill, for example, or money for compensating regulatory agencies for preventive or mitigation measures will be paid out by the insurer. These factors are generally not viewed as damages under public and general liability policies; which is why specific environmental liability insurance is so essential.

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“Environmental insurance liability (EL) policies cover own site clean-up. They do this because an operator has a liability even if the pollution is entirely within their own facility. The policies require a third party trigger, but as the operator is obligated to tell the regulator of the spill, the claim is forthcoming anyway, without giving positive discovery cover. This is different from pollution liability policies, where the pollution would have to be realised by a third party,” Juma says.

“Cover could include clean-up and business interruption, while clean-up work is carried out. It does not cover workers compensation or EL liabilities. Although the EL policy provides for this liability as it does not suffer from pollution exclusion,”

Going the route of due diligence According to Juma, knowledge from specialists in the field will be critical if a realistic picture is to be painted: the potential impact that a crisis can have, the risk factors involved as well as reputational and regulatory concerns. An accurate assessment will require time so expert advisors will need to be brought in from the beginning.

An in-depth knowledge of regulatory frameworks in various markets is thus essential and the only way adequate protection can be guaranteed. The tightening of environmental legislation places a lot of pressure on companies to comply with certain procedures after an incident occurs.

For some businesses, financial pressure means that preventative measures may take a back seat to other priorities. As a result, it is imperative that environmental liability insurance provides practical support as well as cover for crisis management services.

It is vital, ultimately, that companies undertake a thorough assessment of past and current exposures and uphold a solid risk management plan to deal with the future in order to mitigate environmental risks and liabilities.

“Businesses need to understand that environmental regulations are constantly changing and, consequently, cover needs to be as comprehensive as possible.

Only flexible and innovative insurers who understand these complex risks will be able to keep up the pace in this particular sector,” Juma concludes.

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Mechanics

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cent operational risk as part of their top 10 risks. I could not understand why such a significant percentage of an organisation’s top risks are so detailed and tactical, and, in most cases, if money was available, preventable.

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

I

was recently in a client board riskmanagement committee meeting and, as usual, we had four hours allocated to review the governance of the risk process and its effectiveness, and to understand the top risks that significantly influence the organisation. During the meeting, I observed a strange sequence of events – approximately 30 minutes into the meeting the board members casually stood up and began changing their clothes. At first removing their ties and shoes, then proceeding to roll up their sleeves and step into neatly folded bright blue overalls. As if this was the most natural thing in the world to do, they then sat down and continued with the meeting. As you can imagine, I was shocked.

You may have guessed by now that this was not what happened in the physical reality, however, I did observe a group of risk committee members move from discussing strategically relevant risks, to rolling up their sleeves and marching directly into the engine room of the organisation, in the figurative sense. With a tactical approach, the risk discussion became operationally focused.

Why is this trend becoming the norm? As I looked deeper into why this happens, I realised that a significant amount of the organisations I work with have 40 to 60 per

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After discussions with a number of industry executives, two key scenarios emerged. The first being the lack of guidance and facilitated effort by the risk managers and executives to ensure a multiple perspective approach is adopted, that results in a multi- dimensional strategic risk profile.

In the past, risk workshops were facilitated by jumping in and brainstorming the top risks in a random fashion. The question was asked: “What keeps you awake at night?” If this facilitation approach is followed, you run the risk that your top risks often lean towards the organisation’s managers preferred view of reality. This means that if the executive committee tends to be technically focused – engineers and accountants – the risk profile will lean towards operational and often tactical risks. If the management are ‘Steve Jobs’-type executives, the profile might be externally and strategically focused.

Robert Kaplin in his June 2012 Harvard Business Review article, Managing Risk: A New Framework, provides a brilliant framework for risk classification and is a great tool to facilitate a multi-dimensional risk profile. He suggests three key classifications: preventable, strategic and external. Preventable risks are internal and are, for the most part, controllable.

Organisations should have a low tolerance for these risks as there is no strategic benefit for risk taking. Strategic risks are both internal and external, and entail voluntary risk taking in order to generate superior returns. As the

name suggests, external risks are external to the company and are beyond its influence or control.

The second key reason for executives delving into the engine room of organisations is because they have been burnt before.Therefore, they request and prompt the key operational risks to ensure full transparency. In short, the board risk committee members demand to 100 know the details or the full spectrum of risks throughout the organisation.

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The challenge at hand is to find creative ways 75 to facilitate balanced risk discussions. Risk committee members should be able to remain elegant in their office attire whilst trusting in the capabilities of the mechanics in the engine room.

Alicia Swart is the head of risk services for Africa at consultancy Turner & Townsend, and a regular contributor to RISKSA.

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RiskSA_Au

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Success does not come from eliminating risk.

SUCCESS COMES FROM

MANAGING RISK FOR GROWTH.

We help you balance your strengths against the risks that come with growth.

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MARSH AFRICA Africa’s pre-eminent Insurance Broker and Risk Advisor www.africa.marsh.com | +27 11 060 7100 An authorised financial services provider | FSB/FSP: 8414

RiskSA_August2014

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What the

future holds…

Dominic Uys

Prominent emerging risks including evolving terrorism; the collapse of oceanic ecosystems; rubber shortages and even e-cigarettes could drastically alter the insurance landscape over the next five to 10 years.

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lobal reinsurer, Swiss Re’s recently published journal, New emerging risk insights, zooms in on 26 new and emerging risks on the international stage, incorporating assessments of the degree to which five main insurance areas are affected (property, casualty, life and health, financial markets and operations).

“Today's risk landscape is changing fast, driven by new economic, technological, socio-political, regulatory and environmental developments. The risks that emerge from these changes are often difficult to quantify, but they may have a major impact on society and the insurance industry, across all

lines of business. This makes a systematic observation of the risks and a dialogue between insurers critical to the industry,” the Swiss Re report said.

French insurer AXA also recently released its Emerging Risk Acumen. The company focused on the 10 most imminent emerging risks and their impact on society in the near future. “Twenty-nine per cent of AXA’s experts estimated that (economic and financial risks) are the most significant risks, followed by social and political ones (24 per cent), environmental ones (19 per cent), technological (14 per cent), medical (10 per cent) and others (4 per cent),” the AXA report stated.

people trying to quit or cut down on nicotine, although no peer-reviewed study has proven such benefits. Their long-term health effects are not yet known since they have not been on the market long enough,” Swiss Re’s report reads.

Axa’s Risk Acumen points to macroeconomic disruptions; and the mismanagement of public debt ad budget deficit as the most prominent emerging risk.

“There are a number of drivers in the global economy that give rise to social and political risks, potentially, both at a global and regional level.

One important driver is raising discrepancies – not just in terms of income and wealth, but also inequality of access to education, basic goods and health. […] Another important driver is population ageing and the possible mismanagement of that process. […] Every year, life expectancy rises by 1-2 months.

This will change our society profoundly,” said Christian Thimann, AXA group head of strategy and public affairs.

Embracing new risks The industry has made strides in meeting some emerging risks head-on, as can be seen in the case of cyber-liability, where new types of cover have recently begun to appear, however, the challenges of breaking new ground are becoming apparent. Earlier this year Zurich published a cyber-risk report in which the company points out that the threat posed by cyber-attacks are becoming increasingly complex.

“With the internet becoming increasingly coupled with the real world, the nature of cyber risk is undergoing a fundamental change – only with an holistic view on risk are we able to build resilience to the changed cyber risk environment,” Zurich says.

Both studies note that the evolution of information technology is bringing about a slew of new risks, from the security issues surrounding cloud computing technology, to the impacts of digital slander on large corporations.

Risks on the horizon One example that Swiss Re’s report categorises as a medium impact risk is the emergence of plant pathogens that threaten rubber production. “The rubber tree is vulnerable to a specific fungus which causes leaf blight. While this pathogen is currently limited to South America, experts are convinced that it is only a matter of time

until it will spread to Asia (where 90 per cent of global natural rubber is produced),” the report says, also suggesting that, as a result, the property and casualty markets will be considerably impacted.

The steady rise in the popularity of e-cigarettes did not escaped the scrutiny of Swiss Re’s report. The electronic inhalers are typically battery-powered, utilising a heating element to vaporise liquid solution enriched with flavour and, in most cases, nicotine.

These devices are currently experiencing a sales boom in the United States and Europe.

“E-cigarettes are often marketed as a less harmful alternative to tobacco. Some health experts claim that e-cigarettes are useful for

Crawford & Co. adds that cyber insurance is still in its infancy, stating: “Insurers currently lack the data and claims history to build an accurate picture of the exposure and, in lieu of this, are reluctant to offer broad coverage wording and capacity to fully indemnify against first- and third-party cyber risks.”

“By sharing our findings we hope to raise awareness of emerging risks. The future is not a simple linear extrapolation of the past. Rather it is characterised by rapid and continuous change, thus looking back and extrapolating past experiences into the future is not sufficient to assess tomorrow’s exposure,” concludes David Cole, Swiss Re’s group chief risk officer.

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R

esearch from World Wide Worx indicates that there are 16.3 million smartphones active in South Africa, and while smartphone sales are slowing globally, South Africa is bucking the trend and the purchase of these devices is increasing relentlessly.

One Loyalty, which provides value-added services to companies, reiterates that the benefits of mobile apps include: mobile marketing – to own a piece of retail space on a consumers’ phone is of great value to any brand; building an intimate relationship with

your client and getting feedback in real-time; adding value to your clients day-to-day lives; giving clients step-by-step guidance in an emergency situation and at the scene of an incident; and a streamlined claim-lodging process to fast-track claims.

There are companies specialising in developing applications for the insurance industry, such as CustomApp, which combines, integrates and co-develops with a variety of specialist entities, such as Cardinal Insurance Management Systems, and their products to compliment and work

with its solutions, thereby providing a more comprehensive, efficient and serious solution encompassing the market requirements.

The major thing to beware of, is developing an app for apps sake, and just because everybody else is doing it. The best apps are developed as a solution to a problem, to simplify and enhance the way your business operates.

Knowing what is available is the first step to unleashing the productive power that apps can offer. RISKSA takes a look…



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Beame (A MiX Telematics brand) App: Beame Developed by Intelechain, a MiX Telematics partner and is available on AppStore and GooglePlay COST: Free Main function & features: The app facilitates communication with the consumer and the brand, as well as insurers and contract holders. Beame contract holders can manage and distribute information to insurers, contact the organisation directly with any queries, report a hi-jacking or vehicle theft and check the proper functioning of a unit. The next release will include value added options and competitions and ability to purchase a Beame device through an industry first e-commerce online buying site.

The app requires 3.52MB to be downloaded on your phone.

Ctrack App: Ctrack Mobi Developed by Ctrack’s software development team. Accessed on a smartphone or tablet through www.ctrackmobi.co.za COST: Free to Ctrack Secure product customers Main function & features: The app gives an immediate snapshot of the location of your vehicle on a map, along with status details such as speed. It is real-time tracking in your hand, and allows you to track your whole family.

It works on all smart handsets, and was developed to give customers additional peace of mind on the whereabouts of their vehicle or family from the convenience of their handset.

The benefit to brokers is that their customers are able to use their vehicle tracking system where and when they want to – they can also see that their tracking system is always active.

Most tracking devices have no use until the day a vehicle is stolen, explains Ctrack marketing manager Dean Andrews.

Censeo Assessment and Verification App: The Insurance App Suite Developed by CustomApp (Cardinal Group Insurance Management Systems).

Available on AppStore and GooglePlay COST: These vary depending on an underwriter’s/broker’s/adjuster’s/ examiner’s needs Main function & features: Censeo CEO, Servaas du Plessis, explains that the app caters for all short-term underwriters, traditional or direct. Due to ever-changing regulations, the continuous rise in cost of manual labour in terms of policy uptake, asset and claims management and client retention, underwriters need to consider alternative costeffective enablers to remain competitive. The App suite will significantly reduce risk exposure pre-inception, asset management, claims verification/adjustment, and enable proper cost control on all controllable spend.

Without huge capital investment, the app suite will afford brokers immediate access to technology, which will enable them to manage their clients throughout the policy life cycle. The management includes among others, the ability to document inventories, to ensure correct cover selections, inspection requirements, policy updates as well as claims reporting and management.

Cardinal brand manager, Ryan Rudman, explains that it is a native app which has to pass a rigid approval and review process before being allowed onto the online AppStore and GooglePlay store, meaning the app is certified to ‘play nicely’ in the device ecosystem. It requires minimal on-device resources and can run on even the most basic Android devices, as long as it supports an auto-focus camera for scanning purposes. Information is stored on the device in a secure location that can only be accessed by the app which in turn synchronises data with the server when needed. 

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10/06/2014 12:14:37 PM

Fedhealth

Discovery Insure App: Discovery insure app

(gives access to Discovery Insure driving challenge) Developed by Designed in collaboration with experts in the field of mobile sensory analytics: Cambridge Mobile Telematics and Rory Byrne, special engineering adviser to Discovery Insure and F1 legend. Available on AppStore and GooglePlay COST: Free Main function & features: Discovery Insure CEO Anton Ossip says that the app is a great way for brokers to introduce their clients to services and product offers

by Discovery Insure in a fun and interactive way. Brokers can also use the app to show their clients how easy and advantageous it is to actively monitor and improve their driving behaviour and demonstrate the value-added benefits of being a policyholder.

The Discovery Insure app uses a smartphone’s accelerometer and GPS to provide detailed driving information such as harsh braking and cornering, distracted driving, speeding, personalised driving tips and a leaderboard

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that ranks driving against that of their friends as well as other drivers in South Africa.

The app is light and takes just over 10 megabytes of space on a smartphone.

App: Medscheme Broker Application Developed by Helios IT. Available on AppStore and GooglePlay COST: Free

The app scientifically measures and incentivises good driving behaviour. The Discovery Insure app is a global first in combining mobile technology and behavioural economics to create better drivers and improve road safety.

“The science of behavioural economics shows that we can help people improve by giving immediate and objective feedback on their driving, providing tools to help them change, and affording incentives aligned with safe driving. The app aims at encouraging good driving behaviour and reducing the risk of road accidents,” says Discovery.

