New liability insurer Quantum offers products tailor-made for high growth security industry

18 March 2011 Quantum Liability Underwriters

The high growth South African security industry, which boasts more than 5 000 security companies with a total of more than 300 000 employees, will welcome the entry of a new specialist insurer focused on providing liability insurance cover developed specifically for unique security industry needs.

Quantum Liability Underwriters, headquartered in Centurion, has entered the market to offer security companies cover for the commercial liabilities they face in providing security services to commerce, industry, farms and private residences.

MC du Toit, Quantum’s chief executive, says security companies, whether they be full service guarding, Cash-In-Transit or alarm and electronic protection system installers or providers of all these services, face the risk of significant damages claims and legal costs resulting from liability exposures.

“These claims can be of a magnitude that may bankrupt a security company if it has no or inadequate security liability cover. Many of the larger clients of security companies in fact demand that security companies have proper insurance cover in place.”

Du Toit, a Chartered Accountant with B Com Hons and B Acc degrees and 16 years of experience in the security industry including six years as CEO of Coin Security Group, has been involved at director level in the insurance industry for the past six years. He adds that the security liability insurance market in South Africa has until now been limited in terms of choice of insurance products and providers.

“We saw a gap for a more comprehensive offering, so Quantum provides general public liability cover for injury or property damage arising from security duties, with extensions for defamation, statutory defence costs and employer’s liability.”

Additional specific indemnity covers include pollution liability, products liability and liability for security claims that could arise from injury to people or property damage while in the care or custody of the security company. Wrongful arrest cover is also offered.

Typically these liability exposures are covered within the following security services offered to secure domestic, commercial and industrial premises: static guards and dogs, access and egress control, the inspection and confirmation of goods leaving the premises and monitoring and armed response.

Other exposures include the protection of specified people, VIP protection and contracts covering general security, access control, parking, crowd control, the escort of people or vehicles carrying valuables or cash in transit and protection services for exhibitions, sports events, concerts, conferences and other similar events.

Du Toit adds that there are extensions for negligent advice and firearms. Professional indemnity is offered against claims arising out of injury or damage to property as a result of professional negligence and an extension for medical response and ambulance services is also offered.

Marketing of the Quantum products and services is the responsibility of Quantum director Cornel Schoeman, who also has extensive experience in the security industry. “Partnership is a key word in our business and we are offering brokers a new market opportunity with both capacity and expertise,” said Schoeman. “We will be distributing these products through a select group of brokers and intermediaries.”

Security guards and control room supervisors carry a large burden of responsibility. Du Toit points out that their clients rely on them to keep their premises, whether hotels, restaurants, stores, warehouses, offices or homes and the people in them, safe and secure at all times.

“Crime is unfortunately a fact of life and a variety of incidents occur daily, often where security guards are present. If damage is caused and people are injured as a result of an incident, the security service provider can be held liable when the victims seek restitution.

“Our goal is to help security companies overcome the potentially crippling effects of liability claims and litigation by providing innovative alternative and customised risk management solutions supported by solid underwriting. We have a comprehensive product range which will be continually enhanced and developed to meet client and market needs.”

Quantum’s partners include local insurer Resolution Insurance Co Ltd, Africa Re a long-established reinsurance specialist in the Africa market, specie insurance specialist Polygon Underwriting and Arma Iuris, a specialist in providing legal services to security providers.

Source: FA NEWS

Small businesses may pay high price for ignoring CPA

Liability claims are likely to escalate says leading insurer.

Smaller companies may be caught unaware by the weight of the Consumer Protection Act (CPA) as many have not taken this important piece of legislation seriously enough and ensured that their processes are aligned with the requirements of the Act.

“The full impact of the CPA is still to be felt by the insurance industry as South African consumers get used to the protection they receive under the Act,” says Shehnaz Somers, head of commercial underwriting at Santam, South Africa’s largest short-term insurer. “We have found that large companies, particularly those with their own legal departments or legal advisors, started to gain an understanding of the impact of the Act on their business very early on. However this hasn’t necessarily been the case in smaller operations.”

Somers believes the number of liability claims is likely to escalate as consumers start to understand their rights and their access to the various consumer commissions improve.

Ahead of this event all businesses owners are encouraged to protect themselves from an insurance perspective to mitigate potential risks.

The face of the supply chain has changed. Defective products have historically only been the responsibility of the manufacturer, however, since 01 April 2011, the retailer and everyone else in the supply chain can be held liable for failed goods. Thus, all businesses should be covered for products liability even if they are not involved in the actual manufacturing of the product they are selling.

“Now that merchants are also to be held liable for faulty goods, there can be grim financial repercussions for those who are not adequately covered by products liability insurance,” cautions Somers.

Intermediaries should ensure that their clients are insured for the highest limits of indemnity they can afford as the size of liability losses is very unpredictable.

