DREAM BIG on SMALLTO FOCUSING out Ofthebox Be Boldandthink Broker Profiling the Digital the Forceawakens: SPECIAL Focusonsmesandbluecollar FEBRUARY 2016

It’s the end of the world aswe know it It’s to acceptit should youchoose YOUR MISSION… DREAM BIG ON SMALLTO FOCUSING out ofthebox Be boldandthink broker profiling the digital The forceawakens: SPECIAL FOCUSONSMEsANDBLUECOLLAR FEBRUARY 2016

Editor Rianet Whitehead Tel 011 768 2299 Cell 082 467 1924 CONTENT [email protected] FEBRUARY 2016 Journalist Jonathan Faurie  Cell 079 566 8814 [email protected]  IN THE NEWS 33 Solving the puzzle of longevity in the market 6 Your mission…should you choose to accept it 34 Sustainable investing – the new investment Researcher/Journalist 8 Undercharging: the industry’s familiar villain horizon Myra Rego 10 Be bold and think out of the box 35 Raging bull awards recognise excellence Cell 082 291 8760 12 Always look on the bright side of life [email protected]  LIFE  PROFILE 38 Smoke signals of danger Ads & Subs 14 Fighting off the Big Bad Wolf Michelle Schreuder-Rankin  RETIREMENT Tel 011 768 2299  REGULAR FEATURES 40 Are female advisers taking the reign? Cell 083 787 4567 18 Prof Vivian: Churchill’s legacy: one market, [email protected] one regulatory system  EMPLOYEE BENEFITS 42 Key trends shaping the employee benefits Design & Layout  SHORT-TERM landscape Noël Schreuder 20 The force awakens: profiling the digital Tel 011 768 2299 broker  SME & BLUE COLLAR FEATURE [email protected] 22 Rise up and conquer the selfie generation 44 Delving into untapped market potential 26 It’s the end of the world as we know it 45 Protecting future employers is a tough ask Website and 46 Who needs ABC: Use EB instead DAILY E-NEWSLETTER  TECHNOLOGY 47 Mapping sustainability for blue collar offerings Get all your insurance news 28 Keeping up with the Joneses 48 Bottom-line performance: thinking beyond the at www.fanews.co.za. 30 From paper to digital: survive the journey obvious Subscribe to our daily free 31 Future proofing with a purpose 50 A blue light brigade that benefits society e-newsletter to stay 52 Battle tactics for the small business owner up to date.  INVESTMENTS 53 Focusing on small to dream big 32 Investing with an ‘undo’ button in challenging 54 Hand power over to the people FAnews is published by times Insurance Publications cc PO Box 2342  Wilropark 1731

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Articles in FAnuus are specifically written for the FAnuus magazine and do not appear in FAnews. Should you wish to receive the English version of the article appearing in FAnuus, please e-mail [email protected]

Complicated matters: emerging trends of 2016 The views expressed in the edito- The ramifications of an action rial, advertorials and advertise- Cross your T’s and dot your I’s ments are not necessarily that of the owners, publishers and edito- The love of sport: financial woes rial staff. Readers following any Educating clients on educational matters advice contained in the magazine Trust assets at divorce – safe or not? do so at their own cognisance. Playing the game the right way

3 Doing business better

ere at FAnews the year started on a high note with the filming of The Insurance Appren- Letter from tice 2016. Early in January eight young insurance professional took part in a fairly intense week of serious insurance business where they had to complete five tasks in five days. It was amazing to see how these participants grabbed every opportunity to learn about the THE EDITOR industry, their peers, what teamwork is all about and how to stand out as a leader. The Hfirst episode was aired on 18 February and the rest will follow every Friday thereafter (one per week), so if you have not signed up for the newsletters, make sure to visit www.TheInsuranceApprentice.co.za.

The UK has introduced the first Insurance Career Month and FAnews would like to get the initiative going to localise this initiative. A few industry leaders in the UK published an open letter, saying “Without insurance, there is no investment, there is no innovation, and there is no growth. Despite our essential role, the insurance industry in the U.S. faces a looming talent crisis. Forty five persent of management executives will retire in three years, and 400 000 positions are projected to be unfilled by 2020. Less than 5% of Millennials express interest in working in our industry. What’s clear is that the critical role our industry plays is not fully understood, particularly among Millennials. We need to do more to engage, educate and enlist the best and brightest to join us.” The scenario is pretty much the same in South Africa, so let’s get the conversations going.

All indications are that 2016 will be a tough year. The Rand is weak, the drought has really been bad, investor confidence is low, interest rates are increasing and we will see quite a few regulatory changes this year. Insurers are streamlining their businesses in a big way and every decision is well thought through… I cannot but wonder what 2016 has in store for us?

In the January edition of the SAIA Bulletin, Viviene Pearson, CE of SAIA, mentioned that the weaken- ing rand will most definitely impact the short-term insurance industry in the long run as consumers may lapse their policies, forcing insurers to increase premiums to maintain profit margins. Sustainability of affordable motor insurance needs to be addressed at an industry level, because the pool is getting smaller and the costs just bigger. Compulsory third party motor and property insurance is not an option anymore.

Rianet Whitehead One of the main theme’s we have this year is how to do business better. How do you change what Editor you do and how you do it to fit in with the challenges we face this year…. Turn your challenges into opportunities! Follow our blog on www.fanews.co.za and take part in the discussions around this very crucial theme.