With its extensive marketing campaign, the Discovery Insure app has been downloaded by over 41 000 South Africans. Users who drove well stood the chance to win a share of R1 million rand in monthly fuel rewards, and the winner of the Discovery Insure Driving Challenge – which ran to 31 August 2014 – won a trip for four to the 2015 Monaco Grand Prix.

Main function & features: The app provides brokers with tools to service their client base professionally and efficiently.

It allows a direct view of clients at all times, all locations, so brokers can always feel up to date and in touch, with the correct tools to provide service to clients. Features include the Doctor Locator – the scheme has GP and specialist networks. The locator enables anyone to find a specialist or GP in their area or alternatively, to see if their existing specialist or GP is on the Fedhealth network; online application forms – brokers can add a new member to the scheme by conveniently completing the online application form; tracking commission payments; and claims and benefits search by client.

The app is supported on a large set of devices, and although the app connects via a mobile network to backend services for data, the interface is lightweight. 

COST: Zero set up cost for client and free to end user Main function & features: The app creates a dialogue between the broker or insurer and their end client while providing immediate access to emergency services to assist the entire family.

Global Choices App: Global Assist

(A generic app that can be white-labelled into

the brand of the client, who will then own the app in the AppStore) Developed by CustomApp (a joint-venture between Global Choices division One Assist and Cardinal). Available on AppStore and GooglePlay. Licensed to develop for Blackberry and Windows 8 when demand supports this

The Global Assist app provides direct access for the user in the event of an emergency.

The app user has access to a panic button that alerts the 24-hour emergency contact centre and includes vital information to ensure swift action. It is also used to access the suite of assistance services that are provided to members as part of the value added programme.

The drink-driving prevention services and convenience driving services are optional features that make this app central to the brokers’ value proposition.

The entire family is catered for by allowing the user to make the app and all its services

available to the family. Should the primary policyholder add a dependant to the app, the dependant will receive their own version of the app including unlimited panic buttons, and R10 000 worth of embedded emergency medical transportation. The policyholder can also activate investigations into missing, abducted or kidnapped dependants.

On

Clients are able to view live policy data, scan driver’s license and vehicle license disks in order to complete all insurance related claims using pre-populated electronic claim form submission and tracking. In app messages allow for the transmission of extreme weather warnings, hijacking and crime hotspots.

Brokers and insurers are also able to use the functionality for their own communication to their clients such as birthday wishes, and general reminders.

The monthly running costs of the app are embedded into the assistance services programme that is managed by Global Choices and comes with the support of its 24 hour contact centre facility.

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discovered that up to 40 per cent of the pre-inspections performed had incorrect vehicle information,” notes Lightstone head of marketing Cindy Beets.

Lightstone App: LIVE Inspect

Developed by Lightstone Auto and CustomApp Available on AppStore and GooglePlay COST: Free to download and works on a per transaction basis thereafter Main function & features: The LIVE Inspect app helps speed up and improve the accuracy and ease of performing inspections. Most insurers rely on a third-party to perform pre-inspections on vehicles at policy initiation. This process is often paper bound, inaccurate and the data collected unreliable.

“In research conducted by Lightstone we

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The LIVE inspect app uses advanced technology like vehicle licence disc scanning and driver’s licence scanning. The information contained within the barcode is verified by Lightstone’s proprietary data ensuring that the correct information on each vehicle is sent directly to an insurer. The insured’s driver’s licence card is scanned and the information contained within the barcode is sent directly to the insurers.

Photos and the GPS location containing a time stamp are also submitted with each preinspection. This technology ensures the asset is correctly identified, all details are accurately captured and all information required by insurers is available.

It furthermore ensures that at claims stage accurate data is available on every vehicle.

Insurers are in a position to fully understand the asset at the onset of the policy, know of

any pre-existing conditions to the vehicle and ensure they are underwriting the correct make, model, vehicle type and model year.

Lightstone Auto initially developed an app called LIVE which is used by motor dealerships to correctly and easily identify, verify and validate a vehicle. The aim is to provide accurate information to the motor industry which is notoriously plagued by inaccurate information, fraudulent activity and long tedious processes and paperwork.

Beets adds that the app is valuable for brokers because by understanding the exact vehicle at the onset of the policy, the premium can be correctly priced, any fraudulent activity or incorrect vehicle information like the VIN number, licence number, model year etc. can be quickly and easily identified. The customer is in a position of being completely transparent and should a claim arise all preexisting conditions are easily identifiable. The pre-inspection takes less than one minute to complete making the process quick and easy  for a customer, she adds.

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• Pa • Cl • Ta • Ca

Offi

Ant ant

Rya rya

BESPOKE MOBILE APP SOLUTIONS & ASSIST SERVICES One Loyalty Rewards specialises in customised insurance value-added services and the development of all types of Mobile App Solutions.

We support integration into the following systems:

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

We will soon be supporting integration into:

has made five unique solutions available to One Loyalty via their unique mobile scanning functionality or online web service: • Valuation • Verification • Accident data • Test Drive • Quick Credit ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

These Assist Services can be integrated into your app or supplied separately: • Panic SOS • Roadside Assist • Medical Assist • Trauma, Assault & HIV Assist • Home Assist • Office Assist • Claims Assist • Legal Assist • Disability Assist • Crime Assist • Funeral Assist • Notification of Loss • Tutor Assist • Tax Assist • Home & Convenience Drive • Direction Assist • Bicycle Assist • Motorbike Assist • 4x4 Assist • Caravan & Trailer Assist • Boat Assist • Heavy Vehicle Assist • Commercial Assist • Agri Assist • Trip Monitor • Accident Protect • Pothole Protect • Fines Protect • Licence Protect • P.I. Protect (Private Investigation) • Bail Protect

Office: +27 11 291 7300 Anthony Kotton: +27 82 784 4271 anthony@oneloyalty.co.za Ryan Grill: +27 82 552 8216 ryan@oneloyalty.co.za

One Loyalty App: One Loyalty Assist Developed by Digicall and DVT. Available on AppStore and GooglePlay and Windows 8 (Blackberry on request) COST: Free Main function & features: The app can geo-locate you, provide immediate access to closest emergency and non-emergency services, enable you to do motor and home claims processing on your phone. It enhances the end-client’s experience with their broker, underwriter or insurer with

a ‘wow’ factor, but also allows for real-time access to emergency services, a simplified claim-lodging process and access to their policy details and claims history on the run.

One Loyalty apps can seamlessly integrate into any system and clients can choose from a menu of services to create a specialised solution for their target audience.

“Our client’s love the simple claim-lodging process, instant access to emergency services, integration with insurance systems providers, real-time weather and traffic data, licence disk scanning with access to vehicle valuations and accident data, quick credit scores and property data to name a few,” says One Loyalty.

Momentum App: Momentum short-term insurance mobi app: Broker App and Client App Developed by CustomApp. Available on AppStore and GooglePlay COST: Free

Main function & features: The broker app offers brokers an easier way of doing business with Momentum. It includes functionalities such as My Quick Vehicle Quotes, which allows the broker to: get quick quotes for clients while on the move; scan in client’s driver’s licence and vehicle licence discs to ensure that accurate data is obtained with minimal effort.

The detail input can also be done manually; add more than one vehicle to a quote; save the information and submit it to the call centre.

Pre-Inspection allows the broker to: move straight into this application because all the client’s details were already loaded in the My Quick Vehicle Quotes application; take photos of the designated areas of the car; save and submit the information for an endto-end quotation process The client app has safety features and allows for submitting of claims. It allows users to set up a contact list of friends and family who will receive a message when a panic is activated; in an emergency the customised ‘help’ SMS with GPS coordinates will be sent to the predefined contacts for every minute the panic is activated.

It has additional features such as: ‘arrive safely’; ‘stay alert’; ‘vehicle accident assist’; and claim submission.

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MUA Insurance Acceptances App: MUA Insurance Developed by DVT-Mobile. Available on AppStore and GooglePlay COST: Free Main function & features: The app gives brokers instant access to the company anytime, anywhere. “Importantly, the app also enables MUA to react immediately to its brokers’ needs – whether for updating their client’s policy information or just submitting a claim - all they need to do is push a button,” says MUA MD Christelle Fourie.

She adds that one of the most important functions of the app is the ability for brokers to locate the nearest police station or hospital in the event of an emergency. Cutting time on administration tasks, brokers can speed up their daily tasks by requesting forms such as home and motor quote forms, proposal forms and claim forms via the app.

Users of the app will also be able to access MUA’s social media platforms, including Facebook, Twitter and YouTube, as well as the MUA newsfeed, says Fourie.

RISKSA will be doing a follow-up feature looking at more apps available to the insurance industry. If your company has an app that you would like us to know about, email us at newsdesk@comms.co.za.

Software solutions with the right genes WWW. INNOSY S. CO.Z A

+ 27 11 532 8300 | info@innosys.co.za

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CPD here to stay Continuing professional development or CPD has moved from a point system to an hourly system and further changes are in the pipeline. RISKSA investigates.

Neesa Moodley-Isaacs

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A

lthough there has been some confusion in the industry about the current status of CPD, RISKSA can now confirm that it is not off the table. Stefanie MacKenzie, the manager of the FAIS (Financial Advisory and Intermediary Services) registrations department at the Financial Services Board (FSB) says CPD was simply put on hold because the original requirements did not provide sufficient clarity regarding the practical implementation of CPD. “There was an attempt to develop a clearer set of requirements but after feedback from the industry, we decided not to continue with the publication of these requirements.

Questions were raised about the practical implementation and monitoring of these requirements,” she says. Mackenzie says there is no clear timeline at this point as to when the matter will be finalised.

“CPD, to some extent, is affected by the development of the level two regulatory exam model which we are currently busy with,” she says. Public consultation regarding the level two regulatory exam model is expected to commence within the next few months.

Prem Govender, former chairperson of the Financial Planning Institute (FPI), says that under no circumstances should there be any idea that CPD will ‘fall away’. ‘From an FPI perspective, we would like to see the CPD process put to bed as soon as possible. In the interim, we encourage our members to continue their CPD activities as they are still required to log 35 CPD hours every year, regardless of the process pending at the FSB level,” she says.

David Harpur, chief executive of the Insurance Institute of South Africa (IISA) says both the IISA and the Financial Planning Institute (FPI) are actively part of the consultation process with the FSB currently.

“Our discussions with the FSB are ongoing and the main aim is to ensure that there is one overall CPD programme for the industry.

That will streamline the implementation of CPD, which is great news,” he says. However, until that happens, the blanket exemption notice announced in 2012 remains in place.

What does this mean for you?

The point of CPD is to ensure that financial services professionals stay on top of their game, particularly with reference to the ever-changing regulatory landscape. So, the onus is on the professional to continuously upgrade their knowledge base and keep up to date so that they are better able to advise their clients. CPD is merely a formal way for the industry bodies and regulators to monitor and ensure that this is indeed taking place. So, you should continue attending events, seminars and reading literature (such as RISKSA!) to ensure that you stay current.

Although the blanket exemption notice of 2012 means that financial services professionals do not have to report CPD to the Financial Services Board as yet, the CPD requirements as per different industry bodies that you may belong to, will still apply.

The Financial Planning Institute (FPI)

The Insurance Institute of South Africa (IISA)

There have been changes to the FPI’s CPD policy in the last year. Going forward, these are the most significant changes: • The reporting period for CPD is now one calendar year instead of two years, and you are now required to clock 35 CPD hours each year.

• Five of your CPD hours must count towards ethics and practice standards.

• The attendance of seminars, presentations, updates, workshops, conventions and conferences has been collapsed into one category – events.

• Credit bearing courses, including international courses, can be claimed – up to 50 per cent of the CPD requirement.

• Professional reading up to 50 per cent of the CPD requirement is claimable.

• Pro bono activities of up to 50 per cent of the CPD requirement are claimable.

• ‘Unverifiable’ activities include television and radio broadcasts, unless an assessment is linked to the broadcast.

The IISA requires members to rack up 15 hours of CPD within the year from 1 July 2014 to 30 June 2015.

If an FPI member fails to accumulate 35 hours of CPD by year-end, they have a further 90-day period within which to accumulate the outstanding CPD hours.

Misstated or fraudulent reporting of CPD is treated as an offence and members face the disciplinary committee for a violation of the FPI code of ethics and professional responsibility.

The FPI hosts an online CPD register on its website, but the onus is on the professional to ensure that their details are correct and that CPD hours have been correctly recorded.

FPI members can also request exemption or deferral of CPD requirements with a reporting period if they can claim extenuating circumstances which include a medical diagnosis, temporary or permanent disablement or parental leave.

However, parental leave is limited to four months in a calendar year.

You can rack up those CPD hours by: • Attending conferences, seminars, courses or workshops.

• Completing self-structured study programmes.

• Writing books, articles or publications.

• Delivering lectures or presentations.

RISKSA offers you IISA CPD hours just for reading our awesome content.

Follow these easy steps on our website (www.risksa.com/claim-cpd-points) to start earning IISA CPD hours: 1. Click on ‘register’ and fill in your personal details.

2. You will receive your log in details via email.

3. Log in using your email and password.

4. Click on the latest issue of RISKSA magazine.

5. Answer the multiple-choice questions related to each article listed and click submit.

You do need to get 100 per cent of the questions right in order to receive your IISA CPD hours, but don’t worry, we are offering you more than one bite at the cherry. If you don’t get all the answers right the first time, you can check which answers you got wrong and correct them. You can also earn IISA CPD hours when you attend one of the informative RISKSA insurance bootcamps.

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Dominic Uys

Squeezing

dividends

In June this year, the German Parliament signed off on draft legislation which, among other changes, would give BaFin, Germany’s financial watchdog, the authority to prevent life insurers from paying out dividends before all interest rate promises to customers have been honoured. The proposal has been met with harsh criticism from the life insurance industry.

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I

nterest rate guarantees as high as four per cent are not uncommon for life insurance savings policies sold by German life insurers up to the year 2000. The economic downturn has, however, made it increasingly difficult for many of the country’s life insurers to service these guarantees. At present the benchmark 10-year government bonds only yield around 1.4 per cent.

The majority of the 93 insurers operating in the country are not well capitalised enough to withstand prolonged periods of low interest rates; and a study by Germany’s central bank revealed that over one third of these companies will not meet regulatory capital requirements by 2023, if interest rates remain persistently low.

