AON RISK WWW.AON.COM/KENYA | QUARTER 4, 2016
Crisis Management In this Issue Management Liability Policy Celebrating World Enviroment Day
Message from the CEO JOSEPH N. ONSANDO – CEO – AON SUB SAHARA AFRICA & MANAGING DIRECTOR- AON KENYA INSURANCE BROKERS LIMITED
Crisis Management In a world where threats and risks face us both internally and externally in the organization, there is need to relook certain aspects of operations and conform to a structured way of handling crisis. Organizations find themselves in unique situations that threaten to harm the firm, its stakeholders or the general public. Three elements are common in a crisis: a threat to the organization, the element of surprise and short decision time. Crisis management involves dealing with threats before, during and after they have occurred, and is within the broader context of management consisting of skills and techniques required to identify, assess, understand and cope with a serious situation. This primarily entails crisis prevention, crisis assessment, crisis handling and crisis termination. The aim is to be well prepared and ensure swift response while maintaining clear lines of reporting and communication. This is why it is important to have the following steps:
1. Have a Plan Organizations through its leadership need to have clear, written objectives during any crisis and ensure key audiences are kept informed.
2. Identify a Spokesperson Crisis could potentially impact health or wellbeing of customers, general public or employees and may attract media. To ensure that the company speaks with one voice and delivers a
clear, consistent message, a spokesman must be identified. This is usually a deliberate act by management to avoid further deterioration of the crisis through panic and misinformation.
3. Be Honest and Open Lack of honesty and transparency generates more negative media, therefore being as open and transparent as possible can help stop rumors and defuse potential media frenzy.
4. Keep Employees Informed To ensure that business continues to flow as smoothly as possible, senior management need to inform the work force. This will also help to avoid internal rumor-mongering.
5. Communicate with Clients, Customers and Suppliers Information on any crisis pertaining to your organization should come from you first. It paints the wrong impression if clients or suppliers learn about your crisis through the media.
6. Update Early and Often It is always better to over-communicate than to allow rumors to fill the void. Update action plans and new developments as early and often as possible. More often than not, well managed crises confirm that your company has the processes and procedures in place to address almost any issue that may develop.
Contents
Insurance at a glance The basic goal behind buying insurance is to make you financially whole following a loss.
QUARTER 4, 2016 Editorial Board Fred Kung’u - Convener - ARS Corporate Business Lines Alice Nyambura - Marketing and Business Development Habiba Rashid - ARS Corporate Business Lines Esther Muriithi - Healthcare Division
Celebrating World Enviroment Day 2016
Disaster Mitigation Strategy
Martin Kangethe - ARS Corporate Division Wilson Kopondo - Risk Management Division Sydney Obonyo - ARS Corporate Division Jacqueline Wamukoya - Healthcare Division Paul Ngomba - Life & Pension Division Martin Muthui - ARS Corporate Division Kevin Marete - Group service Division Margaret Nasieku - Marketing and Business Development
Crisis Management
Celebrating Mothers at Aon
Joy Bett - Corporate affairs Rachel Kiungu - Healthcare Division.
Aon Kenya Insurance Brokers Ltd Aon Risk Solutions (ARS)
Mitigating Cyber Risk Cyber risk is no longer considered an emerging risk. The rapidly changing nature of cyber threats confounds many. As the security industry strives to protect companies with new, powerful tools, hackers invariably deploy even more damaging cyber attack techniques. Every organization should consider the financial statement impact of cyber exposures. In a best case scenario, a successful cyber attack will highlight the IT system weaknesses of an attacked company. The key questions that every organization should ask is: • Can we identify and quantify the damages from a perpetuated cyber attack? • Beyond IT solutions, how do we protect ourselves from cyber risk? At Aon, we constantly monitor and develop tools to sucssesfuly ward off threats relating to cyber security. Our unique global presence in over 120 countries enables us tap onto an immensly vast talent pool that is dedicated in providing world-class solutions to our clients. Safequard your business and let the world’s leading solutions provider work for you. To find out more, contact: marketing@aon.co.ke, 020 4974000
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Risk. Reinsurance. Human Resources.
Environmental issues are becoming increasingly important with a growing interest to find innovative ways to tackle them. When the subject becomes an “innovation” or a “new way of doing business” there is always a place for entrepreneurship. In other words, the adoption of environmentally responsible business practices can, conceivably, open up an additional range of opportunities for young entrepreneurs.