Have a blessed 2016!



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Innovation House, 192 Bram Fischer Drive, Randburg | Private Bag x99, Bryanston, 2021 T: +27 (0) 11 790 5624, F: +27 (0) 11 790 5299 | E: [email protected], www.innovation-group.com/sa )LQDQFLDOVHUYLFHVRIIHUHGE\,QQRYDWLRQ)63 3W\ /WGDQDXWKRULVHGéQDQFLDOVHUYLFHVSURYLGHUDQGDVXEVLGLDU\RI,QQRYDWLRQ*URXS 3W\ /WG YOUR MISSION… ou might be forgiven for feeling environment in more than 25 years since the that you are being briefed ahead FSB and the Insurance Acts were first put in of a dangerous task in a Mission place. Impossible movie; we are by no means painting the industry in The first of these is the Financial Sector Regula- Ythat light. But the reality of the situation is that tion Bill (FSR Bill), which will introduce the Twin there is no exaggeration in the description of Peaks model of financial regulation. This will see the reality brokers faced in 2014 and 2015. the prudential regulation of insurance shift to the Now we have finally reached Destination South African Reserve Bank, while the FSB will 2016, a year that will change the face of the become a dedicated market conduct regula- industry. tor, to be termed the Financial Sector Conduct Authority (FSCA). Deliberations on the FSR Bill FAnews caught up with Jonathan Dixon, already started in Parliament towards the end DEO Insurance at the FSB, and Paul Kruger, of last year, and it is hoped that the Bill will be Editor and Writer-in-Chief of Investment promulgated by the middle of 2016. Indicators & Moonstone Monitor, to find out their view point on what the industry can The other major piece of legislation is the Insur- expect this year. ance Bill. The Insurance Bill will put in place the SAM framework, as well as a framework for Putting pen to paper formal insurance group supervision and a micro What can you as a broker expect from 2016? insurance framework. The Insurance Bill will be Well, 2016 will be a busy year from a regula- deliberated on by Parliament later in 2016, with tory standpoint. a planned effective date of 1 January 2017.

Two major pieces of legislation will be in Parlia- Enter the protagonists ment this year, which in combination will mean There will also be changes that you as a broker the biggest change to the insurance regulatory need to face. The other major cross-cutting

6 IN THE NEWS If you are reading this article, then you have survived two of the most challenging years the industry has seen in 25 years. And yet, more challenges await you. Your mission, should you choose to accept it, is to negotiate the challenges that the year poses, to comply with the requirements set out by the Financial Services Board (FSB) and to work towards prosperity. should you choose to accept it...

regulatory reform that will be taken forward protected, while at the same time taking ing practices that drive unfair outcomes. He in 2016 is the Retail Distribution Review cognisance of the need for aligning member points out that the FSB’s experience has (RDR). interests with the fair treatment of clients, been that those firms who have adopted a which lies at the heart of the proposed strategic and risk-based approach to imple- An RDR Phase 1 Update was published in changes. menting TCF across their entire business, are November 2015 that outlines the reforms to much better equipped to identify and resolve the regulatory framework for financial advice Product providers, as major employers, risks to poor customer outcomes, than those and distribution that will be implemented in have an equally significant task to ensure the who have taken a reactive, compliance- 2016, many of which will impact the insur- best outcomes for both the industry and its based view. ance sector. Draft regulatory changes will be clients. published by April 2016 for public comment. Final nail in the coffin Consultation will achieve so much more than At the end of the day, the FSB wants to By the end of 2016, the FSB also hopes to confrontation. Kruger points out that one work towards creating an industry which have finalised detailed proposals for Phases must bear in mind that the change envisaged is enabling for brokers who have the best 2 and 3 of the RDR, for implementation in the industry is not a uniquely South African interest of clients at heart; the other side of from 2017 onwards, as outlined in the RDR phenomenon, it happens all over the world. this coin is that the actions of the FSB want General Status Update published in Decem- He adds that the dramatic reduction in the to rid the industry of rogue agents: those ber 2015. number of advisers in the UK, for instance, brokers who only act with their best inter- after the replacement of commission with ests at heart before the clients. Dixon highlights that another big regulatory fees, certainly affected the views of local and supervisory focus in 2016 will be on legislators. We need to accept that change is One must bear in mind that one of the most access to information and data exchange in inevitable, and that neither fight nor flight is important drivers of change is the need to outsourced business models in the insurance the solution. professionalise the industry. This will become sector, such as binder arrangements. There even more important if a proposal in the is a substantially increased risk that poor The TCF question new Fit and Proper requirements, which outcomes for customers and financial risks While we are five years into the existence sets specific standards for the appointment of may not be adequately identified or managed of the concept of Treating Customers Fairly new representatives, is implemented. in business models where a significant (TCF) in the industry, Dixon points out that portion of an insurer’s activities is outsourced there are still some companies who may not A more professional industry will draw a to a third party without having proper gover- be fully embracing the objectives set out by higher calibre of job seekerS. Most people, nance and oversight in place. the key document. if they look back to when the Financial Advisory and Intermediary Services Act first He stresses that effective oversight requires The FSB has embarked on a process of became a reality on 30 September 2004, adequate management information, which incremental implementation of the TCF will acknowledge that the way in which they in turn requires insurers to have robust outcomes, gradually embedding the TCF conduct business since then has certainly systems and processes in place that allow for approach in the way it supervises regulated become a lot more professional. the exchange and management of relevant, firms as well as in the way it will develop the comprehensive and reliable data. regulatory framework. Being taken out of one’s comfort zone is never pleasant, and following a head in the Catch more flies with honey Some significant TCF aligned market conduct sand approach only postpones the inevitable. Building a world class industry cannot be regulatory and supervisory projects have It is possibly better to embrace change, done without the broker; and the broker can already been outlined to the industry. RDR unlock the benefits, and make the fair find ways to prosper in the industry. in particular is a clear example of the FSB’s treatment of customers the reason for the changing approach to market conduct existence of your business. There is a huge responsibility on industry regulation. media to assist with the understanding By far, most of those who survived in this process through the provision of accurate Dixon recognises that the FSB has seen industry did so exactly because the inter- refined information. Representative bodies many examples of firms taking their TCF est of their clients always came before their will play an increasingly bigger role in ensur- commitments to heart, but notes that more own. For them, the transition will be more ing that the interests of their members are work needs to be done to eliminate remain- profitable. 