According to Germany’s Minister of Finance, Wolfgang Schauble, the new legislation is aimed at securing the long-term health of these insurers. The law currently states that a company needs to draw on its own reserves when it falls short on the promised pay-outs on mature or cancelled policies.

While this legislation has, to date, upheld the interests of the customer when an insurer falls short on interest rate promises, it naturally also erodes the company’s capital. The ministry’s solution, as laid out in the draft legislation, is firstly to cut the guaranteed interest rate that insurers will be allowed to offer on these policies from 1.75 per cent to 1.25 per cent.

Secondly, the shortfall on interest rate guarantees would now be covered by the company’s investors’ dividends, and the legislation would give BaFin the authority to compel an insurer to do so. It is this second ruling that has garnered the most amount of criticism.

While the industry has been urging the Ministry to revise the legislation passed in 2008 regarding policyholder pay-outs from company reserves, the draft proposal has been disparaged by the insurance community of simply substituting one extreme with another. “Schauble has overshot in devising a cure, threatening to choke off investment needed by the industry,” German Insurance Federation (GDV) said in a statement.

Putting pressure on the industry

Poor’s, finds that the solution could have both positive and negative outcomes.

“In our view, the proposed reform package would achieve its overarching goal of better supporting life insurers’ ability to honour the long-term guarantees they offer to policyholders on traditional life insurance policies. We consider this generally positive,” Standard & Poor’s credit analyst, Ralf Bender, comments.

“Nevertheless, this comes at the expense of potentially lower earnings prospects and reduced financial flexibility, which could put pressure on the financial risk profiles of German life insurers over time,” he continues.

“Standard & Poor’s has argued that the current rules provide a disproportionate advantage to policyholders whose policies are at maturity or who decide to cancel, and declining bond yields have highlighted this shortcoming. The Ministry of Finance was explicit that life insurance policyholders’ long-term interests trump those of individual policyholders – a stance we share and which the proposed law aims to rebalance,” the company continues in its report.

“The proposed reform package would favour policyholders, in our view. Insurers will likely be able to reduce pay-outs on asset value reserves when interest rates remain low, but at the same time they will be restricted in their dividend distributions. In return, life insurers will be obliged to share larger proportions of the underwriting risk result with policyholders than previously,” the company adds.

“We also believe that not all companies will be in favour of the reduced new business guarantee rate given the likely negative impact on growth and the only long-term upside on in-force guarantees, especially with regards to its targeted introduction,” the company concludes.

The individual insurers are loathe to comment directly at this stage. Industry sources point out to RISKSA that adjustments to the legislation do not seem likely, however. With an eye on implementing the legislation from 1 January 2016, Wolfgang Schauble and the German Ministry of Finance are moving ahead as planned.

The GDV has criticised the proposal by stating that a general clamp on dividend payments would overshoot the aims of helping the industry.

“It would sever insurance companies from capital markets,” the federation said.

It is also estimated that the provisions would affect the operating profit of the large operators in the country. Allianz, to name one example, is expected to lose around 75 million euros in operating profit in 2014.

However, an analysis done by Standard and

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Tips for conducting great interviews Laura Owings

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Conducting successful interviews can help to land the best staff. Nathan Byrne, regional director of Africa for Michael Page recruitment, tells RISKSA how to develop a great interview style.

Know what you want

Create criteria

Make sure you have a clear understanding of why you are recruiting, what you are recruiting for and what sort of person will best fit the role and company. There’s nothing worse than going into a meeting with a potential new hire, and ask some questions and you are not sure what you want them to do. This happens less in multinational companies, but it tends to happen more in smaller and mid-sized companies.

The interviewer and stakeholders should lay out five key selection criteria. If you are going to hire someone, what are the five key points you must see in resumes? For example, candidates must have a degree, have 10 years’ experience and have a proactive mind-set. These criteria can be anything, but there must be a clear set of guidelines to help narrow the focus of which CVs will be considered.

Put it in writing

Get the team on board

Learn from mistakes

Start the hiring process by creating a solid job description. A candidate needs to be able to look at the description and know exactly what the job is and whether it is the right fit. It should explain not just the job, but the company as well. It should tell them about the organisation, why it’s a great place to work, and what they’re looking for in a new hire. As much information as possible should be included, but don’t make it an essay. It has to be well written, well presented and professional.

Take the time to speak with internal stakeholders. Make sure you have their buy-in when you recruit for the role. If HR, for example, is not brought into the process they can provide a road block when it comes to hiring. Whether that means making stakeholders aware of the job opening or are involved in the hiring process, you’ve got to make sure you have their approval. The same goes for those who will be in contact with this person at the company. They should also be included at some level.

The biggest mistake interviewers run into is taking too long to make a decision.

Inevitably, candidates lose interest or move on to other opportunities. Handling salary negotiations can also be tricky, and is a process that should be clear before you start interviewing. Another mistake is interviewers who don’t sell their company well. They spend too much time focusing on the job and the candidate, and do not explain the business, structure and staff involved.

Assign roles

Follow up

Decide early on who will manage resumes, who will hold first round interviews and that the message is consistent regarding which candidates you will be interviewing. In some companies HR may meet candidates first, or you may decide you will screen them first. Will interviews be formal and structured, or do you want them to be more relaxed? How many interviews will you have? If you find one great person, will you decide then and there, or will you have guidelines you stick to; for example, will you hold three interviews before you offer the job? If you have all of that information in a streamlined process, it is unlikely you can have a bad recruitment process.

It’s really common for candidates who didn’t get the job not to hear a response. In fact, I’d say nine times out of 10 companies don’t get back to candidates. It’s important to understand the value of keeping in touch. Again, it comes down to planning and making sure you have the capabilities to manage the interview process. Make sure you or someone has been delegated the job of following up with candidates to provide proper feedback and explain why the candidate wasn’t successful. This could be particularly helpful later on if the same candidate is the right fit for another opportunity.

Make a plan Consider how you will go about recruiting. Will you go through a staffing company?

Will you use local services or job boards and online advertising? Make sure whatever process you use is one that works for you and your timeframes. Once you choose the process, make sure you can actually manage it. If you decide to select candidates yourself, make sure they have access to the right tools, such as LinkedIn.

Don’t give up From time to time, a new hire will not be the right fit, no matter how smooth the interview process went. Open communication is critical to prevent this. Make sure that the candidate has a very clear idea of the scope of their role and responsibilities from the start. If expectations are not managed, that’s when problems occur. But remember that these things happen, and if you keep following the right steps, you will find the right candidate.

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Michelle Camps

We all fear the negative complaint from customers especially when they choose to use social media and public platforms to vent their frustrations, leaving consumers with a one-sided, oftentimes negative view of your company or service rendered.

I

am just that customer who has used the popular consumer venting site, Hellopeter, to complain about a wellknown cellular service provider whom I can now gratefully use as an example of how not to manage your customer complaints.

Why register on these sites as a company and go to the trouble of even posting a standard response thanking the customer for raising the issue then do nothing further? To add insult to injury, said company conducted an sms survey shortly thereafter to rate their service, and after rating them 0, their call centre agent called me and yet again I explained my situation and he promised to follow up. Over a year later I have yet to

Negative = Positive

receive feedback on my initial complaint.

Needless to say I will never recommend this company.

The company clearly understood the initial concept of customer service by being registered on the site, as well as having a standard quick response, and even going so far as to pay for a customer survey. Yet, they clearly do not understand the full extent of customer management. What is the point of having a half-hearted attempt at managing customer satisfaction given the potential damage it can have on your brand? I would love to share my insights with said company, if anyone will care to respond… anyone?

So how should an organisation manage customer complaints? Quite simply – acknowledge, action and respond. If a customer has taken the trouble to complain, acknowledging them and offering a standard response is quite acceptable. This gives the customer the initial satisfaction that they have been heard. This response should be generated immediately if possible or at least within 24 hours. Then action the complaint internally by ensuring it is escalated to the required department and/or person involved. And finally, respond to the customer. All this should be done within at least a 72-hour period.

For complaints that may need further time for investigation, an interim response within the 72-

hour period advising the customer that you have not forgotten their complaint and assuring them of your continued attention, is acceptable. Again the customer feels a sense of importance that they are being taken seriously. A good touch is to respond with a manager’s name and title.

Having worked on customer relationship management strategies within the medical scheme environment, with the potential for numerous member complaints, it always surprises me that so many of the complaints analysed are actually not around the advice received, for example a claim not being paid, but were actually around how the customer was treated.

It is vital to review the complaints and clearly understand what it is the customer is actually upset about. Respond accordingly.

Close the complaint off, using decisive language with clear facts, yet always remembering to be polite. Don’t leave any room for added responses as this can potentially drag the negativity even further. A good idea is to contact the complainant telephonically to resolve the complaint avoiding the continued ping pong in a very public, potentially damaging domain and following up with a response on the site stating that the complaint has been resolved.

A negative complaint can turn into a positive, if handled successfully. Often, a customer will use the opportunity to even compliment the company on the public site if a complaint is handled efficiently.

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

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Gauteng | Alberton, Tel: 011 613 6161 ; Benoni, Tel: 011 421 1326 ; Bruma, Tell: 011 621 2700; Centurion, Tel: 012 661 1003 ; East Rand Mall, Tel: 011 826 6446; Edenvale, Tell: 011 452 1863; Germiston, Tell: 011 454 0240; Gezina, Tel: 012 335 0400 Honeydew, Tel: 011 678 3999 ; Jhb Central, Tel: 011 493 9911; Menlyn, Tel: 012 348 5007 ; Midrand, Tel: 011 312 1133 / 1162 ; Montana, Tell: 012 548 1414; Pretoria West: 012 327 7065 ; Rivonia, Tel: 011 234 3602 ; Roodepoort, Tel: 011 766-2588 / 2737 ; Sandton, Tel: 011 262 5704 Silverton, Tel: 012 803 7944/9903 ; Springs, Tell:011 811 3085; Strijdom Park - Randburg, Tel: 011 791 4292 ; Vereeniging, Tel: 016 422 9777 / 7564 ; Zambesi, Tel: 012 808 3720 ; North West | Potchefstroom, Tel: 018 294 5525 ; Rustenburg, Tel: 014 592 8101/8149 Mpumalanga | Middleburg, Tell: 013 243 2534; Nelspruit, Tel: 013 752 3832; Secunda, Tel: 017 638 1044/1413 Witbank, Tel: 013 692 5475.

Kwazulu Natal | Empangeni, Tell: 035 787 1627; Durban, Tell: 031 902 9534; Durban Central, Tel: 031 368 2108/9 ; Durban North , Tel: 031 579 5140 ; Kokstad, Tel: 039 727 3123 ; Pietermaritzburg, Tel: 033 386 4408 / 9 ; Pinetown, Tel: 031 700 1474 / 1659 ; Marburg, Tel: 039 682 3317 ; Free State | Bloemfontein, Tel: 051 432 7399 / 8409 ; Welkom, Tel: 057 357 1292/3 Limpopo| Tzaneen, Tel: 015 307 2262 ; Polokwane, Tel: 015 293 0982 Eastern Cape | Port Elizabeth, Tel: 041 368 8550 ; East London, Tel: 043 705 8400 Western Cape | Bellville, Tel: 021 949 0342 / 3 ; George, Tel: 044 878 2861; Maitland, Tel: 021 511 6449 ; Montague Gardens, Tel: 021 552 7058 ; Parow, Tell: 021 930 3227; Somerset West, Tel: 021 850 0096

Like clockwork The Clock Tower Conference Centre

Anton Pretorius

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Finding the right conference facility is critical to ensure your event is stress-free and successful. For the Cape Town leg of RISKSA’s annual Insurance Bootcamp seminar, we make regular use of The Clock Tower Conference Centre in Cape Town’s V&A Waterfront.

E

legant, accommodating, affordable and state-of-the-art, the Clock Tower Conference Centre ticks all the right boxes as an internationally-rated conference facility. We chat to managing director, Johan de Villiers, about what makes the Clock Tower such a popular facility for conferencing and any other event imaginable.

In 2012, the Pavilion conferencing team closed shop at the old BMW Pavilion Centre in Portswood Road and moved just down the street to the brand-new Clock Tower Conference Centre in Cape Town’s picturesque V&A Waterfront.

Not only does the Clock Tower Conference Centre consider itself a family business, but it is focused on offering a ‘custom-made conference experience’ that offers premier facilities and excellent services to clients.

Boasting 21 different room configurations with stunning views of the harbour and the ability to accommodate up to 700 guests for a cocktail event, and 300 for a cinema-style seating seminar, the Clock Tower Conference Centre does what few other conference facilities in Cape Town can – accommodate a large number of delegates.

wine estate near Paarl, which they rent out as a traditional vineyard wedding venue.

RISKSA’s events manager, Angelique Edwards had the following to say about the Clock Tower Conference Centre; “I’ve hosted many events and the Clock Tower is one of the best conferencing facilities in Cape Town at the moment. Not only is it centrally located, but it boasts sufficient parking, professional sound equipment, fantastic cuisine, amazing views, modern and comfortable facilities and friendly staff, who are always at hand to assist with every need.

They’re extremely accommodating, even when we bumped up our numbers at the last minute. The Clock Tower is a worldclass conference facility and is in line with international standards, but without international prices. They offer affordable packages which they tailor-make, even for budget-conscious clients. The only negative thing is perhaps the access to the venue due to the construction and restructuring of the Clock Tower, but that should be made easier once completed.” 

The Pavilion team offers clients a turn-key experience, where décor, security, transfers, exhibition stands, entertainment and specialised AV equipment are all part of the package and all you have to do is pick up the phone and sit back while they take care of the rest.

Centrally located within the corporate hub of the Mother City, business has been booming. So much so that the Pavilion Leisure Management Group (Pty) Ltd, the management arm of the company, have added several other venues to its stable, including the De La Paix

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position of general manager at the BMW Pavilion (as it was known then) opened up. I applied, and was appointed. Moving from a corporate background to a privately owned business with all its risks was a big decision for me. But with less red tape or the fear of stepping on corporate toes gave me the necessary motivation to accept this position.

The wife and I made the move down to Cape Town and a year later, I was promoted to managing director and bought shares in the company.

Interview with managing director Johan de Villiers: What is your professional background?

I worked at Sun International in Sun City for eight years and felt like I reached my peak as banqueting manager at the hotel complex.