Celebrating World Enviromental Day 2016 Article by Habiba Rashid To celebrate and commemorate the 2016, World Environmental Day; Aon Kenya sponsored an event held at Kenyatta University organized by Youth and Success Association(YASA) in partnership with Young Africa Leadership Institute (YALI) among other partners as a Corporate Social Responsibility Initiative . The theme for the event was “Promoting Green Entrepreneurship and Employment among the Youth”, and the initiatives to push for the above agenda were through a youth entrepreneurship conference and exhibition and a tree planting event.
Youth Entrepreneurship Conference The conference which was held at the Kenyatta University Amphitheatre, hosted youth between the ages of 18-35 years with the target population being identified as youth in universities, colleges and technical institutions, youth affiliated to KEPSA & Kenya Youth Empowerment Program, Youth Entrepreneurs from Micro & small enterprise authority, beneficiaries of Uwezo Fund, beneficiaries of Youth enterprise fund, youth from religious institutions in Kiambu county and its environs, youth from Kiambu county and youth from faith based organizations in Kiambu. This was platform for the young entrepreneurs and participants to be able to meet and interact with leaders and mentors in the private sector, government, religious sector and public sector which included representatives from Aon Kenya, the Uwezo Fund, NHIF, NSSF, TECHNO, Kenya Private Sector Alliance, Netfund among other. With government involvement, it was an avenue to engage on how the youth can access funding from government projects, how they can access funding or loans for their business. Non-profit organizations that attended the conference also provided this avenue. Equally, the event featured motivational speakers who inspired and empowered the youth to fight and work hard for what they believed in and what they were good at, as opportunities provided at a glance through the diverse industry players at the event, where open to all and had no name tags on specific individuals.
Youth Entrepreneurship Exhibition Green business is smart business. Going green provides bottom line cost savings through the use of locally available raw materials for the end product. The exhibition focused on young entrepreneurs businesses that have gone green in their business processes through reducing energy consumption in their production process while maintaining the same output levels, reducing waste, recycling and water conservation. The event offered young entrepreneurs and participants FREE exhibition space to showcase their innovations, talents and abilities.
Tree Planting Our planet is poised at the brink of a severe environmental crisis. Current environmental problems make us vulnerable to disasters and tragedies now and in the future. We are in a state of emergency, with environmental problems piling up around us. Unless we address the various issues prudently and seriously we are surely doomed for disaster. Current environmental problems require urgent attention. One of the ways on conserving the environment is through encouraging tree planting initiatives geared towards conserving the environment. In Kenya these environmental crisis are brought about by the rampant deforestation witnessed in recent decades, mainly as result of bad land management, slash and burn farming methods, unstainable logging and tree cutting for charcoal. This has consequently put Kenyans at adverse risk of global warming being witnessed through the various flooding incidents that not only caused loss of property and destruction assets but also caused loss of precious human lives. The tree planting activity was aimed at raising awareness on environmental conservation and management among the youth and general public. Out of the 500 trees planted at the event, Aon Kenya generously donated 200 trees towards the commemoration of the 2016 World Environmental Day some of which were planted at the sports centre by Aon Kenya colleagues.
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Navigating Risk in Logistics Aon Kenya’s logistics team combines industry knowledge with risk transfer expertise, and an understanding of the value of superior logistics arrangements to its clients' business challenges. We are globally positioned to respond to your needs by providing tailored solutions. Find out how our invaluable industry data can help you reduce your logistics risk and costs.
Email: marketing@aon.co.ke
Inland Marine
Risk. Reinsurance. Human Resources.
Air
Article by Esther Muriithi
Wananchi Group’s ambitious and increasingly successful services to the retail markets in East and Southern Africa have been built on the principles of consumer inclusion and homegrown quality, with the company now looking to expand further via all two core facets of the organization. Built largely upon its Zuku brand, the home entertainment and communications company has become one of the key market players in the region across direct-to-home fiber network services and a unique satellite television offering.
