Currently, companies and organisations are keen to obtain any protection they can, particularly when it comes to professional and third-party negligence. With a tightening regulatory environment, and the stringent stipulations of the Consumer Protection Act (CPA), some may argue that SA is steadily catching up with the likes of Australia and the US in terms of legal accountability. Here are some developments we can expect to see in the liability insurance sector…
There is no doubt that third party-claims are on the rise, especially claims for injuries sustained on a business premises. The need for comprehensive liability cover within the SA mining space is also increasing, with regulatory bodies putting added pressure on companies to improve health and safety standards and procedures. In addition, employee rights are high on the agenda, with liability cases focusing on harassment and discrimination in the workplace becoming common place. Large manufacturers are also more exposed than ever before – if a product fails to operate according to specifications, all parties in the distribution or supply chain could now be held liable.
Crime doesn’t pay
Commercial crime is rife in South Africa (compared to other global markets) as a result of the low levels of internal controls and security measures currently in place within organisations. Companies have suffered severe losses, adding up to 100s of millions of Rands as a result of employees colluding to steal money or commit fraud. Very often, these employees have gambling or drug addictions and are forced to turn to desperate measures and unscrupulous activities such as faking receipt orders or systematically pilfering from company bank accounts.
Cyber liability cover, something companies previously overlooked, is now in high demand. The onset of the Protection of Personal Information (PoPI) Act will also spur organisations to prioritise security as well as robust IT infrastructure or run the risk of facing hefty financial and reputational losses when a data breach occurs.
A trend we have observed in the market is the quick decisions insurers need to make when underwriting these types of risks. Time frames are usually too short to consider all possible exposures and focus is placed solely on premium costs and not on ensuring that all potential claims down the line will be covered by the policy. This is where brokers with expert knowledge and skills are essential – insurers need to partner and share developments with their broker networks to ensure that they are well-equipped to advise clients on these specialised risks.
There are also numerous opportunities for cross-border cover in the African liability insurance sector. Very often, liability products in other markets on the continent are very general and tailored solutions are not available. Here, insurers can partner with operators on the ground in order to navigate local tax and regulatory frameworks and facilitate in-country product placements.
Going forward, we will still see customers concentrating on price rather than the structure of offerings. However, increased regulation and legislation as well as interconnected risks will certainly ensure that clients are more aware of liability exposures and the cover needed to mitigate substantial losses.
Nick Shutte, Regional Manager: Global Corporate (Cape Region) & Head of Financial Lines, Zurich South Africa