IN THE NEWS 7 UNDERCHARGING: the industry’s familiar villain Advisers and agents who undercharge do a disservice to the industry and may also signal their lack of ability.

e are currently in the midst of a price war in the want to stay the distance need to have a sustainable client industry where clients will move between service base. To achieve this, they need to provide a quality, reliable providers depending on price. But are service service and build a long-term relationship. providers who offer lower rates providing a good Wenough service? • They may be unqualified. Before the current more regulated environment and with low barriers to entry, anyone was able Historically, it seemed to be industry practice that advisers to set themselves up as a financial adviser. Today we have far would uniformly charge the maximum commission provided in more controls and regulations in place, requiring advisers to be the recommended commission scales. This was widespread and adequately qualified and licenced to practise their trade. If still commonplace in spite of the commission scales being recommen- not fully compliant with the regulatory requirements, advisers dations only. may opt to charge a lower fee.

Fierce competition • They may not be around for the long term. Some people enter Once the market became more competitive, some financial advis- the profession with the aim of making a quick buck. These fly ers took to competing on fees. Clearly, this is but one of a range of by night operators are what I refer to as hit and run practitio- elements where advisers can differentiate themselves from other ners, and they may be in it for a brief period only. These are industry players. the advisers who typically give the industry a bad name as they do not play by the rules. Other options can include the level and service quality provided as well as the type of relationship they form with their clients. No service here An adviser who is no longer in business when a client needs to A move towards lower rates is, in itself, not a bad thing; and it make a claim on their policy is certainly not providing the service certainly helps the consumer. However; when fees are cut to an the client signed up for. And if they gave bad advice, they are not excessive level, the result is poor service where both the industry around to pick up the pieces. and the consumer suffer. A fair level of commission is essential to preserve and protect the Would you take second best? advice industry. Quality advisers need to be able to generate a I would like to make an analogy to the medical profession. How sustainable income or they will leave the profession. If it is made comfortable would you feel getting a cut-price operation? What too hard for them to earn adequately, we risk losing them to will you think about the ability and quality of a surgeon who is another industry and the advice sector will be left with those of prepared to lower his or her fees: that the operation might be poorer quality. suspect? That proper procedure may not be followed? That you may face a higher risk of infection? It is better to encourage a fair and sustainable pricing structure in order to ensure that the best brokers and advisers remain in the If a financial advisor undercuts on price, the concern for that industry. advice is no different to the situation of a doctor who undercuts on price. Lowering fees indicates that an advisor believes the advice given is of a lower value, and clients will see it that way too.

Explaining rationale There are several reasons why an adviser will opt to provide cut-price advice: Paul Myeza • Advisers may be desperate. They may have so few clients that Chief Executive Officer they will do work for any amount. However, advisers who Lion of Africa Life Assurance