Events such as the Nedbank Golf Challenge and Huisgenoot Skouspel, where we fed 16 000 people per day, were my babies. The

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Why the change in location?

We were restricted by the amount of people the old BMW Pavilion building could accommodate, and so we looked at bigger premises. At the Clock Tower, we can host more than 700 people for a cocktail function and 300 for a sit-down gala dinner. For the same price, these premises made more business sense from a conferencing perspective. So far, it’s been phenomenal and our location is perfect. Developers are happy as it draws more feet to the Clock Tower premises. We’re at the V&A Waterfront, which is a hive of activity and very close to the city centre. We’re also surrounded by big corporate companies, so it’s very convenient for them.

What’s the conferencing industry like at the moment?

We try to do our bit for tourism by drawing international and national delegates to the Mother City. The conferencing industry in Cape Town is growing at a rapid rate, but is also slightly limited in terms of venue size and the amount of people one can host in a single

sitting. We’re proud to say that we’re able to accommodate and cater for big groups and that we’re proudly South African.

You mentioned that the Clock Tower is a family business, how so?

Twenty-six per cent of the company is owned by our staff through a shares trust. Every person that works here has share in the company.

While this aids in our BBBEE ratings, we consider this a family business where everyone shares in the profit, but also in the damages, if there are any.

What does the ‘custom-made conference experience’ entail?

Truth be told, conferences are usually boring – just people who come, eat and go. But we engage in meetings with our clients, we listen to them, find out what they’re all about and what they want. If they want to do something out of the ordinary and perhaps do a themed conference, we organise that for them. We once had a ‘green’ themed conference where no paper, pens or bottles of water were used throughout the conference. We adapt and cater to each theme and use our own preferred décor supplier to assist. We listen to our clients and treat them like friends, so when they walk away, they walk away as a friend to the business. We realise that providing that personal contact is highly beneficial to the company. With conferences, you usually have 15 different invoices from various suppliers covering things like décor, security, transport and many more.

We bring it all together under one invoice.

There is no hassle for the client and we make sure their experience is easy and convenient.

Parking, AV equipment, standard equipment, coffee breaks, food, décor, transport and transfers, exhibitions and entertainment are all included in this one-stop, turn-key conferencing experience.

How do you help clients grow their business?

Just because you’re budget-minded, doesn’t mean we’ll turn you away. We make it work for our client and for us. If our conference facility is not being used, we lose money. We tailormake packages and see where we can cut costs. To build solid relationships with clients, we’ll draw up a three-year contract to help grow their conference. A prime example of this is Professional Minds. Brainchild Haley Rogoff, started out by hosting conferences for nurses. In the past, nurses’ conferences ended up in school halls and cafeterias, but we helped her host a fun and elegant conference. They’ve grown to such an extent that we’re proud to say that they’ve even become too big for our facilities.

It’s sad to see them go, but we’ve helped them grow as part of our three-year agreement.

Do you cater for specific ethnic groups?

We’re not a full-on Halaal kitchen per say, but we are ‘Halaal-friendly’ for lack of a better term. We’re happy to make exceptions, and we don’t use any liquor or pork in our kitchen areas. We have Muslim chefs in our employ and most of the Muslim communities are comfortable with the food we prepare here. For more specific ethnic groups, we offer the full use of our kitchens and facilities to those who wish to use it. We’re very flexible in this regard and provide clients with solutions.

Do you consider your facilities affordable?

We’ve built up some solid relationships with suppliers and we get pretty good discounts from them. But we hand that saving in costs directly over to our clients. Our prices definitely aren’t out of the market, and in fact, we’re pretty competitive compared to other conference facilities.

What are some of the challenges of working at Clock Tower?

We’re at the stage where we can list on the

Johannesburg Stock Exchange if we wanted to, but we’re more interested in growing our business in a private capacity. Listing on the JSE means you get too big too quickly, and before you know it, you’re corporate. One of the other challenges when we started the businesses was looking for investors. While banks in South Africa were reluctant to loan, we had to go search for investors overseas.

Sustain Our Africa was technically one of our most challenging events to host, but also one of the most exciting. We hosted 600 delegates per day – each room packed to the maximum. We even did a live broadcast from the venue with Helen Zille as the key speaker. We registered one of the highest Twitter feeds in South Africa during the first two days of the conference.

Is social media an important aspect of your business?

If you don’t have a social media presence in today’s times, you’ll get left behind. It’s something that’s important to us, so we concentrate heavily on it. Through Facebook, Twitter and several other social media sites, we regularly post our activities and photos of our events. In doing so, we keep prospective clients interested, and followers updated.

Do you cater for any event?

We do everything from year-end functions, cocktail parties, launches, weddings and even Bar Mitzvahs. Our De La Paix wine estate venue in Klapmuts has come in handy as a traditional vineyard wedding venue. But conferencing is our bread and butter. This is an open and diverse venue, and you’re only limited by your budget and your imagination.

Ever had a situation where things went awry?

No business is without its hiccups. On the hottest day in Cape Town, both our airconditioning systems decided to pack up and on that day, we hosted 300 people in the conference centre. We tried everything: opening doors and windows; we brought in fans and portable air cons. At one stage, I thought people were going to start removing their shirts.

But you make a plan and get through it. What choice do you have?

De La Paix wine estate near Paarl, which Pavilion Leisure Management Group (Pty) Ltd rent out as a traditional vineyard wedding venue.

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Working

Parents Getting the balance right.

Melissa Anne Wentzel

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Parenting is, arguably, the most underestimated job in the world. Add to that an executive title and you have the combined demands of a super human. RISKSA chats to five leaders in the insurance industry to discover how they juggle the pressures of work and still manage to spend quality time with their families.

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t is important to be highly organised in both your business and personal life,” says Christelle Fourie, MD at MUA Insurance and mother to Lea – 11, and Chris – nine. “Being very organised, that’s what works for me.” Fourie’s philosophy is that you get the job done in the allocated hours, and if you can’t manage that then you’re doing something wrong.

Anton Roux, CEO of AON South Africa, has two daughters, Meegan – 19, and Christen – 10. Roux makes sure that his family knows his work and travel plans in advance. “They know where I am at all times,” he says, adding that his daughters and his wife, Lyn, are never left wondering where he is. He also blocks out time in his calendar that he will be spending on holiday with them.

Family focus Roux says that the transition between work and home is important. “I dislike continuous partial attention to something,” he says, which is why he takes his last work call in traffic before switching off and heading home to his family. “The rest of the time I focus on them.”

The COO of AON has a similar ‘golden rule’ – no gadgets at the dinner table.

“No Blackberry, no iPhones, no iPads, no laptops… Otherwise I could just stay at

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Schuurmans’ off time. They’ve taken road trips to Kommetjie, Clarens and the Karoo, and are currently planning another to Victoria Falls through Botswana.

The Roux family enjoys anything waterrelated and both Mrs. Roux and their eldest daughter, Meegan, are skippers. Roux has a passion for restoring cars, and that’s where he can be found enjoying some ‘me-time.’

Fourie and Colman both enjoy running and they plan to participate in the Paris Marathon to kick-start their honeymoon in France after they wed in April next year.

It takes a village

work,” says Daniel Schuurmans. He reiterates that his wife is quite strict about it.

Technology may be banned at the Schuurmans’ dinner table, but for Simon Colman, head of product development at SHA Specialist Underwriters, it is an integral part of his relationship with his two teenagers, Damian – 16, and Paige – 15. Simon has a unique family dynamic in that he lives in a different city to his children.

Colman is engaged to MUA’s Fourie, and moved to Cape Town from Johannesburg in April this year to be with her after maintaining a long-distance relationship for the past few years. Colman recently accepted a position with SHA as head of product development that enables him to be in Johannesburg for one week of every month. While there, he stays at a bed and breakfast close to his children.

For the rest of the month he maintains daily contact with both Damian and Paige, anything from a phone call to a Whatsapp message, or Facebook. “We use social media to its fullest.” He and Fourie are active on Facebook, and when they post something they often mention their kids to ensure everybody is included.

Fourie follows her daughter, Lea, on Instagram. “I can see a side of her that otherwise I wouldn’t have known about – to interact with her on that level is quite special.” Lea has more than 500 followers

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on the image-sharing platform where she uploads Disney-related posts.

Drew Schnehage, MD at Aquarius Underwriting Managers also has quite a unique family dynamic. Drew has three children: Wiehan – 18, Jenna – 11, and Ava – eight. Her son, Wiehan, does not live in the family home but at the Woodside special care facility for the intellectually disabled.

Schnehage splits her time between regular visits to Wiehan, working full days, attending her daughters’ sporting events, cooking, helping with homework, and spending quality time with her husband.

Coping mechanisms To relieve the stress from her demanding schedule, Schnehage carves out a day a week for her dancing. “I don’t enjoy gym and running isn’t good for the knees.” Schnehage also likes to hit the greens. “I play golf every second week on a Friday.” This is an activity she utilises for business, social and family purposes. “As a family we enjoy golf,” she says, adding that herself, her husband, and their two girls are all members of the Rand Park Golf Club.

The Schuurmans relocated to South Africa from the Netherlands last year and they’ve been exploring the country as a family during

Fourie points out that being a working mother is vastly different to being a working father. “Most men in high positions have wives at home. A working mother doesn’t have that.”

Schuurmans can attest to that difference after his wife, Goudelieve, recently had to leave the country for five days. “I didn’t jump up and down,” recalls Schuurmans when he found out he would be working and taking care of the kids on his own.

“I had to take care of that and make adjustments to my daily schedule,” says Schuurmans. “It’s nearly impossible.” He mentions working parents who have to do that every day and says, “I really respect people like that.”

Schnehage has a domestic worker, Marcia, who helps her juggle those very demands of being a managing director and a mom. She reports that Marcia recently got her driver’s license and will soon be able to assist with chauffeuring the kids around. “I can’t do without Marcia – she’s the backbone of the family.”

Fourie, who has the support of a nanny and an au pair (mainly for driving), agrees.

“Have a good support structure in place that can assist with taking care of family needs so you can focus 100 per cent on your work while at the office.”

Fourie says that, as a mom especially, many sacrifices need to be made for the privilege of holding a senior position; and it should go without saying – “you can’t sacrifice the relationship with your children.”

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news NEDIC rating upgraded

Nedgroup Insurance Company (NEDIC) announced that its national scale claims paying ability rating has been upgraded by Global Credit Ratings (GCR). The company has been assigned a rating of AA-(ZA); with the outlook accorded as stable.

The insurer’s underwriting margin exceeded the industry average by more than seven percentage points over the review period. This is expected to continue in the medium-term, although GCR expects the differential to narrow as the insurer grows into more competitive personal lines business.

The GCR also noted NEDIC’s cautious approach to personal lines expansion, through strategic alliances with established multi-line players, as well as the use of quota share reinsurance cover. GCR notes that the company’s strong operating cash flow generation has supported the accumulation of a sizeable investment portfolio and contributed to an adequate level of liquidity.

Envirosure’s Synergy acquisition complete Envirosure Underwriting Managers and Synergy Targeted Risk Solutions have announced the conclusion of Envirosure’s acquisition of Synergy Targeted Risk Solutions.

Envirosure Underwriting Managers has purchased the entire shareholding of Synergy Targeted Risk Solutions, creating a larger and stronger business for current and future clients of the two companies.

To enhance synergies and specialisation in the two businesses, the product portfolios of the two companies will be aligned as follows: Pollution liability products: Synergy and Envirosure will combine their pollution liability portfolios, resulting in a migration of the old

Synergy policies to Envirosure. This will not result in any changes in the risk carrier, terms and/or conditions in the policies currently administered by Synergy Targeted Risk Solutions.

General liability products: Synergy’s existing general liability policies will be transferred to a separate and newly formed company, Synergy XOL (Pty) Ltd. on the same terms and conditions as were applicable under Synergy Targeted Risk Solutions. Going forward, Synergy XOL will specialise in non-proportional liability covers. Its products will be underwritten and administered by Peter Hodgson and Amanda Davis on behalf of Compass Insurance Company.

The Johannesburg branch of the merged business will operate from the existing Synergy offices in Glenanda, Johannesburg, under the Envirosure Underwriting Managers brand.

Envirosure’s head office will remain in Durban.

All Synergy staff will be integrated into Envirosure, with Peter and Amanda assuming the role of consultants to the merged business.

Synergy XOL will run from the same premises.

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INSETA approves R11.3 million for bursaries INSETA has approved 405 higher education bursaries, worth R11.3 million, in line with its strategy to boost learners studying critical skills for the insurance sector at education institutions such as universities and FET colleges.

Two years ago, INSETA launched its Bursaries for Youth not in Employment programme to support the development of scarce and critical skills in the insurance sector. These include management and leadership, claims assessing, underwriting, actuaries, business and systems analysis and development, and advice and sales.

This year, INSETA extended an invitation to all public universities and technical and vocational education and training (TVET) colleges. INSETA received applications from 10 institutions for a total of 433 unemployed learners. This compares favourably with the target of 300 unemployed learners to be supported with bursaries.

Even though a total of 405 bursaries have been approved, the balance of the applicants is pending final approval, subject to the submission of outstanding information from the tertiary institutions. This means that no applications have been declined.

Western Cape are SA’s best drivers South Africa’s best drivers are from the Western Cape, according to Discovery Insure’s data collected from its road safety smartphone application.

Second place went to Gauteng, followed by Eastern Cape, North West, Free State, Northern Cape, KwaZulu-Natal, Mpumalanga, and Limpopo respectively. Limpopo drivers were found to use their cellphones the most while driving.

During June, the first month of the campaign, over 36 000 people logged 16.8 million kilometres of driving.

The Discovery Insure driver challenge allows South African drivers to receive real-time feedback on their driving after each trip. Information includes speeding, harsh braking and cornering, and distracted driving (using smartphones). Drivers are given a score out of 100 and are placed on a leaderboard which scores them against other users.

Discovery Insure’s research shows that the app encouraged users to better their driving scores, thereby bettering their driving. Users with scores of less than 50 improved on average by 20 per cent within two days. Drivers with a score of 70 or higher improved on average by seven per cent over the same period. Ten per cent of drivers improved their score by at least 10 points after the first day.