Unique Selling Propositions One of Wananchi’s key differentiators is its footprint and the subsequent portion of the population it can reach out to. Casting aside misguided notions about the readiness of parts of Africa to embrace innovative new technologies, the company has successfully brought its services to the ever-expanding middle class market, while some competitors continue to focus on a smaller, wealthier section of the region. Zuku Fiber is arguably the product benefiting most from Wananchi’s allencompassing - philosophy; the triple play platform comprising internet, phone and television providing speeds of up to 60 Mbps. Running parallel to this is Zuku Satellite TV the fastest growing platform in the brand’s armory and currently covers 32 countries to bring its unique and locally relevant content to millions of people on the continent. Continuous updates to this offering have recently consisted of HD channels while also focusing on providing different and more appealing content always remains at the forefront of Wananchi’s strategy. Investments into building fiber networks directly into consumers’ homes, or building and acquiring new and locally relevant television content all gives us an advantage and a lot of strong USPs.
Quality over quantity As part of Wananchi Group’s recent rise to market success, a huge focus has been placed on the internal structuring of the company and, in particular, to the people within the organization. In the early years of the business’s development, there wasn’t always the lure to bring in the most skilled individuals to capitalize on the established and reputable business model, but that has all changed now, with Wananchi fast becoming an employer of choice in the region. Over the past years Wananchi Group has been able to get a lot more people with deeper skill sets than the company could afford to access in the past. The company is now getting people to focus on very specific areas of expertise and then bringing in new people to supplement that, all the way down, through from management to the people on the ground.
A local success story Wananchi Group’s Zuku brand is a local success story this is due to the indigenous nature of Wananchi Group, ensuring that both he and the entire team of employees can be proud of working for a company in East Africa providing services every bit as comprehensive and advanced as those seen in the rest of the world. There’s a lot of talk around the world about African constraints but Wananchi Group’s Zuku brand is actually building a first world business here and every day they come to work, they are developing this part of the world and should be very proud of their achievements. The people on the ground can hold their heads up high knowing that what they’re doing is the same as what’s being done in the western world and is being done in a very positive way for the African continent.
Crisis Management Article by Anne Mkala
The world is full of uncertainties that can disrupt both events and businesses, and pose a significant threat to customers, employees and infrastructure. Be it natural disasters, terrorist attacks, fires, pandemics, or Internet of things era cyber attacks that can cause physical damage anyone in charge of any location where people congregate needs to be prepared.
Crisis usually occur because businesses fail to properly understand and plan for the risks they are facing. In Kenya we have had a few examples that we can learn from which include;• The Westgate mall terrorist attack • The El Nino floods • Jomo Kenyatta Airport fire • Cyber attack on government data • The Garrisa University terrorist attack • The Strathmore student fatalities and injuries following a crisis mock exercise gone wrong
What can businesses learn from the way the organizers of major events have responded to such unpredictable threats? The challenge for those in charge of places with lots of people present is managing crises effectively, which means understanding the risks – and being as prepared as possible for all eventualities. The potential financial costs of direct damage are compounded in such incidents by the possible long-term damage to your organization’s ability to function. Property is no longer the only exposure at risk rather, with civilian casualties now the primary target [of terrorism], organizations must also consider non-damage business interruption, liability and casualty exposures.” The implications of the response taken are considerable. While not acting can lead to disaster, the decision to play it safe can also prove expensive. Developing an effective risk management plan is an essential first step to minimizing the negative impact of a crisis. After all, the worst case scenario can lead not just to loss of revenue and business reputation, but also life.
Putting people’s safety first
Setting roles and responsibilities
There is need to move with speed and efficiency. The Garrisa University Terrorist attack was a perfect example of what devastating effect one can have to loss of life for lack of speed.
Keeping people safe when an incident occurs depends on anticipating the kind of things that might go wrong, and being prepared to make the (often difficult) decision to order an evacuation that will in itself lead to a financial loss, rather than risk waiting in the hope that it proves to be a false alarm. Getting expert advice to identify the areas of biggest potential risk is a vital step with such complex and potentially catastrophic incidents, in which verified information can be slow to emerge, and confusion about the scale of the threat is often the biggest initial challenge. Large events like sporting events or business conferences present a particular challenge in this respect.
Taking precautions against loss of income
After the event: communicating in a crisis
If robust training and clear emergency procedures and protocols can help ensure organizations are prepared on the day, and that all relevant safety needs are met, the potential financial implications and exposures also need to be considered. Loss of revenue, public and employer liability, and the costs of cancelling an event – or evacuating an office or factory – can present serious business continuity challenges.
A mishandling of communication can not only create additional confusion on the ground, but also create longterm reputational damage for the organizations involved.