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Investors are advised to familiarise themselves with the unique risks pertaining to their investment choices and should seek the advice of a properly qualifi ed fi nancial consultant or adviser before investing. 9 BE BOLD and think out of Although it may seem bizarre ttoo some, design thinking is vital for the SSouthouth African the box insurance industry. nsurance as we know it is changing; so, they seek and identify industry cover thatat consumers are more connected and addresses their risks. tech savvy. They are demanding more flexible products to suit not only their If the local insurance industry is able to be pockets, but also their own unique flexible in order to meet consumer needs, Iindividual requirements. Gone are the days we could see a big change in the industry’s of developing products for mass appeal. mindset. Future insurers need to be forward thinking, developing more flexible products to However, very rarely do local consumers drive competitiveness and to retain a loyal have the ability to discern insurance productscts customer base. and services that meet their own needs. Rather, they measure insurance offerings Get out the drawing board based purely on price. Because of this, localal Design thinking is an extremely attractive industry finds itself in a precarious situation, approach as it entails a core focus on the where their only option to stimulate growthh needs of the consumer, designing products is to decrease premiums. pertinentti t to t them, th withoutith t which hi h design d i that precisely appeal to their specific require- thinking will not be successfully imple- ments. This concept then guides the process But introducing design thinking in the mented. Clients require peace of mind of product and service creation. development of insurance offerings has the when engaging with the insurance indus- potential to change how consumers think. try, knowing that their specific needs are It embraces a consumer centric thought met. They need to be comfortable that process whereby product design and deliv- Effective thinking is key the premiums they are paying are fair and ery is driven by core consumer needs and For it to be effective, the industry would address their risks adequately. requirements rather than pure mass appeal. need to be equipped to design and produce niche insurance products; this is the true The overall effect will be a more positive Through this applied thinking, insurers have challenge. Product offerings need to remain customer journey, resulting in the spread of the ability to push products and services into relevant over time whilst still providing positive news. This would lead to a change the market that have the potential to garner adequate returns. But to start changing in industry thinking affecting the develop- a favourable reaction. consumers’ minds, the industry needs to be ment of local insurance offerings. closely aligned to products that are game But the focus is not only on having attractive changers. No longer would purchasing insurance be offerings. Design thinking also encompasses seen as a grudge purchase by consumers. extending further services, an experence and Customisation plays an important role here. Design thinking is an entry point into an ecosystem around products and services. For example, you have a regular Uber user untapped market that is either self-insured who may not have comprehensive vehicle or uninsured. Changing thinking insurance, but they can insure themselves Historically, consumers have always viewed through a pay-per-drive system. This type insurance as a grudge purchase. This is due of insurance is flexible and adaptable to the to the limited opportunity for customisation client’s specific needs. or lack of flexibility. Applying design thinking to insurance has the potential to create offer- Breaking bounderies ings that are solutions-based and provide This same principle is applicable to property value that is tangible and economically justifi- insurance, as with rental websites like able to the consumer. Airbnb. Comprehensive insurance could be tailored depending on when a property is As a result, consumers are forced to think occupied or unoccupied. Carlos Morais critically about their unique risks and how Assistant Executive for Insurance they want these risks addressed. In doing A client needs to be able to address risks Innovation Group

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11 Karin Muller, Head of Growth Market Solutions at Sanlam o person or organisation can The Bureau of Market Research shows Ronald King, Head of survive if there is a constant air that while South Africa experienced slow Nof negativity surrounding them/ economic growth on one hand; on the Technical Support at PSG it. Difficult as it may be to see a silver lining other hand consumer spending continued in the current economic climate, a host of to rise and personal disposable income As a financial adviser, it is difficult to feel trends are stacked in favour of the financial reached an all-time high in the third positive about the year ahead. The Rand services industry this year. quarter of 2015. has thrown us for a loop and there is little in the way of positive economic news. Technology is one of these trends. More A tough time for decisions than half of the South African adult popula- In short, South Africans are at pains to In addition, we are experiencing the most tion have smartphones which presents the try and navigate a sensible financial road regulatory changes affecting our industry opportunity for digital services and despite for themselves and chances of emotional than ever before. December 2015 saw the slow economic growth in the country, decision-making based on fear abides. six publications from the Regulator on consumer spending continued to rise last This, undoubtedly, presents a scenario for future changes affecting our lives, and it is year. professional intervention. Helping your easy to become despondent. clients to focus on the longer term impact Brokers and advisers today find themselves rather than the short-term remains a But I was taught a very important life in an age of change and opportunity, and valuable role you can play in their financial lesson when I started out as a young finan- those who embrace the challenge are likely wellbeing. cial adviser. Granted it was a long time ago, to lead the future of advice in South Africa. but it still holds true today. When there are A critical success element for financial changes, there are also new opportunities. Hail the Age of the Consumer planners will be their ability to embrace We live in the Age of the Customer; our new and interesting ways in which to In other words, to change the world and success depends on our ability to under- reach clients. our environment, we need to change our stand and engage with people’s needs mind sets. If you are able to do that you and behaviour. Contrary to what may Reaching a client in this context calls for will be able to see all the opportunities that have been predicted years ago, today’s an understanding of where people find 2016 could bring, and you will prosper. consumer wants to engage with a financial themselves, how they engage with infor- planner. mation and what their preferences are. Finalise the blueprint We have a good idea as to how the next This trend shows that consumers are The adviser or broker who cracks the five years will unfold, and we can therefore becoming more aware of the challenges world of hashtags, smartphones, social plan ahead. But if you continue to moan they face; not only in selecting the right media and video will surely experience and groan and believe the world is coming financial products to serve their needs, but results. Relevance will remain the key to to an end, the world as you know it may also in successfully managing their income. successfully engaging with your clients.  very well come to an end.

In 2016, determine what drives your business and evaluate how you need to change things to adapt to the new realities in this country.