Although 70 per cent of users of the app are male, women score as the better drivers. According to the results, men lose significant points on speeding and cornering, whereas women record more harsh braking events and higher levels of cell phone usage while driving.

Centriq given sixth A+ rating Global Credit Rating Company (GCR) has given specialist and cell-captive insurer, Centriq, an A+ rating for the sixth consecutive year.

CEO, Gareth Beaver, said that this rating confirms Centriq’s highly stable solvency margin, strong liquidity levels, and investment approach that provide clients and shareholders with security. It also affirms the company’s ability to pay claims.

The rating gives confidence in Centriq’s established brand, and Beaver said it highlights the company’s reputable position in the alternative risk transfer arena and preferred business partner of UMA’s and brand affinity schemes.

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SA households’ net wealth rises The net wealth of South African households increased by 9.9 per cent, at a quarter-over-quarter seasonally adjusted and annualised basis to R7.309 trillion in the first quarter (Q1) of 2014, despite lower international and domestic economic growth. This is according to the South African households’ wealth index for the first quarter of 2014, released by Momentum and Unisa.

The report shows that households’ net wealth was driven by household assets outpacing the increase in household liabilities. Household assets increased by 9 per cent to R8.912 trillion in Q1 2014, from R8.721 trillion in Q4 2013, whereas liabilities increased by 5.1 per cent to R1.603 trillion in Q1 2014, said Momentum.

The value of household assets was driven mainly by an increase in households’ financial assets – specifically investments in listed shares, directly, or indirectly via their retirement funds.

The report indicates that household liabilities increased due to stronger growth in residential mortgages and consumer secured credit. However, household debt serving costs increased at a quarter-over-quarter seasonally adjusted and annualised basis 17.9 per cent in Q1 2014 following the increase of 50 basis points in the repo rate and further growth in household credit.

However, this also contributed to a sharp increase in household arrears.

Fitch gives M&F an AAA(zaf), outlook stable Fitch Ratings has assigned Mutual & Federal Insurance Company (M&F) a National Insurer Financial Strength (IFS) rating of AAA(zaf). The outlook is stable.

Fitch considers M&F as core to the Old Mutual group under the agency’s insurance group rating methodology, based on its alignment to Old Mutual’s strategy and integration of management into the Old Mutual group. As a result, M&F’s rating is notched up by three levels from its standalone credit profile, which is weaker than the IFS

rating of Old Mutual Life Assurance Company (South Africa) Limited (OMLACSA) of AAA(zaf).

At end-2013, M&F’s regulatory solvency ratio decreased to 49 per cent (end-2012: 54 per cent). Fitch expects solvency to remain strong in 2014, supported by a return to profitability.

M&F declared a net loss of R96 million in 2013 compared with a net profit in 2012 of R286 million. This was mainly driven by negative underwriting margins. The underwriting result is expected to improve in 1H14, as a result of pricing and claims management interventions having been put in place and the absence of natural catastrophe events. From a standalone perspective, M&F’s rating benefits from its conservative investment strategy, wellestablished business positions in its chosen market segments and strong, but declining, capitalisation.

Praesidio partners with Lombard Niche personal accident and healthcare cover underwriter, Praesidio Risk Managers established a new partnership with Lombard Insurance. Andrew Munro, managing director at Praesidio, states that Lombard has acquired a 30 per cent share in the company. In addition, Lombard will also start underwriting 25 per cent of Praesidio’s written business.

“Lloyd’s of London will still be carrying the remaining 75 per cent of our risk. We have a very good relationship with Lloyd’s and we will continue to rely on them because of their capacity. We realised the importance of partnering with a local insurer who has an intimate knowledge of the South African market. In Lombard, we found a company with a similar attitude to our own, towards challenges and opportunities in the market,” Munro says.

“Lombard have a proven track record of supporting long-term partnerships with specialist UMA’s. This has come at the right time for us as they can provide us with exactly the type of impetus we want, to help us take our business to a new level,” Munro concludes.

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Genasys rebrands to align with growth Insurance industry software company, Genasys Technologies, has re-launched its branding, aligning it with the company growth.

The new identity aligns with the company’s mission, to be the preferred software solutions partner to the insurance industry throughout Africa, Europe and beyond. To partner and support both direct clients and value added resellers in attaining a global footprint, says Genasys.

“We really feel that our new triangle logo accurately depicts the mutual dependence and service that Genasys provides to both intermediaries and insurers, all being essential parts of the sales cycle.

Most of the other changes to our brand will be done internally for the benefit of our staff who are the real drivers behind the growth we have shown, we now have over 80!” enthuses group brand manager Andre Symes.

The company has spent the last two years focused on enhancing its primary product SKi, and growing its product portfolio

Free financial advice for Road Accident Fund claimants The Road Accident Fund (RAF) has entered into an agreement with the Financial Planning Institute (FPI), in terms of which all claimants will have access to free financial advice from certified financial planner (CFP) professionals through the MYMONEY123 programme in a bid to protect them from mishandling their finances.

The RAF makes available compulsory social insurance cover to all South Africa’s road users. Figures from June 2014 suggest that an average RAF claim payment is around R104

Don’t Risk It

000. For the 2013/2014 financial year, the RAF paid out R15.2 billion in claims. The majority of the RAF’s funding is derived from the fuel levy.

Payouts by the RAF are meant to cover everything from past and future medical expenses to past and future loss of earnings, past and future loss of family support, compensation for pain and suffering, as well as funeral expenses. There are caps on these categories and terms and conditions do apply, but in many instances, RAF payouts are no small change.

Branding the Insurance Industry since 1995

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In-house Graphics Department We’ve got it covered

Give Sandy a call to see HOW WE DO IT!

Email: sandy@crbrands.co.za

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For more info visit: www.crbrands.co.za

THE BRAND BEHIND YOUR BRAND

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newappointments Tradesure Tradesure has announced two new appointments.

Neil Clay joins as broker consultant in KwaZulu-Natal and Ansie Smith, as broker consultant in the Free State.

Neil Clay

With 25 years in the industry, Smith has a wealth of experience; she has a proven record of operational leadership, customer excellence and relationship management. Ansie is passionate about growing Tradesure’s Ansie Smith business in the Free State and establishing the Bloemfontein branch into a force to be reckoned with.

operations at Natsure.

She brings an illustrious track record in the South African short-term insurance industry, from, amongst other things, her time as chairperson and CEO of SAUMA. Prior to this she was the Tersia Davey executive of sales, claims and broker distribution for ONE Insurance and before that the managing director of EVB Underwriting Managers.

Compli-Serve SA

Clay has been appointed to the Ballito office for the KZN region. He has a distinguished career spanning 38 years in the insurance industry, with experience gained from working in Saudi Arabia, Bahrain and Dubai. Clay will be responsible for a broad range of disciplines, including commercial insurance, product development and underwriting.

Compli-Serve SA announced the appointment of Mahesh Deva. He joins the team of compliance officers specialising in asset management compliance.

With broad risk Mahesh Deva management experience and in excess of 10 years’ in capital markets and investment related fields, Mahesh holds a specialist background in investment and regulatory compliance, governance, investment due diligence and investment management. He holds a B.Bus.Sci (Hons) from the University of Cape Town.

Natsure

Discovery

Tersia Davey has been appointed executive director of business development and

Dr Shrey Viranna joins Discovery as the new CEO of Discovery Vitality. Viranna replaces

Gidon Novick, who takes on the newly created role as Discovery’s chief digital officer.

Previously, Viranna was a partner at McKinsey, the global management Dr Shrey Viranna consulting firm, where he spent 12 years, and was involved in a large range of global healthcare consulting assignments and in building McKinsey’s implementation business line. He is also a medical doctor by profession and brings clinical expertise to his new role.

South African Insurance Association SAIA has elected its new board as follows: Wayne Abraham (AIG South Africa Ltd.); Tom Creamer (Telesure Short-term Insurance); Daryl De Vos (Africa Re (SA) Ltd.); Garikai Dhombo (Alexander Forbes Insurance Company Ltd.); Ian Kirk (Santam Ltd.); Nic Kohler (Hollard Insurance Company Ltd.); Edwyn O’Neill (Zurich Insurance Company SA Ltd.); Anton Ossip (Discovery Insure Ltd.); René Otto (MiWay Insurance Ltd.); Terrance Ray (SCOR Africa Ltd.); Willem Roos (OUTsurance Insurance Company Ltd.); Adam Samie (Lion of Africa Insurance Company Ltd.); Adam Samie (Lion of Africa Insurance Company Ltd.); Denise Shaw (Standard Insurance Ltd.); John Sibanda (Lloyd’s South Africa (Pty) Ltd.); and Raimund Snyders (Mutual & Federal Insurance Company Ltd.).

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2014/07/23 12:59 PM

news international INDIA

India discusses raising cap on FDI in insurance

India is set to raise the foreign direct investment (FDI) limit in the insurance sector to 49 per cent as the government seeks to put in place reforms aimed at easing the capital crunch faced by the industry.

The finance ministry has floated a Cabinet note for inter-ministerial discussions, acting swiftly in line with the announcement in the recent Union Budget, two senior government officials familiar with the development said.

As per the fresh proposal floated by the department of financial services, FDI up to 49 per cent will be allowed in the sector after the prior nod of the Foreign Investment Promotion Board (FIPB), on condition that control stays in Indian hands.

However, FIPB approval will not be required for FDI up to 26 per cent, as per current

UK UK flood insurance scheme questioned

The future of a UK fund intended to prevent homes being left without flood insurance has been thrown into doubt after insurers warned that details proposed by government were ‘unworkable’.

The Association of British Insurers indicated that, as drafted, the proposals meant Flood Re could be denied approval from regulators as a sustainable insurance vehicle.

In particular, the industry said a proposal from the Department for Environment Food and Rural Affairs to limit Flood Re’s cash flows risked causing insurmountable problems in financing the scheme.

Without a deal on Flood Re, an estimated 200 000 home insurance policyholders are likely to endure huge rises in premiums and excess levels.

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policy. The cap would be composite, implying that it would include both FDI and portfolio investment. The measure will also pave way for insurance companies to list on the stock exchanges.

Though the Indian market is one noted for its massive growth potential, the industry needs a substantial amount of money to increase life insurance penetration, which was just 3.17 per cent in 2012, while non-life coverage was even worse at 0.78 per cent.

Insurance penetration is measured as gross premium income as a percentage of GDP.

Insurers say their existing commitment to provide universal flood cover has become unsustainable, partly because of a lack of investment in UK flood defences.

While a collapse of Flood Re remains unlikely, the fight over the important unresolved details means the scheme risks missing its planned launch date later this year.

africa Energy and power most active SSA M&A sector

The value of announced merger and acquisition (M&A) transactions involving sub-Saharan African targets reached $8.3 billion during the first six months of 2014.

The most targeted country was South Africa with 52 per cent of the overall M&A activity.

This was followed by Angola (11 per cent) and Ivory Coast (eight per cent). The United Kingdom was the most active foreign buyer in the region.

Equity Capital Markets (ECM) issuance in sub-Saharan Africa totalled $2.9 billion during the first half of 2014. Around 75 per cent of deals involved a South African issuer.

Sub-Saharan African debt capital issuance recorded $5.2 billion during the first half of 2014, marking the highest first half since 2011.

Investment banking fees from advisory on completed M&A transactions dropped 31 per cent to $26.2 million during the first six months of 2014, marking the lowest first half total for M&A fees in the region since 2003. Debt capital markets underwriting fees totalled $13 million, 14 per cent up from the same period last year, while syndicated lending fees fell 76 per cent to $18.3 million.

Fees from equity capital markets underwriting increased 65 per cent to $66.7 million, marking the highest first half total in the region since 2007.

The most targeted nation by value so far this year was South Africa, accounting for 52 per cent of activity, followed by Angola (11 per cent) and Ivory Coast (eight per cent). The United Kingdom was the most active foreign buyer in the region.

Sanlam Emerging Markets concludes NICO Holdings acquisitions

from N1.75 billion in 2012 to N2.09 billion in 2013.

Sanlam Emerging Markets (SEM) has announced that all the conditions have been met to complete its acquisition of a stake in NICO Holdings’ general insurance businesses in Malawi, Zambia, Uganda and Tanzania.

Underwriting profit increased by 25 per cent from NGN1.35 billion in 2012 to NGN1.68 billion in 2013, mainly due to a higher growth in premium than the increase in combined costs. The 2013 underwriting profit ratio as a percentage of GPI at 11 per cent, remaining the same as the previous year. The reinsurer’s loss ratio remained unchanged for both years at 47 per cent.

SEM now holds 49 per cent in NICO’s general insurance operations in Malawi, 49 per cent in Zambia, 48.4 per cent in Uganda and 32.7 per cent in Tanzania.

SEM already held a 49 per cent stake in NICO Life insurance in Malawi and SEM holds a 25.1 per cent stake in NICO Holdings.

Continental Re announces 28 per cent income growth

Continental Reinsurance Plc has reported an increase of 28 per cent in gross premium income to N15.86 billion in 2013, compared to N12.40 billion recorded in 2012. The non-life and life businesses grew by 32 per cent and 11 per cent respectively. Total comprehensive income grew by 19 per cent

In addition to the two regional offices in Lagos, Nigeria and Douala, Cameroon and the Nairobi, Kenya subsidiary, Continental Re also operated from the Abidjan, Côte d’Ivoire office in 2013 to cover Francophone West Africa (previously covered by the Douala office). In the last quarter of 2013, the company got regulatory approval for the Tunis office to cover North Africa.

The office, which has since started operations fully, will be reported in 2014. Continental Re also obtained a license to operate in Gaborone, Botswana, and will commence operations in this market in 2014.

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events

Cruywagen-IRMSA Risk Lab The Institute of Risk Management South Africa welcomed delegates to the scenic Vineyard Hotel for the Cape Town leg of its annual Cruywagen-IRMSA Risk Foundation Risk Lab in August. The jampacked programme featured top speakers on economic, infrastructure, political and cyber risk in South Africa and Africa.

ACORD Forum Southern Africa 2014 The ACORD Forum Southern Africa brought life insurers, short-term insurers, brokers, underwriters and software vendors to the Johannesburg Country Club for two days in July. The focus was on how ACORD has been working with the South African insurance industry to bring standards and efficiencies to the market. The third annual conference set a record for pre-registration, with 90 people. By the time all was said and done, ACORD Forum

Southern Africa drew over 100 guests. Add to this, the IISA this year approved 11.45 CPD hours for attendance at the two-day event.