While property damage and business interruption remain important, new risks are emerging. These can include non-property damage business interruption resulting from streets being closed after an adjacent attack; threat impacts, with hoax calls made to an organization resulting in closure and subsequent business interruption; and those that impact casualty planning (death in service benefits for example), with terrorism potentially providing a cat-loss scenario.”
Information travels faster than ever, and false rumours have the potential to significantly damage brand reputation. Companies cannot afford to operate without a crisis management plan in a real-time news environment.” This is why reputation management forms a key part of any crisis communications strategy. Having a well-trained and experienced Public Relations team is the most effective way to ensure an effective response, and a fair reaction.
The key elements of effective crisis management There are eight main areas organizations should focus on to ensure an effective response to a crisis, • Ensure all stakeholders are addressed including customers, partners and employees • Formulate a well-defined plan for time-critical responses • Establish a clear chain of communication • Ensure a single point of contact for information • Secure appropriate insurance coverage • Put contingency plans in place • Develop a media response process • Practice, practice, practice your crisis management and communications plans through mock scenarios As you conduct a risk assessment to develop your crisis management plan, working with insurance experts Like Aon can be a good way to minimize risks, including financial ones. Not only can they help you to identify potential risks, and ways to reduce your exposure, they can also help provide peace of mind so that you can take the decision to implement your plan without worrying as much about the financial consequences.
Disaster Mitigation Strategies Article by Margaret Nasieku
The basic goal behind buying insurance is to make you financially whole following a loss. You agree to pay a (relatively) small fee to an insurance company today, causing a small but certain loss to you now, in exchange for a guarantee from the insurance company that it will bear the burden of a large but uncertain loss in the future. Heavy rains in recent days have resulted in floods within Nairobi and other parts of the Region, causing not only loss of human lives and animals, but damage to residential property including household items, commercial properties including stock, motor vehicles together with infrastructure damage and water borne diseases too - with a majority of business owners reported to remain uninsured against this type of natural disaster. A total of 34,129 people have been confirmed affected so far with some business premises said to have been destroyed and many entrepreneurs have reportedly had to close their businesses due to the water damage. Many businesses do appreciate the high risk presented by natural disasters but insurance has never been regarded as highnecessity, despite the obvious risk of natural disasters. So the main challenge cited as facing the Kenyan insurance sector is a lack of awareness of insurance products and limited industry knowledge, with many individuals seeing insurance as a luxury service. A person can insure almost anything these days: be it a flight to Mombasa, rental property, or a valuable phone.
The insurance industry and the government of Kenya have engaged in concerted effort to make coverage affordable to many farmers through micro-insurance initiatives that provide viable and affordable insurance products to farmers. Again, the lack of insurance cover is implied to be largely based on the perception that insurance is a complex area shrouded with legal jargon and too much ‘small print. For most car owners in Kenya, the “Third party cover’’ is usually the most mandatory type of coverage. However, this coverage is only limited to damage and physical injuries on third parties as a result of an accident. For those who use their vehicles often, stay in a flood zone or park their cars where demonstrations are likely to happen, know that apart from accidents, there are many other ways in which their cars can be damaged.
Aon Motor Comprehensive Insurance Cover Motor vehicle insurance is as old as the invention of the motor vehicle itself. After few days of inception, it was soon realized that man wasn’t in full control of the machine. It had the potential to cause harm to which adversely might result in death. That is why it was christened a lethal machine. That is when the thought of countering its lethality was born. Motor vehicle insurance was then born as a result.
This is where Aon Motor Comprehensive insurance comes in handy. Aon Motor comprehensive covers the asset against damage as a result of other incidents other than an accident, like fire, theft, vandalism, animal damage, floods and falling objects. Although this type of cover is not required by the Kenyan law, it may be a good idea especially if you consider the value of the car you drive. In fact most drivers of financed or leased cars are required to acquire this type of insurance cover so as to protect the car lender or owner’s investment.
