Specie Insurance: An update

In this age of specialisation it is both fitting and good business sense for a company to offer a specialist, focused product and service; this is particularly true for Specie insurance, which hones in on a very confined sector within the overall short-term insurance landscape.

Undoubtedly, Specie Insurance occupies a narrow, highly specialised niche within the overall short-term insurance market. Having said that, Polygon adheres to the principle that specialisation leads to effective cover at lower cost. Premiums are calculated according to the individual risk rather than simply being market related. In this environment, policy wordings are clear and concise and the cover, almost without exception, is tailor-made to the specific needs of the specific risk.

The objective of Specie Insurance is to provide cover for one of the most common and oldest risks, historically known as “Piracy” but in South Africa parochially referred to as hijacking or, more mundanely, as theft of cash and valuables while in transit or storage. The cover can be extended to include the risks of accidental and in some instances, malicious damage and, while it does not usually include fidelity cover, this can be arranged in certain circumstances.

While this is a niche market, it should not be construed as being stagnant; rather it is a growth market. Clients include security companies, Toll Road Concession holders, mines, major retailers, petrol stations, casinos and fuel retailers. The market has growth potential because anyone who regularly takes in and holds significant amounts of cash or valuables needs Specie Insurance cover.

Cash and money aside, “valuables” are typically construed as being securities, all forms of valuable papers such as cash letters, shares, debentures, bonds, bills, cheques and foreign exchange, precious metals such as gold and silver bars, diamonds and gemstones, jewellery and works of art, antiques and collectables such as coins, stamps, historic or rare books and high value antiques.

These covers are available to the owners of the goods or to the entities entrusted with the goods against the liability while such cash or valuables are in their custody and care.

Insuring such risks in the normal commercial market would be costly with a very high excess. Only with deep knowledge, understanding and experience of the specialist Specie Insurance and its specialised risk management requirements can competitive pricing and excesses be offered to protect the interests of all involved.

Today, Specie Insurance customers constitute individuals or businesses that sit with cash or other high value items either in storage at vaults, safes, art galleries or museums or when these goods are in transit.

Technology has brought additional risks into the Specie Insurance arena. Typical is the proliferation of bank Automatic Teller Machines (ATMs) countrywide, each one holding quite substantial sums of cash, the transportation of which also constitutes a risk over and above the storage aspect of each ATM. Then consider that all of the country’s mainstream road toll gates daily take in large amounts of cash, as do major supermarkets, retailers, wholesalers, fuel retailers and convenience stores.

All of this cash has to be stored and transported. This in itself constitutes a major market, not even considering other Specie insurance demand related to precious stones, jewellery, gold, artworks and collectibles.

At present, Polygon is the only Specie-specific underwriting agency operating in the South African market but competition is expected to develop over the next five years or so. This insurance is now available only through the formal FSP-licensed broker network in South Africa, which is the correct channel for such a specialised line of business, after being launched by Polygon at the beginning of April. While the product was operational in 2003, it was not available to the broker network until now.

Specie insurance risks require careful, diligent research and evaluation but since 2003 a solid book and strong partnerships with key local and international players have been built up. In the past, limited cover was available from local insurers, who placed the majority of these risks in the London Market. Polygon partners include insurer Resolution Insurance Co Ltd and two major international insurance players of more than 100 years’ standing, Price Forbes and Swiss Re. Grail Africa, a short-term insurance management software specialist, provides policy management software tailored to the needs of Specie insurance.

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