COMPANY PROFILE
2014
Rand
Mutual Assurance Minefields protector sets new horizons
company profile
Minefields protector sets new horizons
Editorial: Colin Chinery Production: Ajuanne Payne
For 120 years Rand Mutual has been providing caring compensation for workers in the mining sectors. Now as it moves into other sectors such as metals and auto, CEO Jay Singh talks to IndustrySA about the proud history and new horizons of a company for whom compassion is never a cliché.
In South Africa’s biggest and most iconic industry Rand Mutual is pioneer, innovator and role model. Its protectorate; the great minefields: coal, diamond, chromite, vanadium, and the platinum group metals, a sector realising 18% of GDP, employing one million – half directly - and accounting for roughly a third of the JSE’s market capitalisation. Of South Africa’s industries this is by far the most hazardous. Safety is improving, the 2012 figures – the latest available - registering the lowest ever number of fatalities, according to the Mine Health and Safety Inspectorate. Even so 112 miners died that year, and this February saw at least 26 workers, legal and illegal, killed underground. This is the backdrop against which, 120 years ago, non-profit Rand Mutual Assurance was formed
PAGE 2 APR 14
by three gold mining corporations opening on the Witwatersrand. “At the time there was no injury insurance cover for those working in the new gold mining industry,” says Rand Mutual CEO, Jay Singh. “But there was a demand, and the only country in the world that offered workers compensation insurance was Germany. There are close parallels with our work and the work done in Germany. Someone would probably have looked at the German model and adapted from it. “It was three gold mines that started the business in the beginning so from 1894 until 1940, RMA did what it thought was required of it, in consultation with those gold mining companies.”
MINERS’ FRIEND For the next 46 years Rand Mutual Assurance was the
Rand Mutual Assurance
sole provider of industrial death and injury cover in South Africa. The first national legislation came in 1941 - but excluding workers in mining and construction. 52 years later the Compensation for Occupational Injuries and Diseases Act (COID) created a workers’ ‘umbrella’ to which employers are required to register and contribute. COID nonetheless encourages employers to take out additional insurance. And Rand Mutual, which deals exclusively with corporates, has an impressive client list that includes majors such as Anglo Platinum, Anglo Gold Ashanti, the whole of Anglo American, Harmony Gold, Lonmin and BHP Billiton. “If you are in mining you can choose to buy your cover from the Government or from Rand Mutual; just like in construction where you can choose the Government or FEM,” says Singh. “And this means
in effect that in market terms our competition is the Government.” And competitive edge demands better and more attractive benefits. “We have to make sure we pay at least what the legislation says. So we have built other products around COID, for example our workers compensation scheme has a number of components - medical aid, injury while on duty, and a disability calculation resulting in a lump sum or pension. “COID says that a pension should be based on a person’s salary but the salary is capped at R26,000 per month. We’ve taken that cap away and will base the pension on your actual salary, even if it is R1million per month rather than the minimum R26,000. “We’ve created a lot of value-adds. COID doesn’t cover travel to and from work and we’ve added that as a product. If you’re injured while going to work or
APR 14 PAGE 3
company profile
coming from work or travelling on business then we can provide that cover too - this is particularly significant in South Africa, where a lot of people travel by taxi. “We deal only with corporate customers. When the employer buys the cover and pays the full premium, we take over the obligation of providing cover. Any of his requirements in terms of legislation or injury at work, we would then honour on his behalf.”
“Our system is pretty much five different programmes integrated into one” To underpin this and to manage the pension benefits payable to claimants and their beneficiaries RMA Life Assurance Company Limited (RMA Life) was established as a wholly owned subsidiary of Rand Mutual in 1990. From its Johannesburg headquarters Rand Mutual
PAGE 4 APR 14
oversees 160 employees, six main offices around the country, and three satellites –in the Eastern Cape, Mozambique and Lesotho. “In South Africa and neighbouring countries most of the miners come from very rural areas; rural parts of South Africa and rural parts of neighbouring countries; and that is why we have a number of small or satellite offices. “40 years ago South Africa got a lot of its mine workers from Mozambique for instance, so now there will be injuries, or widows of those who died in mining accidents who need to be paid pensions or medical care. In fact there are in Mozambique around 2000-3000 pensioners who we look after.”
CROSS-BORDER COMPLEXITIES According to Southern Africa Trust consultant Dr Mathais Nyenti, some 86% of migrant workers from Botswana, Lesotho, Mozambique, Swaziland and Zimbabwe are currently working in South Africa. Does this throw up administrative complexities for insurers?