Take the leap of faith to change, put in the Karin Muller Ronald King hard work and change your mind, because Head: Growth Market Head: Technical it will change your destiny.  Solutions - Sanlam Support - PSG

12 IN THE NEWS Who will lead the pack?

THE INSURANCE

APPRENTICE 2016 www.TheInsuranceApprentice.co.za 1313 Fighting off the BIG BAD WOLF We are all aware of the child’s story about the three little pigs. The cleverest of the three built his house out of bricks, and the Big Bad Wolf could not huff and puff and blow it down. One would say he was prudent and forward thinking in that he saw a risk and took steps to prevent it from becoming an issue.

n a world where cyber-attacks are capital and have a very large need to protect The price is right occurring on a frequent basis, are we sensitive information. But this need is no The pricing of the new product is also being prudent in protecting our data? less pertinent when it comes to small and tailored to fit the finances of an SME. Or are we taking the view of the other medium enterprises (SME). In fact; one Traditionally, cyber cover has been out of two pigs? Cyber policies are becom- may argue that the need is even more the reach of small businesses due to large Iing a crucial part of a company’s insurance pronounced with these companies. premiums and excesses, but we’ve changed cover; and it is no longer the realm of larger all that and a relatively small SME can get corporates. An SME may never recover from a cyber- themselves insured for under R10 000 per attack. Invariably, an SME may not be able to annum. Taking care of the little man afford a messy legal battle following a breach In the past, cyber policies were largely or two weeks of down-time following a hack SHA believes that the resultant damage designed to suit the needs of large corpo- attack. SHA’s new policy and our cyber risk of a cyber breach in a small business far rates. These companies have significant team work together to help mitigate that risk. exceeds that of a larger corporate as SMEs

Company type Risks Cover provided Stores data belonging to third parties (or employees) After a breach, the business may find it has to defend Legal defence costs and damages if the case is unsuccess- Home Owners Association, Professional services, Tourism, itself against and/or pay damages to third parties fully defended Real estate agent, Market research, Insurance Brokers, Once a breach occurs, there are costs and expenses This extension covers the costs Accounting / Auditors to notify effected individuals & the regulator, not to • to restore, re-collect or replace data, mention to get the business back on track • of specialists, investigators, forensic auditors or loss adjusters, • of the use of rented, leased or hired equipment, services, labour, premises or additional operating costs (including staff overtime) Interacts with customers via social media and other Most organisations use websites, social media The legal defence costs, legal liability to pay damages, electronic media platforms and other electronic media – face risk of public relations communication costs, claimants costs Health club (gym), Universities, Online retailers, Airlines, liability for defamation, copyright infringement, POPI and claims expenses arising from the performance of Travel agent breaches etc. multimedia activities Publishes material on a website There is always a risk of copyright or defamation The legal defence costs, legal liability to pay damages, Marketing agency allegations public relations communication costs, claimants costs and claims expenses arising from the performance of multimedia activities Has concerns about things like ransom ware or network Should your data or system be locked by ransom Costs of the investigation into the cause of, or the payment breaches ware or your company is threatened by cyber extor- of monies in response to or as a result of, an extortion IT consultants, Lawyers, Management Consultant, tionists, there may be costs in negotiating with the threat or ransom demand Telecoms, Engineers hackers or paying a ransom demand Worries about POPI fines (up to R10m per incident) HR, Legislation such as POPI (Protection of Personal The legal defence costs against the sanction as well as the Document storage Information) introduced the imposition of hefty fines, amount of the actual fine or penalty itself (as long as the penalties and even jail time regulator allows it) Sells or supplies devices that are linked to the internet Businesses that supply devices that are connected to The legal defence costs against such actions and possible (Internet of Things) a network may find themselves the subject of litigation damages to third parties Motor retail sales, Electronics retailers, Security companies, if hackers intercept these devices and cause physical Tech companies damage or injury Cannot operate if their networks are offline The company has been hacked and no one can figure IT Security & Incident Response Team: The expertise and Retailer, Airtime sales, Internet Service Provider, Airlines, out how to restart systems and operating services of an internationally recognised IT Security & Document storage, Mining, Energy sector, Military Incident Response service provider Reputation is paramount / survives by word of mouth Every business cares about how their customers Covers the costs of a public relations consultant or related Restaurants, Salon/spa, PR company, Hospitality, Advertis- perceive it advertising expenses in order to mitigate any reputational ing/broadcasting or material brand damage Provides professional IT services Technology companies Insurance for your legal liability to pay damages, claimant’s Tech companies costs and claims expenses arising from the rendering of Professional Services

14 PROFILE don’t always have the funds to spend on clients so that they don’t need a separate The company needs to react quickly and IT Infrastructures or Security and because policy. decisively when an employee brings the of this many insurers are not willing to take business into disrepute, but they may also on the risk. SHA has taken a view that the Clarifying the issue have to defend themselves if some third businesses that make up the backbone of SHA will indemnify the insured for monetary party - possibly offended by the social media our economy need protection as much, if loss sustained as a direct result of the post - decides to take action against them. not even more, than corporates. insured’s failure to prevent a network Our cover is not intended to protect individ- security breach. The maximum amount uals who post inappropriate or offensive Money’s too tight to mention payable is R100 000 in the aggregate, and material but rather to protect the company Most cyber policies exclude financial losses the deductible is R10 000. that may be dragged into litigation following and actual funds that are stolen. Our new the actions of an employee. policy covers this exposure. The policy also Monetary loss shall not include trading losses recognises that business use of social media or liabilities, or losses suffered as a result of SHA’s SME Cyber Policy will indemnify the platforms is growing and with this increased transactions involving Bitcoin or any other insured company for its legal liability to pay visibility in the social space comes the risks of virtual currency. Other instances that are not damages, PR communication costs, defence defamation – often perpetrated by employ- covered include the face value of coupons, costs and claimants’ costs arising from a ees - and even copyright infringement. price discounts, prizes and awards. Losses wrongful act that causes harm to the reputa- directly or indirectly arising from Phishing or tion or character of any person or organisa- The policy provides liability cover to protect incorrect, fraudulent or unauthorised transfer tion in the performance or failure to perform the business against these types of events. instructions by an employee are definite multimedia activities including digital and Traditional cyber exposures are also covered exclusions on the policy. social media activities. such as liability following a network breach, the costs of reinstating a damaged database Fighting the dark cloud after an attack, public relations costs to Over the past few months, we have seen protect the brand, credit monitoring for the dark cloud of racism rear its ugly head in clients of the insured whose personal info social media and we have seen the impact of has been compromised, and loss of business these comments on the people involved. Candice Sutherland income while the system is offline. Companies spend a lot of time and money Business building their brands. That can all be Development We have also included professional indem- damaged very quickly if public sentiment Consultant nity insurance for technology professionals toward the business changes following tweet SHA Specialist who may be providing IT services to their or Facebook post. Underwriters