Aon domestic package insurance cover We all value the sanctity of our homes. It is one place we feel most safe and it is also the last place we envision suffering of any kind of loss or damage. What if a raging storm destroyed not only your perimeter wall but also the contents of your house or worse still a fire guts down all your worldly possessions. This is where the domestic package policy comes in handy. The domestic package policy is tailor-made to ensure that you are not rendered destitute in these circumstances. The household insurance policy covers loss or damage as a result of theft, burglary, fire and related perils to residential buildings, whether owned or rented. It incorporates the insured personal liability and that of their house hold members. The policy also covers the cost and expenses that the insured incurs in the event of death of or injury or disease to their domestic servant arising out of and in the course of their employment as defined in the Work Injury Benefits Act. Did you know that In the event of the buildings being rendered uninhabitable by any of the perils specified above the Insurer will indemnify the Insured against: (if the building is yours) a. Reasonable additional expense for alternative accommodation b. Loss of rent payable to the Insured actually incurred during the period necessary for reinstatement of the Buildings
Aon crop insurance cover Crop and livestock farming in Kenya are exposed to many challenges which make it difficult for a farmer to realize their expected harvest. Some of the challenges the farmers go through are the need to plant the right seeds at the right time and place and using the correct type of fertilizer. However, others such as changes in weather patterns, excessive rainfall and drought, earthquakes, diseases, damage by wild animals, malicious damage, pests, death of animals etc. are beyond the control of farmers. In many instances, farmers do require credit from financial institutions so as to be able to buy farm input such as seeds, fertilizers, chemicals and farm implements among others. Farmers also need to buy chemicals, drugs, construction materials and the like. Financial institutions however, are not willing to avail credit to farmers unless they are assured that the farmer will be able to pay back the money even in the event of poor returns. Availability of insurance protection enhances loan repayment as the farmer is assured of repaying the credit using the amount paid in by the insurance company. Arrangements could also be made for the claim proceeds to be paid directly to the financial institution that extended credit to clear the outstanding amounts
How crop insurance works: There are two approaches to crop insurance; 1. The insurance company agreeing with the farmer on the expected crop yield per acre for the crop being insured. The amount to be insured will depend on the average crop yield in the area concerned. If at harvest time, the farmer gets less than an agreed percentage of the agreed yield, the insurance company pays for the difference. This way the farmer is assured of some return even when there is crop failure; 2. The insurance company insures the farmer against any damage that may arise out of specific perils e.g. drought, floods, disease, fire etc. The farmer must report such damage to the insurance company which will then proceed to assess the extent of loss and arrange to pay the farmer accordingly.
Don’t Guess - Know You should know what your policy does and more importantly - does not cover. Come to Aon Kenya for all your insurance needs.
The Aon crop insurance provides cover to the insured standing crop, and crops from field to floor against; 3. Loss or damage to growing crop or crop being harvested caused by Drought, Hail, Fire, Windstorm, Excessive rain and Damage by uncontrollable pests and diseases. 4. Loss or damage to Crop in storage due to, Fire, Lightning, Explosion and Special perils 5. Loss or damage during transit to Market against all risks. 6. Loss due to downgrading of quality as a result of defined perils which is always subject to terms and conditions outlined in the insurance policy.
Celebrating mothers at Aon Article by Kevin Marete In support of a mother friendly environment, Aon Kenya has gone to greater lengths to ensure the needs of its working mothers are well taken of through investing in a child care facility, commonly referred to as a Crèche. A crèche could be described as a place where young children are cared for during the day while their parents are working. The facility can be more described as a Lactation room which is an exclusive private room where a breastfeeding mother can use a breast pump in private one or more times a day. It has been widely accepted that infancy is the most critical period for a child’s growth and development. Not only does it nourish the child’s growth but also exclusive breastfeeding guards children against diseases such as jaundice, pneumonia, cholera, among others. One of the major interventions of the Ministry of Health Department of Nutrition and Dietetics is providing a designated clean, private area for mothers to express milk or breastfeed their babies and storage facilities to keep milk safe. In providing a supportive environment, Aon Kenya Crèche has provided appropriate furniture, utilities and access to water and soap to clean storage items. We embracing this culture will certainly improve the retention of our female employees more so on their valuable skills and experiences, lessening recruitment and retraining costs.
Benefits that corporate organizations would heed from having a child care facility are: • Easier transition back to work after maternity leave • Improved retention of female employees • Lower employee absenteeism rates on account of improved child health • Improved employer employee relations and greater employee loyalty • Improved company image • Higher job productivity, employee satisfaction and morale In support of working mothers all around the globe, let us join hands in influencing best practices for breastfeeding in the workplace and home.