Rand Mutual Assurance
GUIDING CLIENTS INVESTMENT STRATEGIES Ginsburg Asset Consulting is an established investment advisory business, focusing exclusively on providing independent asset consulting services to a wide range of institutional clients across Southern Africa. We provide forward-looking, bespoke solutions to achieve results consistent with our clients’ specific needs and investment objectives. Our business proposition and services are underpinned by our principles of integrity and transparency, ensuring impartiality, objectivity and the avoidance of conflicts of interest. Our mission is to ensure that our clients’ assets are managed in a responsible, accountable and prudent manner, providing for the best possible return within a sound risk management framework.
For more information, please contact our offices: Tel: +27 21 685 7761 (CPT) Tel: +27 11 326 5373 (JHB) email: info@ginsburg.co.za www.ginsburg.co.za Authorised Financial Service Provider Licence No. 27526
APR 14 PAGE 5
company profile
Some choose not to follow their passion. Our track record is proof that we do.
10234 Compliance number: 3DR068
Our passion. Your investment’s success.
www.stanlib.com
STANLIB is an Authorised Financial Services Provider
“Looking after cross-border workers and ex-workers is fairly complicated,” says Singh. “For example; if there’s a mining accident the widow may not fully understand she is entitled to receive benefits. It is our responsibility to find and identify the widow - making sure there is no fraud - and then pay her. And the difficulty so often is in tracing the dependents and beneficiaries.” While statutory workers insurance remains its backbone, the Rand Mutual product reach has expanded into areas like accidental injury or death due to workplace disturbance, and a number of other related spaces. Another area under review is a funeral policy or burial fund. “We could do more on this. We currently have about 50,000 insured and it’s an area we want to expand and in which we see great potential.” The Government may be its only market competitor but Pretoria is engaging with Rand Mutual on a joint scheme to improve national welfare insurance mechanisms and in particular its IT system. “Another key area for us in terms of expansion surrounds the licensing of our systems. We’ve built a COID system and the Government does the same
PAGE 6 APR 14
things as us but their compensation fund system is not the best so we see that as a potential market for us. “The same scheme could be marketed throughout Africa – in fact there isn’t a good system anywhere on this continent that administers workers compensation benefits.
“In South Africa and neighbouring countries most of the miners come from very rural areas which is why we have a number of small or satellite offices” “The Government is piloting some of our IT systems as we speak, with the potential to put some ten million lives on to the system. We have been doing research to see if there is anywhere else in the world comparable to our system and we haven’t come across one yet - and certainly not in Africa.
Rand Mutual Assurance “Workers compensation benefits have a number of components. There is a medical aid component, a leavepay component for people injured at work, then there is a component that calculates your disability from which we can pay a disability lump sum or disability pension. “If you are severely or fatally injured at work then you or your wife and children will receive the pension for life or until they are 18. So there are many facets to consider. “You often get a pension system that delivers only pensions, or another that handles only funeral benefits. Our system is pretty much five different programmes integrated into one system and database and it is this integration that provides the real benefit.” While Rand Mutual pursues opportunities to license its IT system to third parties, a parallel focus for growth is an extension of its COID license to include the metal sector. “We have been operating more or less as an exemption from current legislation, and until last year this was on the basis that we can provide this service only to the mining industry. “So over the past few years we have gone back to Government and said ‘Look we are doing a very good
job in mining, with more than 95% of the mining houses buying from us rather than the Government. So on the basis of us providing a very good and costeffective service, let us expand our services into the iron, steel and other metal industries.’ “Replicating our business model into another sector is the quickest and easiest way to expand, potentially increasing the 400,000 lives we currently insure by another 600,000. “We have started, and are making presentations to the bigger potential clients, understanding motivations and doing analysis, and signing up half a dozen. And this year we expect to take on at least 100,000 lives.” As for expanding physically into neighbouring countries and offering products to industry in the rest of sub-Saharan Africa, Singh says this would be a complex move and one that requires extensive research. “There is strict legislation between different countries. For example; if we were to offer our products in Zimbabwe, the Zimbabwean government would say that the money can’t leave Zimbabwe and would have to be insured with a local insurance company. We would also need to prove that this type of insurance is not available in that country.