PROFILE 15 Transport cover for business – at MiWay you can broker it

Morné Stoltz: Head of Business Insurance

THE transport and logistics business prime targets. Vehicle claims are the most Insurance, business owners will enjoy a flat is a highly specialised and challenging frequent, while Goods in Transit claims can excess on all commercial vehicle policies, industry with no two businesses alike. be the most expensive. Often vehicles are making budgeting in the time of a loss much It demands unique insurance cover that found abandoned following a theft or hijack- easier. Often a percentage excess is applied addresses every aspect of freight and ing with the items inside the vehicle stolen. by other companies, meaning that the first transport risk. Our Business Vehicle product is supported amount payable by a client can be astronomi- by a Goods in Transit policy to address these cal when the item being claimed for is of a MiWay Business Insurance is designed to risks,” he says. high value. give peace of mind insurance freedom to both short and long haul transport operators Stoltz notes that Liability insurance should Broad #insurancefreedom across multiple risk areas. not be overlooked either. “This covers the “Scientific rating and a broad spectrum of insured for injuries and/or loss to third parties benefits and features ensure that we offer Country wide innovation where the insured can be held legally liable.” what our clients need. We also include MiWay has recently extended the acces- many benefits while offering a large range sibility of its proven insurance solutions to “Areas that should also be included in trans- of optional covers, truly allowing clients to more people and businesses by providing port specific insurance range from roadside create an insurance product that is designed brokers access to perhaps the most innova- assistance appropriate to the size of the specifically for their needs,” concludes Stoltz. tive personal and business portfolio available truck covered, through to recovery. At in the market today - hereby allowing inter- MiWay, we offer optional cover for neigh- By adding brokers to its channel to market mediaries around the country to broaden bouring countries and extended territories and by adding the business product to the service offerings to customers. into Africa. It is important to note what terri- broker offering, MiWay provides more torial limitations are on your insurance policy. choice and more options, increasing compe- Morné Stoltz, MiWay’s Head of Business There may be limitations on the type of tition in the South African insurance market Insurance, explains that MiWay offers cover you have and in some instances there to help give customers the right cover at the standard and perils based cover, but always may be no cover for roadside assistance or right price. recommends full comprehensive cover to the repatriation of a vehicle following an ensure that all possible risks are covered. He incident,” he says. Brokers will earn standard regulated commis- notes that it is essential to cover the trans- sion; MiWay will also pay referral fees to those port company’s assets, loss or damage to Stoltz points out that not all transport working in the financial services industry, but third parties’ goods and to have sufficient policies are the same: “It is essential to note who are not accredited to sell short-term or liability limits. the terms and conditions of the policy along business insurance. with the excess that is payable. In the current Transport specific economic times, you have to ensure that you With MiWay Business Insurance, you and “Many vehicles spend a large part of the day are offering your clients a quality product your clients get #insurancefreedom travelling, increasing the risk of an incident that protects them in the correct manner.” with a great range of benefits and cover happening. By keeping to dedicated routes for amongst others; business vehicles on a fixed timetable, it makes vehicles If your client switches to MiWay Business and goods in transit.

[email protected] 16 For more information to market our business product, MiWay is anemail Authorised Financial Services Provider (Licence .no: 33970) 92099/E

Big or small, we cover them all.

At MiWay we understand that the transport and logistics business is a specialised industry. That’s why we give you and your clients freedom to choose the type of cover that is the perfect match for each individual business. MiWay Business Insurance offers cover for business vehicles, goods-in-transit, all risk, ofﬁce contents and a great range of other beneﬁts. Isn’t it time your clients experienced #insurancefreedom? Why any other way?

To be part of our select broker channel, call 0860 64 64 64 or email [email protected].

An Authorised Financial Services Provider (FSP 33970)

17 CHURCHILL’S LEGACY: one market, one regulatory system Setting out the history of insurance regulation, we reached the point when the first piece of UK

REGULAR FEATURE legislation was passed, the Life Insurance Act (1870).