Jokes & Quotes By Sydney Obonyo
The Raise
Funny Quotes & One-liners
Sam walks into his boss’s office. “Sir, I’ll be straight with you, I know the economy isn’t great, but I have over three companies after me, and I would like to respectfully ask for a raise.” After a few minutes of haggling the boss finally agrees to a 5% raise, and Sam happily gets up to leave. “By the way”, asks the boss as Sam is getting up, “which three companies are after you?” “The electric company, water company, and phone company”, Sam replied.
There is a new trend in our office; everyone is putting names on their food. I saw it today, while I was eating a sandwich named Kevin.
The Salary Reaching the end of a job interview, the Human Resources Officer asks a young engineer fresh out of the University, “And what starting salary are you looking for?” The engineer replies, “In the region of Kshs.12,000,000 a year, depending on the benefits package.”
We never knew he was a drunk... until he showed up to work sober. Don’t be irreplaceable - if you cannot be replaced, you cannot be promoted. Today a man knocked on my door and asked for a small donation towards the local swimming pool. I gave him a glass of water. A recent study has found that women who carry a little extra weight, live longer than the men who mention it. Do you know that tingly little feeling you get when you like someone? That’s your common sense leaving your body.
The interviewer inquires, “Well, what would you say to a package of five weeks’ vacation, 14 paid holidays, full medical and dental, company matching retirement fund to 50% of salary, and a company car leased every two years, say, a red Range rover?”
Very strange Newspaper Headlines
The engineer sits up straight and says, “Wow! Are you kidding?”
“County to pay Kshs. 25,000,000 to advertise lack of funds.”
The interviewer replies, “Yeah, but you started it.”
“Statistics show that teen pregnancy drops off significantly after age 25.”
Employee Motivation The owner of a company tells his employees: “You worked very hard this year, therefore the company’s profits increased dramatically. As a reward, I ‘m giving everyone a cheque for Kshs. 500,000.” Thrilled, the employees gather round and high five one another. “And if you work with the same zeal next year, I’ll sign those cheques!”
“Man Accused of Killing lawyer receives a New Attorney.”
Our Dynamic Culture
Lydia Macharia DirectorEmployee Benefits Article by Habida Rashid & Margaret Nasieku
Who has made a significant impact on her career and why? Her former boss, who encouraged her to never shy away from problems but to face them as they come.
One characteristic that she believes every leader should possess? Integrity
What matters most to her in life? Faith, her relationship with God
Favourite Kenyan politician and why? Not a fan of politics and has no favourites.
Who would she be without your accolades? Christian, Mother, wife of one man. Lydia, believes in mentoring other people.
Favourite sport and why? She is not sporty; Lydiah enjoys swimming, only when the weather is nice and hot‌
The hardest habit for her to give up? She has had to give up tea which was her daily addition but adds that the hardest habit for her to give up would be her daily devotion.
Legacy She walked in Integrity.
Ugly and live forever or attractive and live for a year Ugly and live forever, she believes beauty is in the eye of the beholder.
Her favourite & least favourite word Favourite word-The solution, least favourite- But‌
With Lydia what you see is what you get. She has a no nonsense look but when you interact with her She is very charming. We were quite impressed with her simplicity and her beliefs.
Staff wellness activities
Joe Onsando – CEO Aon Sub-Sahara Africa & MD Aon Kenya Insurance Brokers Ltd (in Blue shirt) and David Waithaka – Head of Risk & Compliance Aon Kenya Insurance Brokers Ltd (in Brown shirt) undergoing various nutritional tests
Joshua Karani – Director HR & Administration Aon Kenya Insurance Brokers Ltd \ undergoing a blood sugar test
Aon Wellness Champions/Delegates after being presented with certificates
Justus Ochieng – General Manager, Corporate Business lines, Aon Kenya Insurance Brokers Ltd (left) presenting a certificate of recognition to Margaret Nasieku (Aon staff and wellness Delegate/Champion)
Dr. Wangai giving a health talk to Aon Kenya staff
Aon Kenya staff from extreme left: Justus Ochieng, Lawrence Njenga, Agnes Chege, Joshua Karani and Michael Migwi dancing to some good music at the Health talk forum
Management Liability Insurance Policy Article by Martin Kangethe
What is Management Liability Insurance? Protects you and the company against the risks and exposures of running the company (i.e. your liability of mismanagement)
What does Management Liability Insurance cover? • Directors & officers liability • Employment practices liability • Statutory liability • Entity coverage • Crime protection • Legal representation costs
Directors & officers liability Will protect the past, present and future directors and officers plus everyone else involved in the management of a company for claims alleging a wrongful act and for which the company does not grant indemnification to such person
Claims examples 1. Unfair competition
Employment practices liabilities Provides cover to the company, directors, officers and employees for the claims made by current, past and prospective employees for issues arising from employment practices, including harassment, unfair dismissal and other employment issues.