Speaking about this year’s event, Alan Stitzer, director of global development, ACORD, stated: “This year we took a different tack in planning the sessions. We asked the ACORD members to choose topics that were of special significance to them. The result – record attendance.”

Nedbank senior economist, Nicola Weimar, gave an in-depth analysis of global and local economic risks. She stressed that in South Africa, there is a crucial need to put down the basic infrastructure required to unlock private sector growth and grow the tax base. She listed constraints in power production as a key economic risk in SA. Institute for Future Research director, Andre Roux, shared insights on possible future risks, noting the shifting role of the US economy as China’s power grows; Africa’s ability to correct its governance and education deficits; and the voting behaviour of South African ‘born frees’ as key uncertainties. Well-known political analyst, Justice Malala, gave an insightful and humorous overview of SA politics for the next five years. IRMSA president, Sheralee Morland, emphasised the critical need for risk managers to bring all these conversations into their own organisations and strategies.

Reach for your pantoffels

Some crazy foot attire, silly slippers and prancing pantoffels made their rounds in the COSA Media offices in August as staff members went all out in support of The Reach for a Dream Foundation’s Reach for Your Slippers campaign. Third prize went to journalist Anton Pretorius for his stokies and flannel PJs, while last year’s winner, Herman Dorfling (art director) chose the healthier route with his carrot slipper creation.

But top honours this year went to financial manager, Leanne Cox, for her funky, homemade design. Those slippers were definitely made for talking and not walking.

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SPEAKERS

COSTS Early bird fee (ends 15 Aug 2014) Members: R5 600 Non-Members: R6 350

Regular fee (after 15 Aug 2014) Member: R6 150 Non-Member: R7 050 *All amounts ex VAT

BOOK NOW For more information on the conference visit www.irmsa.org.za or contact events@irmsa.org.za

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Insurance

Conference 2014 Christy van der Merwe

The 2014 Insurance Conference at Sun City had been built up so much, first-timers could not believe that it would live up to expectations.

But it did, and so much more.

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he event truly highlighted the camaraderie and competitiveness of the industry, and emphasised that people, and relationships, are at the heart of the insurance business. While there are many challenges, in the form of regulation, soft markets, and skills shortages, the event certainly left delegates inspired and positive about the work they do.

Lloyd’s deputy chairman, Paul Jardine, told RISKSA that he was astounded by the size

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of the conference and the friendliness of the people. There was much discussion about technology, mobility, connectivity, analytics and telematics, and the impact of big data on the insurance industry, but simultaneously, the constant reminder to stay focused on the basics of insurance.

“This is a people business. It’s about long-term relationships and trust.

We need to get back to the basics of insurance. Understand our clients businesses; have products that suit

their needs and transfer the risk to us; and partner with them for long-term relationships,” said Jardine.

He emphasised that the insurance industry needs to sell the value of its product, and that this value is demonstrated through service. “It’s all about claims. It’s about how we pay claims, and how fast we pay them. If we do that, then people will believe that the promises we make are actually real.” Jardine noted that the world is becoming more complex and more

RISKSA TV chats to Tracker director, Michael Niewoudt.

uncertain, and the insurance industry must innovate, and provide true risk transfer.

“Fair policies at fair prices, and when bad things happen to our clients, we have got to be there for them.”

available, and this is equally important.

“The speed factor, the availability of information, the distribution of information, and the ability to analyse it, is changing the way we are doing things.”

It was also often reiterated that technology does not replace the need for solid advice.

The risk of being disintermediated exists if someone finds a better way to do insurance broking, and if brokers are not able to see what their customers want, and how they want it delivered, they perhaps deserve to be disintermediated, suggested Cross. “We cannot live

Stephen Cross from Aon Global told conference goers that there is a need for personal advice to complement and supplement the data and analytics

with legacy computer systems, and be continuously patching to the past, as opposed to building to the future. So you might say that legacy technology is a risk, but it is also an opportunity for someone – hopefully us,” he said.

As an industry with its roots dating back over 326 years, in a London coffee shop, the need to keep up with, and ahead of the times is apparent. As Cross remarked: “We have got to start smelling the coffee as opposed to just drinking it.”

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Day one Delegates made their way to Sun City on Sunday 27 July, and while exhibitors began setting up their stands, the Hollard golf day got under way. Well done to the team from SHA who won the top spot.

The Centriq Tour de Conference also took place on the Sunday, and the riders arrived just after 14:00, making the 164 kilometre cycle look like it was all in a day’s work.

Congratulations to all on your fantastic achievement.

Delegates were officially welcomed by Insurance Institute CEO David Harpur at the AIG welcome cocktail party, where everyone had a chance to interact with all the exhibitors, and get started with the serious business of networking.

Guests were dazzled at the AIG welcome cocktail party, after a great day on the golf course, courtesy of Hollard.

Day two Conference-goers rose bright and early for a full day of presentations and heard from the following speakers: Paul Jardine from Lloyd’s of London; Stephen Cross from Aon Ireland; Giles Ward from Ace UK; Adrian Gore from Discovery; Ismail Momoniat from National Treasury; Jonathan Dixon from the FSB; Bonang Mohale from Shell and the Black Management Forum; Hugo van Zyl from the SAICB; and finally a panel discussion including Peter Todd from the IISA; Themba Gamedze from SAIA, and Jay Ramsunder from the FIA. The highlight was undoubtedly the Tracker theme party – ‘Secret rendezvous at the haunted house in Transylvania.’

The frightening outfits on display were extraordinary and it was fantastic to see the effort put in by everyone. Guests were treated to a snippet from the Rocky Horror Picture Show theatre production, and then took to the dance floor for the Time Warp. There are sure to be many interesting stories from the evening that will be told for some time!

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Left: the winners of the most innovative exhibitor, Europ Assist. Right: cast members from the Rocky Horror Picture Show at the Tracker party, with Kim Hand from Europcar.

Day three It was another full day of deliberations including presentations from: Mike Pritula from McKinsey US; Anton Ossip from Discovery Insure; David Davidson the assistant FAIS Ombudsman; a panel discussion featuring Caroline da Silva from the FSB, Justus van Pletzen from the FIA, Peter Dempsey from ASISA, and Michael Blain; Corneille Karekezi from Africa Re; Sheralee Morland from IRMSA; and a true show stopper of a presentation from Vusi Thembekwayo from Black Sheep.

IISA CEO David Harpur concluded the conference, and competition winners were announced, including the lucky folk who won incredible prizes such as a trip to Lloyd’s in London, a trip to Italy, a trip to Abu Dhabi, and numerous iPads and cash prizes.

The final event on the schedule was the Allianz gala dinner and Cover Excellence Awards, and delegates showed up in their finest attire, and enjoyed an evening of fine wine and dining and enthralling entertainment. Winners of the Cover Excellence Awards in various categories included: Rene Otto; Suzette Olivier; Adrian Gore; Peter Atkinson; Louis Fivas; Mitch Marescia; Willem Theron; Gavin Came and Junior Ngulube.

Top: elegantly dressed guests at the Allianz gala dinner. Bottom left: SHA representatives claim the trophy after snatching first place at the golf day.

Top right: Europ Assist claim their award at the gala dinner. Bottom right: the M&F team claiming their award at the gala dinner.

And the winners are...

As for the incredible exhibition, conference organisers recognised the efforts of everyone who entertained and informed delegates, and bestowed the following accolades: Most interactive exhibitor: Mutual & Federal Most innovative exhibitor: Europ Assist Best new exhibitor: Business Connexion Visit www.risksa.com/risksa-tv/ RISKSA is already looking forward to the next Insurance to view videos from conference Conference! Save the date for next year at Sun City from presenters at the 2014 26 to 29 July 2015.

Insurance Conference.

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For those in the insurance industry seeking a bit more of a challenge than a day on the golf course, the 165 km Centriq Tour de Conférence cycle to Sun City presented the perfect opportunity to make an entrance at the 2014 Insurance Conference in July.

Christy van der Merwe

The inaugural Centriq Tour de Conférence Participants were: (in alphabetical order:) Andre Symes – Genasys Technologies, Andrew Munro – Praesidio Risk Managers, Catherine Albertyn – GIB Insurance Brokers, Colin Germs – Roadcover, Eugene Beck - Roadcover, Gareth Beaver – Centriq Insurance Company, Heinrich Smit – Ad Ultimum Outsourcing, Jacques du Toit – Ad Ultimum Outsourcing, Nic Kohler – Hollard, Pascal Pau – Mutual & Federal Insurance Company, Rene Otto – MiWay Insurance and Taryn Kerr – Cover Publications.

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THE MEETING OF MINDS Dominic Uys

The Financial Planning Institute (FPI) this July held its annual FPI professionals convention, playing host to over 1000 delegates and exhibitors from the financial services industry. RISKSA had a look at the convention that moves the financial services sector forward.

T

International speakers included Sarah Harper, Oxford Professor of Gerontology and director of the Oxford Institute of Population Ageing, as well as Hal Ratner, global head of research at Morningstar IM (Chicago).

A high calibre of speakers were selected to address the crowd, including wealth creation expert and human transformation coach, Max Moyo; Toby Shapshak, technology commentator and editor of Stuff Magazine; and Helen Nicholson, founding member of the Professional Speakers Association of South Africa and director of The Networking Company.

“This year’s convention allowed our professionals to put themselves ahead of the financial services industry pack. The workshops and panel discussion sessions were on a variety of topics, including how to succeed in an ever-changing business world – with special focus on ways in which professionals can use technology to achieve specific business outcomes, tips and strategies on networking, reaching new markets as well as introducing and running mentorship programmes,” said Godfrey Nti, CEO of the Financial Planning Institute commented.

he event, themed ‘Growth through Innovation’, focused on new ways to advance the financial planning sector and explored the role of technology in the financial planning sector. Michael Jordaan, former FNB CEO, was chosen to open the event. He is renowned for his role in innovation in the financial services sector. This year’s forum was sponsored by Discovery Holdings as a platinum sponsor.

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“The objective of this event is twofold. Firstly we want to improve the level of professionalism and positively influence the quality of advice delivered by our professionals. Secondly, we use this opportunity to recognise and celebrate members who are advancing the profession through our various awards,” he added.

The title of FPI Financial Planner of the Year was this year awarded to Peter Hewett, founder of Efficient Advise practice. “I am honoured to be named the recipient of this award; it came with a lot of hard work that proved to be worth it in the end.

I look forward to working with FPI in advocating the values of the organisation on behalf of my profession and ensuring that we drive consumer financial literacy across South Africa,” Hewett said.

FPI Financial Planner of the Year Peter Hewett (middle), runner up Donovan Adams (left) and second runner up Bruce Fleming (right).

Hewett was joined in the awards ceremony by finalists Donovan Adams, retirement specialist at Chartered Wealth Solutions and Bruce Fleming, executive head private clients at Consolidated. In addition to the Financial Planner of the Year, a number of other awards were also doled out in recognition of excellence in the industry.

RISKSA will be conducting an in-depth interview with the 2014 Financial Planner of the year, Peter Hewitt, in our October edition.

Alan McCulloch, was awarded the Harry Brews’ Award in recognition of life-long outstanding significant contributions to FPI. Principal Wealth Manager of African interests, Gerald Mwandiambira, was awarded the Media Award for outstanding significant contributions to the media, and Jacques Hodsdon, was named Top Student in the CFP Professional Competency Examination Award.

“The success of the convention is an indication that we are doing something right and I’m confident that future events will be just as successful. We will continue to partner with industry players to ensure that we create a platform for vibrant industry debates to encourage the progression of our profession,” concluded Nti.

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I12033/

The chilly waters of the Cape are bound to ignite as the financial services sector descend on Cape Town’s Table Bay for this year’s much-anticipated RISKSA Regatta. This is not your granny’s regatta and here, sea legs are a necessity and hierarchy is determined by your skill at sea. Do you think you have what it takes? We still have some spots open for booking and we want you to be a part of this memorable event that’s still a talking point in our industry. Come relive history and make

new memories as we commence this battle of the high seas. We must stress that this is not a booze-cruise to Clifton as many of the entrants at last years inaugral event will testify. Expect an exhilirating day at sea on a competitive racing boat with your teammates, building memories that you will simply never forget. Its about more than the networking and business deals. Its about asking yourself “when last did you really live?” and then sharing that experience with clients and co-workers.

www.risksaregatta.co.za

2014 Team profiles PA R T O N E

Naughtical Netstar Debutants Altech Netstar has studied all the game films from last year and is ready to rock on the water this year. The team will be led by Altech Netstar’s sales and marketing executive Lawrence Wordon, and general manager Wynand Scholtz, who, according to his team mates, will need to start taking sea sickness remedies by next week to be prepared in time for the RISKSA Regatta in October.

Why did you decide to enter the RISKSA Regatta?

We had some exposure at last year’s event via a sponsorship and our managing director Harry Louw was an invited VIP guest. He thoroughly enjoyed the atmosphere and overall experience, especially all the network opportunities.

How do you rate your chances?

We rate our chances fair to mild, with squalls from the North.

Pirates in Purple What GEES will you be bringing to the event?

Just like our products, Altech Netstar has an innate ability to track and recover items – ANY items – whilst fending off the weather elements, rough seas, sea gulls, opposition and perhaps even pirates!

Team Hollard are full of zest for this year’s RISKSA Regatta. Mark Molenaar, Marius Kuhn, Renate Scriba, James Shepperd, Saskia Stemmet, Brad Stemmet, Heinrich Westenraad and Clodagh Knott make up the Purple Pirates team.

With ample attitude and determination, the Hollard team are not to be underestimated.

What do you expect from this year’s RISKSA Regatta?

We expect to win… something.

Why did you decide to enter the RISKSA Regatta?

Some of us (from Etana) had such fun racing in the inaugural RISKSA Regatta last year. We didn’t need any encouragement to ensure that team Hollard was once again involved in one of the most exciting industry event of the year. It’s a wonderful opportunity to network and build relationships with our brokers – and to test our mettle against other industry players. And we’re nothing, if not competitive.

What messages do you have for spectators and competitors?

