Commercial insurance seems to be doing much better than personal lines at the moment. However, the pressure is still on due to increased competition and a suppressed economy. COVER chatted to Justin Keevy, Camargue Senior Underwriter: Commercial and Cyber Crime Division, for more inside info.
How are clients responding to the efforts of the industry to improve risk management amongst commercial clients?
In the course of doing business, companies regardless of industry, are faced with a variety of risks, not all of which can be transferred to an insurance policy. The quantification of the effects and impact of reputational and brand damage on a business is an example of such an exposure which is challenging to insure against. With heightened competition and an almost static economy, now more than ever before, it’s imperative that management adopt a proactive approach to risk management.
Load shedding has plagued the South African economy over the last quarter, and is an example of a relatively new business continuity risk which was not an issue in the past but which now bears due consideration.
Advice and risk management services offered by commercial insurers should be welcomed by insured businesses. Whether it be advice pertaining to business continuity planning in the event of a power cut, representation at the Commission for Conciliation, Mediation and Arbitration (CCMA) in relation to labour matters, or contract and disclaimer vetting concerning compliance with the Consumer Protection Act (CPA) – accepting advice from experts in these fields is the best chance organisations have of managing the inherent and attendant risks. Utilising these value added service offerings, empowers businesses to do what they do best and to do it better; thereby reducing the cost of doing business and further enhancing the organisation’s competitive advantage.
What are you doing in this regard?
Camargue is well known for its integrated M-Cubed approach to risk transfer for its insureds. Firstly, it believes in empowering businesses through its complimentary risk management services to mitigate and manage uninsurable risks and empower management to run their business better. In the event of an insurable loss, the risk will be migrated to the insurance policy and the insured will be indemnified accordingly.
Amongst others, the comprehensive risk management services available to all policy holders include: private arbitration services to ensure efficient resolution of labour issues; telephonic advice on most legal matters including that in relation to the CPA; memberships for directors to the Institute of Directors South Africa (to ensure directors and senior management are educated and kept up to date on their fiduciary duties to the stakeholders); emergency medical evacuation for visitors to our insured businesses premises; on site risk surveys in relation to fraud risk which identifies key exposures and advises ways in which to mitigate such risk; bank account verification services for large payments; contract and disclaimer vetting to ensure that the business complies with current legislation; and crisis communication guidelines which addresses ways in which to reduce the impact of potential reputational damage on the business.
UMA’s seem to be doing well in the commercial space. Why would you say that is and is it sustainable in light of current regulatory changes?
UMAs operate in a niche space and provide much needed underwriting skills and expertise to the insurance industry. It is estimated that the annualised gross premium income of the UMA market is between R5.5 and R7Bn, demonstrating the significance of the collective UMA activities in relation to the greater insurance industry. Operating in a niche space, UMA’s are less susceptible to changes in economic conditions and less elastic to changes in pricing, as they tend to compete on expertise and offering, rather than engage in price competition.
Further, UMA’s tend to have fewer competitors, further enhancing their resilience to changes in economic and market conditions. Provided that UMA’s are proactive in keeping updated with changes in regulation, such as Treating Customers Fairly (TCF), it is reasonable to envisage that they will continue to thrive in the commercial space.