ITQ Business Solutions, a JHB based IT Company founded in 2000, drives and supports its clients through the provision of custom built software solutions and outsourced / co-sourced development services. ITQ Business Solutions has 3 subsidiaries – ITQ Health, Red Edge and iSolve, which collectively form The ITQ Business Solutions Group. Our solutions are typically built around the Oracle and MS SQL Server Databases using Oracle Forms, Oracle ADF, Java or .NET as the development platform, leveraging proven development architectures like SOA. ITQ traditionally enters into long term business relationships with its clients and is seen as a trusted partner rather than a supplier. The ITQ Business Solutions Group has a complement of over 350 Developers, Project Managers and Business Analysts - we believe with some of the finest skills in the country. We have established a solid reputation for delivering large and complex projects, all of which are reference sites. Our long standing large clients include Rand Mutual Assurance Company, Medscheme, Wesbank, Standard Bank, Liberty, Stanlib, FNB, Momentum, Vodacom, AON, DE Beers, Deloitte and Mutual & Federal. We employ a hybrid of proven methodologies ranging from agile practices to more traditional project management that will see the project achieving its full potential in shorter time frames. The specific development methodology we employ depends on the nature of the project, but where possible we use our own flavour of Agile/RAD. Where complex business rules/processes are involved we always prepare a detailed architectural specification and database design up front. In our industry, it has become common for projects or development phases longer than 12 months to miss deadlines or never finish. We break this trend through our strong belief in providing frequent, functional deliverables to our project stakeholders. Where required, we endeavour to adapt our approach to fit in with our clients’ existing methodologies. ITQ Business Solutions is majority black owned business (BEE Level 3) that is part of the listed Morvest Group. iSolve House 17 Sunninghill Office Park Peltier Drive Sunninghill Ext 71 Gauteng, South Africa
Office: +27 11 087 6601 Fax: +27 86 621 9666 Fax2Email: +27 86 621 9618 info@itq.co.za www.itq.co.za
MAR 14 PAGE 7
company profile “What we would need to do is set up in those countries and get a life insurance license to do business. We are researching this and the concerns are around the capital required and the need for a local partner in those countries. “It’s probably a slightly longer term vision, not for the next two or three years but after that we might find the ideal types of partners, those who are involved with life insurance and want to grow into workers compensation and benefits.”
KING COAL Like South Africa itself, Rand Mutual has grown through mining. “Pre-2008 we may have had 90% of the mining business. And we would try to convince the remaining 10% to join us.” Since then and despite a 7-8% fall in mining employment, Rand Mutual has seen a decline of only 2%. “We have been very active in making sure we are not much affected by the drop in mining house numbers. “There’s quite a bit of diversity in mining. Look at gold. Six or seven years ago it was in decline while platinum was growing like crazy. Since 2008 platinum
has not grown but the coal industry has. “The international demand for coal is so great that no one country can meet it. As a result we have seen a lot of new employees in the coal mining sector. So growth in one industry offsets a decline in another.” Over 120 years Rand Mutual has grown almost in lock step with the rise of the nation’s great mining industries. Now as it moves into the steel, metal and auto sectors, it is attracting a new client list of potential major league companies such as ArcelorMittal, Evraz Highveld Steel, Mercedes-Benz, BMW, Nissan, Toyota; an inspiring South African story of shared interests and Mutual regard.
.
“Replicating our business model into another sector is the quickest and easiest way to expand”
> Corporate and Investment Banking
Leading the way in investor services Standard Bank is the leading provider of Investor Services in South Africa. If you need access to custody, trustee services, securities lending, derivatives clearing and investment administration services, you need a partner that can offer you a fully integrated solution. Whatever your business needs, you can be certain of our ability to provide a solution that meets your specific requirements within South Africa and beyond. They call it Africa. We call it home. For more information, contact Adam Bateman: email: adam.bateman@standardbank.co.za or visit www.standardbank.co.za/cib
Authorised financial services and registered credit provider (NCRCP15). The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06). SBSA 177414 03/14. Moving Forward is a trademark of The Standard Bank of South Africa Limited PAGE 8 APR 14
Rand Mutual Assurance
Jay Singh
Rand Mutual Assurance – The People Like any company, RMA has employees with a wide range of skills. Having people with skills across different areas allows for real expertise in the various departments of the business. Singh explains that what makes RMA people different is that they understand the medical nature of the company. “We have people who asses a disability; maybe people who have been in a mining accident and is injured; for this we have medical doctors who have gone on to gain an occupational health qualification. They will measure disability and review our patients. Supporting these doctors are senior nurses. “On the other side of the business we have people who capture claims. They are usually more junior and but they have understanding of medical terminology. If
there is a claim, our people can quickly relate to the injury, when they are capturing the claim or processing a doctor’s invoice. “Then of course we have financial people, administrators and IT people. Our IT people are highly skilled. We do all of our IT development in-house. “It’s like any other company; we have a whole cross-section of skills. The main difference is our medical expertise and the training that we provide in that regard. For example; our doctors are trained and understand occupational health but we skill them in terms of worker compensation, legislation and all the systems that go with it. “We also offer training to all the mining houses that we cover and the labour organisations. It’s very important that they understand the benefits so when there a query, they know exactly how to report it.”
APR 14 PAGE 9
010 214 3000 www.randmutual.co.za
(0)1603 618 000 info@industrysa.com East Coast Promotions Ltd, Ferndale Business Centre, 1 Exeter Street. Norwich, Norfolk NR2 4QB