Businesses must also be prepared to recall any goods that are unsafe or pose a potential risk to the public in the event they may be asked to by the National Consumer Commission. Insurance for product recall is available from specialist liability insurers, but will usually only be granted to clients who have a comprehensive recall programme in place to ensure that the recall can take place as efficiently and cost effectively as possible.

The Act deals in great detail with unfair, unreasonable and unjust terms used in contracts and agreements, as well as the need to ensure such contracts are issued in plain and understandable language. Suppliers will not be able to ‘hide behind the small print’ and where contractual terms have previously enabled them, and their insurers, to deny liability claims, this may no longer be the case.

The Future of Business

Ultimately, the increasing amounts paid by insurers to third parties injured by the products and processes of businesses, will translate into increased premiums to sustain this very important source of insurance. In turn, such businesses will apply these costs to the goods they are supplying which mean ultimately the consumer bears the brunt of these costs by having to pay more for the product.
“As our judiciary and legislation is becoming ever more consumer driven, any ambiguities or unfair terms used by businesses in the sale or distribution of their products will no doubt be ruled in favour of the consumer. All documentation should be drawn up with a view to fairness to and understanding of the consumer,” says Somers.

It is up to businesses and insurers alike to ensure that the correct risk management and quality control measures are applied in order to reduce the risk to consumers and ensure that only high quality and safe products are released to the South African market. Businesses who do not demonstrate this obligation in the processes employed in the manufacture or supply of their products, may find themselves unable to obtain public liability insurance at all, or at exorbitant prices.

“We all have a role to play to ensure that our consumers are treated with the respect and care they deserve,” concludes Somers.

Source: FTI Consulting

In challenges lies opportunity

01 August 2013
Cornel Schoeman, GENRIC

Being an independent underwriting management agency (UMA) in the short-term insurance market has an abundance of challenges, but the upside of being fleet-footed is a huge advantage, and not one to be underestimated.

Independent operators in the short-term insurance market are beset by challenges, as opposed to being in the more comfortable folds of larger insurance companies and their distribution channels.

Independent challenges

One of the challenges for an independent starting out is to establish a large distribution channel. A start-up independent underwriting management agency (UMA) has to build its own broker base as opposed to tapping into a large corporate structure where this already exists says Lesley Kruger, sales manager at UMA Quantum Liability Underwriters.

"To successfully take your product to market, you have to have a productive broker network,” Kruger says. She is the chief architect of a new professional indemnity policy aimed at motor dealers and short-term insurance intermediaries, launched in May by Quantum, and underwritten by GENRIC Insurance.

When you are small and independent, having a broker network can be a major challenge. However, there is a way around this obstacle, Kruger argues. Smaller, niche insurers specialise in backing independent UMA’s who offer single line products. One such insurer is GENRIC, which can offer an existing sales and distribution channel to independent administrators and underwriters.

Opportunity in adversity

"Being a niche UMA is a model we understand very well, since we’re the mirror image of that. We work only with people who specialise and don’t generalise,” says GENRIC’s commercial executive, Cornel Schoeman, "the independent knows his product and clients intimately. He is small, quick and flexible in making decisions, like we are.” Indeed, in the challenge also lies the opportunity.

Kruger at Quantum agrees. "As an independent you’re flexible and agile,” she says. "You can be innovative in your product designs and be open to opportunity.”

Under the CPA, consumers have access to free legal assistance when they file complaints and claims, whereas motor dealers are left vulnerable with precious little support to fall back on.

"There was a clear need for a product like this,” says Lylanie Mackenzie, legal officer at Quantum. As a result, GENRIC has crafted and pioneered, in the space of one-and-a-half years, a one-of-a-kind cover through Quantum.

Help with running a business

However, independents have other challenges. In a smaller business, the independent also has to attend to indirect aspects of the business, like accounting and administration, human resources and contractual matters that could be a distraction from focusing on the core business of underwriting risks, Schoeman says.

"As an independent you have to be all encompassing,” he explains. "You have to be the accountant, the HR department, the legal department, all in one, which can cause such distraction at times that you have to take your eye off the main reason for your business to exist in the first place. This is a very real and big challenge for an independent.”

However, there are solutions to this as well, he argues. Niche insurance companies, like GENRIC, provides assistance to the independent UMA when it comes to administrative functions of running a business.

"For this reason, and the fact that we are open to new, innovative partnerships, for any independent looking for a house, they [independent operators] don’t need to be left out in the cold,” Schoeman says.

He argues that a niche product would find it difficult to get support from a large insurance company, which would first look at its bottom line, and give little assistance in terms of knowledge. And that is why smaller, niche insurance companies exist.

"The independent has challenges, yes, but these are not insurmountable. In fact, it can be used as a huge advantage,” he adds.

Source: FA NEWS