To spectators, we say brace yourself, the Naughtical sailors are in training and getting in shape to rock your world (or boat) come race day. To the competing teams, we have ocean maps and we are studying them. We want to know every inch of sea we’re sailing. Altech Netstar provides a customised fleet management system to the NSRI, which enables them to track their rescue vessels whilst out at sea. So keep your enemies close.

How do you rate your chances?

We're always optimistic. We know that we will be a force to be reckoned with and if the sailing gods smile upon us, then who knows?

What GEES will you be bringing to the event?

The Purple is strong with our Cape Town team.

And providing Purple pizazz is our thang!

What do you expect from this year’s RISKSA Regatta?

Experience breeds confidence, so this year we’re hoping that team Hollard has more success on the seas and sails smoothly into first place.

What messages do you have for spectators and competitors?

To our spectators, support the winning team and don your purple outfits on race day, and we’ll see you at the finish line. To our competitors, may your seamen be able, may your captain be courageous and may the winds fill your sails and may our spray always be in your face!

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Ford EcoBoost Review Driver’s Impression Andy Mark

Price: R204 000 Top Speed: 181 km/h 0 – 100 km/h: 12.7 seconds Fuel consumption: 6.7 litres per 100 km (urban cycle) Power (kw)@rpm: 92 kW @ 6 000 rpm All specs according to manufacturer’s website

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I

t has been my privilege over the last few years to drive some pretty exotic machinery – from Lamborghinis and Ferraris in the hills above Maranello in Italy to rip-snorting Mercedes AMG V8s along the scenic Chapman’s Peak in Cape Town. So, when we started this series of driver’s impressions to find the perfect broker’s wheels, I must admit that my standards were pretty high. I mean, if you’re going to be spending money on a car that’s the equivalent of a deposit on a small apartment in Camps Bay, the thing had better deliver on its promise.

And so, it was with some trepidation that our Anton came and told me that the vehicle I was road-testing for this month’s feature was a little three-cylinder 1 000 cc Ford EcoBoost that costs around R200 000.

I was pleasantly surprised when I climbed into the car and fired up the threecylinder motor. This half-a-V6 sports a delightful throaty exhaust note and my drive home from the office dispelled more of my reservations. The EcoBoost responds instantly to pressure on the throttle and the

car certainly didn’t feel underpowered at any stage while sitting in traffic.

Interestingly, a recent survey that gauges what a group of 21 to 35-year olds look for in a vehicle revealed that most of these first-time car buyers were looking for a vehicle that can be an extension of their iPads or smartphones and not outright horsepower as it was back in my day. Here, the EcoBoost is going to win a lot of friends amongst this demographic.

The interior of the car is spacious and the quality of the furniture and trimmings is excellent for a car of this price range.

The exterior styling notes belie the car as somewhat humble in the SUV crossover market. The crossover styling provides ample ground clearance and the placement of the spare wheel on the outside of the sideways opening rear hatch door is simply genius. This allows for maximum boot space utilization although having an outside positioned spare wheel might prove tempting to those midnight part-shoppers looking for a wheel of that size.

What’s great is that this little three-cylinder, 1000 cc engine will delight bunny-huggers and car-allowance corporates alike. It is enough for this little car to drive within smelling distance of a petrol station to extend its range by another 100 km.

Our editorial staff were delighted at the Ford’s electronic accoutrements and readily accepted our request to help us test the digital displays and usability of this little vehicle. The Ford EcoBoost now holds our office record for the time taken to connect a phone to its Bluetooth hands-free system.

A little more than a minute was all it took for our staffer to connect her iPhone 5 to the system without resorting to the owner’s manual.

If you’re looking for clever business wheels but still sexy enough to drive to an institute dinner, this could well be the car you’re looking for. Sufficient, efficiently powered, great sound system and a quality cabin married to a sexy-sounding miserly onelitre engine with super low emissions, we think that Ford may have nailed the perfect business car brief with this one.

We would certainly recommend you take a look at this Ford first if you’re in the market for this category of business wheels. I spent a lot of time driving off-road with our sister publications and my years of experience have taught me that you can get pretty much anywhere if the vehicle you’re driving has good enough ground clearance and the correct tyre pressures.

Fit this car with a roofrack and maybe a nifty set of driving light’s and it really wouldn’t look out of place eating up the miles on a Namibian camping holiday.

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Cur ved

Samsung U9000 136 8 4

U

Samsung recently left us wideeyed when they launched their range of curved ultra highdefinition televisions in South Africa. With the promise of the most immersive silver screen experience yet, we review the 65-inch model.

Luka Vracar

ltra high-definition, or 4K, is undoubtedly the future of television. With four times the resolution of standard high definition, it makes for a riveting viewing experience. With an increasing number of Hollywood stars moving from the big screen into our living rooms in successful TV shows like Breaking Bad and House of Cards, the public demand for more features for their home viewing is growing. Samsung announced that 2014 would be their year.

“Samsung is delivering an ultimate immersive experience to our consumers that will take entertainment to new heights. Our 2014 TV line-up and new audio offering combine the best in design, picture quality, regional Smart features and mobile sound entertainment,” said Lance Berger, Samsung South Africa’s head of television product marketing, in a statement prior to the brand’s 2014 product launch.

Samsung’s curved U9000 is impressive, and, as far as high-end televisions go, we were not disappointed. While the price tag will certainly make it an exclusive purchase, it gives us a glimpse into the future.

Design Any discussion of the Samsung U9000, the flagship model of the new range, has to kick off with the curve. We were sceptical. For the past decade we were told that flatter is better, so surely Samsung’s new concave television was either a novelty, or a bold gamble. The screen curves gently back at its centre, creating an instant and potent impact to what we are used to.

Sleek, with a glossy panel (as opposed to a glare-reducing matte finish), the television is highly attractive, even when switched off. This is further accentuated by the narrowness of its bezel, which is tiny, and which works in the televisions favour – 65-inches of screen alone is big enough for any living room.

The downside of the design is that it will certainly look awkward peeling off the wall if you mount it. Obviously, unlike traditional flatscreens, the corners of the screen would jut out, and even though Samsung provides a simple wall mount for the U9000, the aesthetics might take some getting-used-to.

Turning it on Samsung claims that the television will seem bigger and will be more immersive because it curves towards the viewer. For this to work the viewer needs to be watching from the sweet spot, which is approximately three meters away from the centre of the screen. 

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so that you can browse the internet, or make a Skype call, while watching a movie.

Instead of housing the image processing engine in the televisions itself, Samsung’s new range holds all its electronics in a box called the One Connect. The One Connect in the U9000 has HDMI 2.0 ports that can handle 4K video at 60 frames per second.

The U9000 even comes with gesture control so that viewers can control the television with a wave of the hand, via a 5-megapixel webcam.

However, it is easier to use one of the two remote controls provided.

Verdict

As you would expect, there is a fundamental element to the curve that works against the U9000. If you are sitting at extreme angles from the television, the experience will be impacted by the curve, and the picture will be warped.

The size of the 65-inch screen, as well as the larger 78-inch version, make up for this issue in your average living room, and because of this we assume that the curve would not be as effective on smaller screens, should the option become available.

The U9000 has a 3,840 x 2,160 pixel ultra high-definition display, so it has four times the resolution of standard high definition. This is immediately evident, even from a distance, with the television’s default settings. This is what is truly immersive. The colours are bright, the blacks are deep and the whites are bright and accentuate detail impeccably. We were drawn into the fine details of the sprawling cityscape on the screen for moments before we realised we were watching a Samsung sample film.

Instead of following the OLED (organic light

emitting diode) trend, Samsung has opted to use more affordable LED-backlit LCD technology, which also allowed them to bring the range to the market much sooner.

Samsung’s PurColor feature allows the television to express most shades of colour so naturally that, combined with the definition, some 2D scenes appeared 3D. While most televisions focus on adjustment points of the primary red, green and blue, PurColor focuses on secondary magenta, cyan, and yellow.

Meanwhile, the television’s system sharpens contrast by dimming LED’s behind the darkest area of the picture, which brightens the picture and highlights detail. Contrast and sharpness is also accentuated by the glossy panel.

Like HD before it, UHD content is still relatively hard to come by, especially in South Africa so in the beginning viewers will be reduced to watching upscaled content. The recent FIFA World Cup in Brazil was the first to be broadcast entirely in UHD. The U9000 does a brilliant job of increasing the detail, contrast, and colour of standard HD to the point that viewers would need a side-by-side comparison to tell the difference between the upscaled and the true ultra high-definition.

Future Ready Like all new high-end televisions, the U9000 is what Samsung calls ‘Future Ready’. It’s a smart TV with features like apps (Skype and YouTube included), web browsing, and even a Multi-Link Screen feature that allows to you split the screen

As you might expect, UHD comes at a price.

The 65-inch U9000 retails for R70 000, whereas the 78-inch is more than double that at R150 000. While UHD shows us what will become normal television viewing in a couple of years, those who purchase U9000 will also have to update their insurance policy.

With 60 per cent of African millionaires living in South Africa, there is a growth in the luxury goods market in South Africa, and an increased risk of underinsurance. Christelle Fourie, managing director of MUA Insurance Acceptances, said in a statement in June that their consumers expect their luxury brand items, which includes high-end televisions such as the U9000, to be properly replaced, should the goods be damaged, lost, or stolen.

“However, many general insurance providers do not factor in the premium that is paid for certain brands into their claims settlement approach,” Fourie said.

It is therefore essential that owners are made aware that if their policy is not reviewed and the higher replacement value of their new high-end television is not taken into account, it will leave them underinsured. Due to the exponential speed of technological development, televisions tend to depreciate quickly, and brokers need to inform their clients to update their household inventory list on a regular basis.

Product photos supplied by Samsung: http://www.samsung.com/za

Yes, we were immersed, but after spending a few minutes watching the screen, we forgot about the curvature. It did not make the viewing experience better, but it did not make it worse, either. If the television puts the viewer inside the Roman coliseum, as it does with the marketing material, then perhaps the curve is only slightly more noticeable, attributed to the curved lines of the coliseum wrapping around you. When watching a regular TV show or movie, there is no illusion of depth.

Ultra high-definition is sublime, and the U9000 is one of the best we have seen. We are adamant that the picture quality is where the magic is, not the effect of the curved screen. While we think that the futuristic curve does give the television an aesthetic we don’t think we would grow tired of anytime soon, it should not be the selling point. Instead, the vivid colours, sharp details, and stunning contrast are what make the viewing experience superior to standard high definition and 3D.

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Our Corporate and Business Insurance sets the standard when it comes to: • Property • Commercial • Vehicle and Asset Finance • Marine • Guarantees • Agriculture • Corporate

Product photos supplied by Samsung: http://www.samsung.com/za

Call us on 0860 999 334

Standard Bank Insurance Brokers (Pty) Ltd is an authorised financial services provider (FSP224).

A member of the Standard Bank Group. Moving Forward is a trademark of The Standard Bank of South Africa Limited.

Products are underwritten by Standard Insurance Limited. SBSA 3513-9/13

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Not a one-trick pony!

Garmin’s Fenix 2 Watch Anton Pretorius

What good is going outdoors these days if you’re not able to capture the data for online analysis or showing off to friends on Facebook? If it wasn’t logged and shared, it never happened, sparking a trend among athletes and adventurers to invest in GPS watches. Garmin’s Fenix 2 has progressed from a largely hiking and running-orientated unit to a complete multi-sport wearable. We ask resident ironman Blake Dyason’s opinion on Garmin’s latest GPS watch offering.

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s you unwrap Garmin’s new Fenix 2 from its packaging, you’d be excused for thinking it looks big and complicated. Yes, a sleek, powerful and stylish presentation with a wealth of features can be slightly intimidating at first. But once you’ve explored its capabilities, you’ll be pleasantly surprised at how functional and easy it is to operate.

Dyason, RISKSA’s senior sales manager, is a regular fitness junkie and recently helped raise nearly R1.2 million for charity when he and a

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group of fellow fitness enthusiasts cycled 1 600 km from Cape Town to Pietermaritzburg for the Unogwaja Challenge. It took the group 10 days to complete the challenge, and on day 11, Blake also ran and completed the Comrades Marathon. So if there is anyone that’s well suited to review the Fenix 2, it’s him. He took the watch up to the snowy Matroosberg in Ceres for a proper test. “Compared to the Garmin Forerunner 910 XT which I own, I would say the Fenix 2 is catered more towards the general, outdoors, sporty and adventure individual. The Forerunner 910 XT is better

suited for a specific sport or activity, while the Fenix 2 is more of an all-round watch with loads of additional cool features,” he says.

With the Fenix 2, Garmin managed to blend all the functionality from their other popular GPS devices and assembled them beautifully into a stylish wrist wearable. From the rubber wrist strap, it’s sophisticated, smooth and welldesigned body and wonderful functionality, the Fenix looks the part when it comes to comes to multi-sport devices. “It looks great. I received comments from everyone. People kept coming

AT A GLANCE Dyason delivers the verdict:

User-friendliness - 6/10 Comfort - 7/10 Ruggedness - 8/10 Value for Money - 6/10 Overall - 8/10

to me, asking me what it is and what it does. It attracts a lot of attention and interest wherever I go,” says Dyason.

The Fenix 2 is slightly more understated than its predecessor, making it more accessible for daily use. Not only is it scratch-resistant and waterproof, it also has a battery that lasts up to 50 hours in GPS mode and up to five weeks in normal watch mode. Mileage will vary depending on usage. “I took it into the mountains below freezing temperature and it performed without a hitch. I did some hiking and mountain biking with it, and even fell – but no damage nor a single scratch on the watch.

It’s durable, rugged and strong.”

Fenix 2 is the first Garmin wrist worn device to include advanced running and fitness features in the rugged form factor of an ABC watch.

Fenix 2 displays real-time performance data such as distance, time, pace and heart rate as well as advanced workouts and running dynamics. “The basic use of it is very easy. To get from your watch to general sport settings is a piece of cake. But as soon as you’re getting into your more technical and advanced settings, it takes some getting used to, and I really needed to play around on it to grasp it.

Going into more depth and to set coordinates or change settings, you’ll probably need to read the manual,” he says.

“While on the ‘adventure’ setting, I struggled to find some of the other features I used when I was in a different mode. I want to be able to interchange more easily between settings, especially while on the fly,” says Dyason.