 IN PERSPECTIVE WITH PROF VIVIAN 

his Act was passed as a consequence of the collapse Re-examining the system of the Albert Life Company. This highlights the regula- As a result of the Burnard scandal, the Committee of Lloyd’s was tory solving process; a problem arises, the cause of the forced to re-examine the fragmented self-regulatory system at problem is identified and remedial steps are taken, and if Lloyd’s. The Committee looked at the proposals of Heath who necessary, legislation is passed. advocated that syndicates should be subject to an audit signed off T by an accountant, a premium trust fund be established into which all Two systems evolved premiums had to be paid and deposits payable by all. It is accepted that much of the regulatory steps looked to Lloyd’s for guidance. The next step also learnt from what happened at Lloyd’s, The Committee obtained a legal opinion which concluded that the which as is well known, is not an insurer; it is an insurance market. Committee had no legal authority to insist on any of these changes, since the Act which governed Lloyd’s only dealt with marine insur- Before 1900, Lloyd’s dealt mainly with marine insurance. Neverthe- ance. less, some syndicates started writing non-marine especially Cuthbert Heath. On the other hand, the press got wind of the problems at Lloyd’s and voiced concerns about the Lloyd’s system. Major insured’s Non-marine classes were looked down upon by the established indicated they would be moving business away from Lloyd’s. Lloyd’s marine underwriters. Some of the more perceptive underwriters realised that two regulatory systems had evolved; one for The members at Lloyd’s agreed to implement the reforms. Lloyd’s marine insurance and one for non-marine insurance. They agitated as a market henceforth would be holistically managed. No longer that a single system should be adopted. would the two markets be regulated by two different systems, one for the marine market and one for the non-marine market. The Members of marine syndicates, for example, had to lodge a deposit Lloyd’s Act of 1911 removed the marine restriction which existed in of £5 000, while non-marine members were not required to do the 1871 Act. so. Heath tried to get Lloyd’s to accept a deposit for his non-marine insurance and faced considerable resistance. Therefore, the simple regulatory philosophy was established; one market, one regulatory system. The Burnard scandal In 1902, Lloyd’s had to deal with the Burnard scandal. Burnard was a Insurance under one system member of a Lloyd’s syndicate and also managed the syndicate. At the Meanwhile, outside of Lloyd’s, the corporate insurance market was time, there were virtually no regulatory requirements binding opera- developing. As a result of the collapse of the Albert Life Company, tions at Lloyd’s. the Life Assurance Act (1870) amended in 1872, governed the life industry. How were the other classes to be regulated? Syndicates entered into insurance contracts, set premiums rates, collected the premiums and paid claims. The net result was syndi- The possibility of two regulatory systems evolving existed; one for cates, as in the case of insurers, held quite a lot of cash in the form of the life market and one for the short-term market. The Lloyd’s collected premiums. Those premiums were needed to pay claims, as experience had shown that this was not the correct route to go. and when they arose. A Bill was introduced in parliament by Winston Churchill, as the In the absence of any regulation there was nothing stopping syndicate President of the Board of Trade, which became the British Assurance managers from investing those premiums in other activities. Burnard, Act of 1909. This Act repealed the Life Assurance Act and included in addition to being an underwriter, also had other businesses. One of all classes of insurance under one system. these was that of a travel agent. The system which was enacted was the Lloyd’s system, and Lloyd’s One of the projects the travel agency invested in was King Edward’s was exempted from the Act in terms of a schedule to the Act Coronation. Unfortunately, King Edward became ill and the corona- providing it complied with the provisions, which it clearly did. So the tion was postponed. Eventually, Burnard suffered a loss of £100 000. fundamental principle was adopted in legislation for all insurance; This was an enormous amount in those days and was unable to pay one market, one regulatory system. That is Churchill’s legacy to insurance claims submitted to the syndicate. society.

18 REGULAR FEATURE Is there a connection between Churchill and Lloyd’s, a connection of such a nature that it can be accepted that the developments at Lloyd’s influenced Churchill?

Churchill married Clementine Hozier. Her father was Colonel Sir Henry Hozier, the secretary of Lloyd’s, from 1874 to 1906 the period when the British Assur- ance Act was passed. Robert W Vivian There can be little doubt that Churchill was extensively briefed by his father-in-law Professor of Finance & Insurance about the troubles at Lloyd’s, and the steps taken to deal with those problems. University of the Witwatersrand

Holistically regulated What does this have to do with regulation in South Africa? During the late 1800s, the South African insurance market developed rapidly in the Cape. Insurance expertise came from the UK via the long list of UK companies. Shortly after the 1870 Act was passed in the UK, the Cape Parliament followed suit with the Cape Act.

Once the 1909 British Act was passed, work started at the Cape to produce a similar Act in South Africa. Of course that period was dominated by the Second Anglo-Boer War and the formation of the Union. In 1923, the Union Insurance Act was passed. Agata MacGregor Associate Lecturer in Insurance If the parliamentary debates are read of the time, the reliance on the work done University of the Witwatersrand at the Cape and the British Assurance Act is noted. Oddly, when the two current insurance Acts were passed in 1998, the Churchill legacy – one market, one system, was forgotten and two acts passed, one for life and one for short-term.