Claims examples
2. Fraud/breach of fiduciary duty
1. Bullying/harassment
3. Misappropriation of trade secrets
2. Unfair dismissal
4. Insolvent trading
3. Discrimination
5. Manslaughter
Case study ASIC Brings Criminal Charges against Former Kleenmaid Directors
Case study Dr Mark Colson v Barwon Health [2013] FWC 8734
Statutory liability Covers certain individuals and the company for fines and penalties from operating the business including fines related to workers compensation and occupational health & safety
Claim examples 1. Wrongful act/fraud 2. Shareholder dispute 3. Shareholder employment
Claims examples 1. Occupational health and safety penalties 2. Other pecuniary penalties (civil penalties)
Case study Inspector Christensen v P & M Quality Smallgoods Pty Ltd [2013] NSWIRComm 91
Crime protection Provides cover to the company for loss arising from dishonest acts such as theft and fraud by employees including theft of stock
Claim examples 1. Theft by employee
Entity coverage Extremely relevant for companies that are owned by the directors by providing cover to the company for actions arising from managerial matters. A claim against the company will cause the same financial hardship to the owner therefore this cover is extended to provide protection to the company
2. Theft of inventory 3. Theft by contractor/consultant
Case study Clive Peeters
Professional Indemnity Cover Article by Martin Muthui
Professional indemnity insurance, often referred to as Professional Liability Insurance or PI insurance, covers legal costs and expenses incurred in your defence, as well as any damages or costs that may be awarded, if you are alleged to have provided inadequate advice, services or designs that cause your client to lose money.
Example of a claim A graphic designer was briefed by their client to provide price tags that would fit round the stem of Christmas trees. The tags would need to withstand exposure to the elements and stay fitted to the tree while it grew. The tags did not survive the test of time; the ink ran, rendering them useless to the client. The client lost money due to this oversight and took legal action against the graphic designer for professional negligence.
The graphic designer’s professional indemnity insurance policy covered their legal costs and compensation payments to the client, a total cost of over Kshs.450,000. The client didn’t pursue their claim for the full cost of the labels; if they had, the claim could have cost as much as Kshs.5,000,000.;
Do I need professional indemnity insurance? Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for thousands of pounds worth of legal fees and compensation payments – not to mention lost income from the time spent defending any allegation. Professions that might need professional indemnity insurance include (but are not limited to): • Management and business consultants such as marketing consultants, training consultants and education consultants • IT professionals including IT contractors, consultants, programmers and developers • Recruitment agencies and recruitment consultants • Designers such as web designers, graphic designers and interior designers
Don’t Guess - Know You should know what your policy does and more importantly - does not cover. Come to Aon Kenya for all your insurance needs.
• Fitness professionals including personal trainers, dance teachers and yoga instructors • Teachers and tutors including private tutors • Doctors and Lawyers
How much does professional indemnity insurance cost? The cost varies depending on a
number of factors, including the amount of cover, but Market Direct offer PI insurance cover from for a wide range of professionals.
What does ‘claims made’ mean? A ‘claims made’ policy provides cover for claims which are made and notified to the insurer during the period of insurance. This means that provided the wrongful act occurs during the period of insurance, and you report it to the insurer during the period of insurance, it will be covered. However, if the policy is cancelled or not renewed, cover will end and any subsequent claim – regardless of when the wrongful act occurred – would not be covered by that policy. As such, it’s important to have professional indemnity insurance cover in place – even between contracts or work – to ensure your business is protected. All Markel Direct professional indemnity insurance policies are on a ‘claims made’ basis. This contrasts with a ‘claims occurring’ policy which provides cover for claims which occur during the period of insurance. Professional indemnity policies are rarely, if ever, written on this basis. It is more commonly found with public liability and employer’s liability policies.
About Aon Kenya Aon Kenya is a leading provider of insurance broking, risk management and human capital consulting solutions. We are part of Aon (NYSE:AON), a global giant in the insurance arena with more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry - leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon’s global partnership and shirt sponsership with Manchester United. Aon Kenya Insurance Brokers Limited
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