The Fenix 2 can estimate users’ VO2 Max (the maximum amount of oxygen in millilitres one can use in one minute per kilogram of body weight) to evaluate their fitness level. Plus, the Fenix 2 can calculate recovery time and perform a recovery check after intense workouts, so users know how much time to rest before they’re ready for the next session. It also has additional activity profiles like swim and ski modes, which makes it even more appealing to multi-sport athletes. In the dedicated swim mode, Fenix 2 can record stroke count, interval distance, pace and time for both indoor and outdoor training.

The Fenix 2 has an absurd amount of options.

Highlights include an altimeter, barometer, and 3-axis compass, mapping and navigation, GPS breadcrumbs, up to 10 000 track points, up to 1 000 waypoints, TracBack (to keep from getting lost), sun/moon info, hunting/fishing calendars, the capability to load routes and adventures onto the device, geocaching, and the ability to display multiple time zones at once. One significant outdoor addition, is the Ski-Board mode and the XC Ski mode. In Ski-Board mode the Fenix 2 measures your three-dimensional

speed and distance (i.e. horizontal distance and vertical drop). It will auto-pause the time and distance when you’re standing still or going back up the ski lift. Each run will be stored as a lap, so you can see and compare data from each individual run. The watch also comes with a strap expander so it can be worn on the outside of your jacket.

Thanks to the Bluetooth Smart wireless upload capabilities, Fenix 2 can send runners’ data to the Garmin online community, without being connected to a computer. It can transfer the data through the app on compatible smartphones. This allows a user to easily track progress over time, and with LiveTrack, they can share real-time workouts with friends and family through email or social media. This provides great peace of mind, especially if training alone. “I found the compass in the adventure hiking setting really useful. On a personal front, getting GPS coordinates, logging it and sharing it with Garmin or your friends on social media was another awesome feature,” Dyason says.

Dyason agrees that the Fenix 2 is slightly on the expensive side, but well worth it if you’re an adrenaline and adventure junkie. “In terms of overall value and enjoyment, it’s a splendid watch and I’m already looking to put my order in,” he concludes.

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Get app Dominic Uys

For those with a few meetings in a new city and precious little patience for getting lost, there is always the metered taxi.

Or perhaps, like in the case of our editor-in-chief, Andy Mark, you need to find a taxi in a hurry after your hotel forgot to send a driver. In either case, there’s an app for that.

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o be exact, there are two apps. Two metered taxi companies, launched fairly recently in South Africa seem to have changed the game for the industry.

US based, Uber launched in South Africa in August of last year. The company originally served the Johannesburg area, but recently added Cape Town and Durban to its repertoire.

SnappCab, a South African start-up, originally launched in Cape Town around the same time as Uber entered the country but quickly moved its operations to Johannesburg. According to a company spokesperson however, SnappCab will once again be taking on the Cape Town market, within the next few months.

Both services have launched iPhone and Android apps for the market, making for quick

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access once registered. Of the myriad of app options one can download for taxi cab services, it seems the only two that guarantee prompt service are Uber and SnappCab. The findings merited a closer look at both operators.

In a snapp SnappCab has partnered with a number of existing metered taxi operators in the Johannesburg area, which has undoubtedly helped it build up a sizeable network in the short time that it has been in operation.

The company’s app operates with Google maps and the user has the option to locate his position on the map, or let the phone’s GPS set the location. From there it is a matter of

setting the destination and, if relevant, choosing a preferred service provider. The company offers a choice between Zebra Cabs, Orange Cabs and Delta Cabs, all charging around R10 to R12 per kilometre. Naturally prices vary according to traffic conditions.

In a country where horror stories of kidnappings by fake taxi services is on the increase, the SnappCab app has also taken care of the risk by including the driver’s picture and telephone number at the top of the screen. One also has a choice between paying by cash or credit card. The latter can also be done via the app.

Testing it out, we found the app to be basic but useful. Once our current location, destination

and

Go AT&T

and payment method were entered, the app located an available driver within 30 seconds.

The driver also phoned immediately to confirm the pickup details.

The no-frills app suits the needs of a stranded traveller perfectly. The only downside, naturally, is that the service is only available in Johannesburg. Roll on the day that this is available countrywide.

Upper-class experience Uber’s plan of attack on the market was decidedly different. Uber guarantees a highend private driver experience. Drivers are expected to provide their own vehicle and have a professional driver’s permit. That

AT&T

said, not just any car is allowed to drive Uber clients around.

The company typically makes use of Mercedes C-Class, BMW 3 Series or Audi A4’s. The company also does not brand its vehicles, turning the trip into a VIP experience.

Signing up to the sleek Uber app is even quicker than with SnappCab, and anyone with a Gmail address can register quickly via Google+. Unlike SnappCab, the only payment option is by credit card.

The GPS can do most of the locating work but with this app, you need to know your destination beforehand. Extra options also include the ability to split the fare with other passengers.

AT&T

AT&T

Once again, locating a nearby taxi is fast, and the driver’s face immediately appears on the screen. Unlike SnappCab’s app, the Uber app quotes the user a price before the start of the journey and, surprisingly, also falls within the R10 to R12 per kilometre range.

The fee is deducted from your credit account once you arrive at your destination. We do count the cashless transaction as a slight negative but the overall experience is a positive one. The competition between metered taxi companies in South Africa’s major cities is intensifying, and we expect to see even more service providers step up to the plate with better offerings, more convenient access and a wider range of loyalty programs.

Watch this space.

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It’s a

revolu t (taxes and fees still apply) Laura Owings

A

new low-budget airline has launched, servicing South Africans with an eye-catching R99 one-way flight from Johannesburg to Victoria Falls in Namibia. If the offer sounds too good to be true, then you’ve probably seen this sneaky advertising before.

routes. “Fuel surcharges are simply double charging by airlines to hide the true cost of travel. We will never apply a fuel surcharge,” he explains. “We have also removed many cost-incurring items like check-in. With us, passengers no longer have to check-in. We believe in keeping our costs very low,” he says.

Zimbabwe-based Flyafrica, which launched on 23 July, says of its service: “It’s a revolution.”

According to the founder of Flyafrica Ltd, Adrian Hamilton-Manns, it is innovating African air travel with a new business model that scraps unnecessary fees.

Flyafrica.com currently offers flights on Wednesday, Friday and Sunday, with plans to add Monday operations from 25 August.

Additional bases are expected to be added as well. “New routes and increased frequencies will be announced in the coming weeks and months, with fares from R99,” says HamiltonManns.

The former commercial vice president of South African Airlines, he says African flights are expensive due to the trend of airlines using high fares to cross-subsidise unprofitable long-haul

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On its site, Flyafrica boldly advertises this statement, and, for the most part, it lives up to

the message. A search for one-way prices from Johannesburg to Victoria Falls for Sundays 3 and 10 August reveal seats available for R99.

A search for Friday 1 August, however, showed fares of R390.

According to an airline representative, the number of R99 flights is ‘limited’, and subject to airport fees. “The R99 airfare advertised on our website is a basic fare and depends on availability,” said the agent. If trip dates are flexible, the agent says it is possible to book travel based on flights where the low-cost seats are still open.

So, the price of the seat is legit, but that doesn’t mean travellers aren’t still in for a shock.

Proceed to check-out, and each ticket price jumps by more than 500 per cent, with an

u tion!

Debuting with jaw-dropping R99 fares, Flyafrica hopes to start a revolution in air travel. Much like their low-cost counterparts abroad, bookings feature a sales shock. average of R574 in fees and charges.

Indeed, the fine print on Flyafrica.com clearly states that these charges are applicable. And those who have flown low-budget before would probably expect this. Worldwide, low-cost carriers are well-known for hiding the taxes and fees added to their domestic flights while touting the low-cost of their fares.

Within Europe, the tactic is a given with Easyjet and Ryan air, both of which are notorious for surprise totals at check-out and multiple add-on fees. However, this doesn’t seem to have affected sales. In June this year, Easyjet announced that passenger traffic climbed 5.4 per cent to 63.4 million in 2013.

In the US, low-cost carrier Southwest Airlines

is believed to have launched the budget fare revolution in the 1970s. Despite its sneaky sales taxes and fees, it too has experienced success.

It is currently one of the largest airlines in the USA, servicing over 100 million customers annually, according to its website.

African budget airlines, however, have not been so lucky. In South Africa, 1Time Airline launched in 2004 offering low-cost fares between most of the country’s main airports and to Tanzania, Zambia and Zimbabwe.

Financial difficulties and the breakdown of one of its jets, resulted in the airline being liquidated in 2012.

Velvet Sky, another budget carrier in South Africa based at the King Shaka International Airport near Durban, launched operations in

2011. Succumbing to financial troubles and controversy over corruption allegations, the airline ceased operations in 2012.

Flyafrica Zimbabwe is the first airline of the Flyafrica group to launch. According to CEO Chaka Karase, the company is just the tip of the iceberg of the offerings to come from airlines in Africa.

“Zimbabwe Flyafrica is the first of several airlines in Africa that will combine low fares with global standards of safety and quality,” he says. “We are committed to providing fares that are always affordable to everyone who travels to Zimbabwe. We believe that low fares are vital in developing trade and tourism for Zimbabwe and we are proud to be part of the low-fare revolution.”

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

Kuier with Carel

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If you don’t know your Facebook profile from your @twitterhandle, then what follows may be a tad confusing, #justsaying.

remember (not so long ago in fact, as the Eagle had already become Zurich) when insurance companies were debating whether to give their employees access to social media applications. Some relented and set aside an hour a day.

Thankfully those days are as distant a memory as the male-only dinners at the Rand Club, with companies adopting a far less paternalistic view. Nowadays they have competitions and prizes for followers and understand that what happens online is an inexpensive brand building tool. Brokerages like Barkers in Johannesburg use their online presence to strengthen their very personal touch, rather than seeing @ # as a threat to relationships.

Many CEOs (and a few regulators who, as public servants, can’t be publically outed as online lurkers but ask me when I see you next!) are Facebook stalkers. For some, the balance of maintaining a separation between the public and the private is important. For others, like @liabilityguy who has over 5000 tweets to his name; his work is his life, it is personal, and I love getting not only insurance updates but also views on world politics and his hot fiancé (who has nearly 8000 tweets, so work out who she is).

In August this year, KPMG – for the first time ever – included a social media report in their annual review of the South African insurance industry. Amongst a myriad of interesting facts, what stood out for me was the basic point that, as an industry, we lag way behind our cousins in banking. Sad really, when one considers that those self-same inbred cousins are the ones that gave financial services such a bad name with their dubious practices (by now it should be no surprise to readers of this column that I am a

tad biased towards insurance). And what have bankers got to share with the world anyway?

We at least have interesting claims – did you see Altrisk paid a R119 million claim just a few months after the policy incepted? We also offer innovations – King Price, whom one would have thought is a direct player is making waves in the intermediary space. As well as interesting people – @ronaldgw from Global Choice has two beautiful daughters whilst @sandrapage from Tracker celebrated her special birthday in Rome before hosting the annual awesome Tracker party at the Insurance Conference. And did you see @jonobruton from East London is not only responsible for social activities at the Border Institute but runs a Facebook page, DeadReckoning, where you can find all things surf, MMA and some of the best looking people and tattoos around. We certainly don’t attract a dull crowd!

As someone who has been tweeting since 2009 with around 1 400 followers (about 1 billion less than Justin Bieber) I have a few favourites within the industry, starting with our very own Blake Dyason from RiskSA. As many of us know, this is one of the most-networked people in the industry, with no ego and who always goes out of his way to help. No surprise then that unlike many others out there (myself included) Blake follows more people than he has followers. Blake’s social media updates are generally about his latest physical activity for charity and are always inspirational. @RiskSA itself has over 2000 followers and is a useful way to keep abreast of daily happenings.

If Twitter is not your thing, check out Facebook.

Anton Roux from Aon is not only running a highly successful brokerage but updates his Facebook with trips around Africa servicing

clients, building cars with his wife or having fun with his daughter (soon to matriculate and hopefully join the industry). Gay-Lynn Rheeders from the IIKZN looks after her institute’s page.

When she’s not writing business or driving educational initiatives in schools to get more kids to work in insurance, Gay-Lynn is posting pics of what happens in our KZN region. Yes, those AIG women really did all that stuff.

And yes, Kurt Solomon really did wear a Zulu leopard skin to dinner.

LinkedIn has become the go-to place for recruiting and networking online in our industry. With groups such as ‘South African Insurance Professionals’ having nearly 3000 members, the heads of companies that have recently ‘moved to pursue personal interest’” won’t find it hard to get their next paycheck (I wonder by the way why so many leaders find it hard to stay the course at the top? Tweet me @carelnolte or let us know @risksa what you think).

And then we have Youtube. It won’t come as much of a surprise that the ever elegant and poised Olivia Smith from Allianz is planning to put motivational material on this channel to help women in our industry better navigate their careers. Olivia has promised that I can be one of her co-presenters on the channel – don’t you think we’ll make a cool couple #wink #Iwish. Maybe Olivia and I will post some photos on Instagram or Pinterest or ask you a question on Jelly or or or …

In short my friends, our industry is perfectly placed to use the social media at our fingertips to show the world why we are the best industry to work in. With the best people. Until next time, happy surfing and stay connected.

Please stay in touch via carel@comms.co.za, and look out for October’s column where we learn a bit about charity in our industry - charity drives, not charity cases.

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Austrian daredevil Felix Baumgartner became the first man to break the sound barrier in a record-shattering freefall jump from the edge of space, The 43-year-old jumped from a capsule more than 39 kilometers above the Earth, reaching a speed of 1,136 kilometres per hour before opening his parachute and floating down to the New Mexico desert.

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Te l . . - . . 0 8 6 1. . 9 4 9 . . 4 4 4 . . . . . . F a x . . - . . 0 8 6 1. . 9 4 9 . . 9 9 9 . . . . . . W e b . . - . . w w w . i u m . c o . z a . . . . . . E m a i l . . - . . i n f o @ i u m . c o . z a INSURANCE .. UNDERWRITING .. MANAGERS .. (Pty) .. Ltd. .... Reg .. No. .. 2004/022210/07 .. is .. an .. authorised .. financial .. services .. provider, .... FSP .. No: .. 21820

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