Professor Jan Tinbergen was the first Nobel Prize winner in economics in 1969. He espoused a regulatory philosophy of one policy - one instrument similar to the one market, one regulatory system. Legislatively, this seems to work better than complex inter-related systems. Think of the judicial system, the police investigate crimes, a different body - the prosecutor, prosecutes the case and a different institution the judiciary judges the case. They are separate institutions, each with non-overlapping functions. Justine van Vuuren Thus, in the UK from 1909 until 1986, the insurance market was holistically Associate Lecturer in Insurance regulated which worked exceptionally well – that is Churchill’s legacy.  University of the Witwatersrand

REGULAR FEATURE 19 THE FORCE AWAKENS: profiling the digital broker Today we are starting to see the changing face of insurance on a global scale.

nsurers in the Netherlands are now using Big Data strategies and collections. Both the broker and the insurer should be deliv- to price insurance policies. The Germans, more specifically ering improvements that benefit the customer – an omni-channel Ergo Direkt, are selling policies online; customers use an approach is an excellent departure point. electronic signature and receive their policies within three business days. Trend setters I Near the end of 2015, Accenture’s Digital Life & Health Innova- In South Africa, we are starting to see mass innovation with insur- tion Tracker identified five key trends shaping the insurance ers finding a unique product offering to attract clients. industry in mature markets: • Extended ecosystems: Innovative insurers are partnering with Keeping pace players outside of the insurance sector and even beyond finan- It is clear that the world is changing, and it is imperative that insur- cial services. ers keep up. For instance, stuff insurers are grappling with is how • Culture of sharing: Insurers are generating new business to insure the driver-less cars and rocketships clients will invariably opportunities and are enhancing their brands through social own in a few short years. aggregation media and initiatives. • Mobility: Mobile technology allows customers to use products But insurers are not the only ones who need to adapt, brokers and services when the need arises; anywhere, anytime. bear the real brunt of this change. They are in a precarious • New market opportunities: Insurers are introducing new position; they have to keep up with the 175 South African insur- elements of competitive differentiation and increasing sales ers as well as understand the product and policy updates to best opportunities and new business. advise their clients on personal, business, commercial, or indus- • The customer experience: Improved customer experience trial insurance. It’s a mission. enables brokers and insurers to increase the perceived value of their products and services by enhancing consumer satisfaction Added to that, the fact that the consumers are evolving much and meeting rising expectations. faster than the insurer, and that typical engagement and sales techniques that worked 10 or 20 years ago are now old hat and There is a concern that going digital may be costly. And in some reserved for much older clientele. cases it is. But you have to weigh out the pros and cons to see it if will benefit your business in the long run. Bank on digital? Do brokers need a digital presence to succeed? Not necessar- Each of these trends are firmly rooted in digital. Bottomline, how ily. Let’s ask the question differently: Do brokers need a digital can you keep up with these trends if you do not have a digital presence to prosper? This is an absolute. presence? How do you engage with extended ecosystems or new markets? How do you share? We won’t launch into a soliloquy about the wonders of social media and the rise of digital in South Africa; if you are not More importantly, how are you keeping track of your customers’ somewhat aware of its pervasiveness and exponential growth, satisfaction levels? It’s not that you can’t do all these things without then we can honestly say we are surprised that you’re managing the digital approach, it’s just that a digital to read this article under that rock you call home. approach makes it infinitely easier.

A digital presence is essential. Not only to help you find, retain, and/or provide a personalised service to your customers, it can also aid you in back office administration. A digital capable broker can deliver faster at a more competitive rate. Gideon Galloway Consider the consumer thirsting for innovation; digital can play an CEO important role across all touch points, from underwriting to claims King Price Insurance

20 SHORT-TERM

One of the cornerstones of modern psychology is Maslow’s hierarchy of needs which was published in his 1943 paper A Theory of Human Motivation. It provides us with keen insight into human motivation and what drives us to react and respond in certain ways. RISE UP AND CONQUER the selfie generation key principle of Maslow’s theory is Self-Actualisation, The selfie generation which is the actions taken by humans to make Unfortunately, the days of clients asking what you did for their families themselves the best that they can be. How is this are riding off into the sunset. The generation of millennials have gone relevant to the insurance industry? We need to ask through a process of inner enlightenment where they are now acutely how far are we from insurers stripping old products aware of the role that they can play in influencing society. They think Abare in order to build completely new products to suit individual of it as flexing their muscles, others look at it as them being selfish. client’s needs. According to a recent survey, this is having a significant impact on A place in this world societies around the world. Seventy-one percent of American adults This is a tough task for insurers, especially larger industry players who think millennials are selfish while 65% of them think millennials have a may have thousands of clients. It is especially difficult for brokers who deserved sense of entitlement. may also have to now reacquaint themselves with a different product for a different client, a tough task when you see hundreds of clients We see these influences in South Africa as well. Think of the recent a month. So is there a place in this world for personalised insurance? #FeesMustFall campaign. Many people were split down defined lines The same question was asked by an Australian insurer in 2013. of students being selfish and students acting out of a deserved sense of entitlement. David Powell, Insurance Agent at Elders Insurance Metro Melbourne, has been in the insurance industry for more than 30 years and has The role of the broker tracked the subtle shifts occurring in recent times. What we need to be aware of is that millennials are no longer content with sitting in the shadows waiting for change. If a millennial does not “Probably the biggest change I’ve seen is the inroads of direct sellers get what they want, then they will go to another company. The world through the internet. It is possibly changing the face of insurance, is their oyster and if the right policy is not offered to them, they will particularly for personal lines insurance,” Powell explains. move on.

While the internet has made it easier and quicker to access such What does this mean for the broker? It means that the broker is in the sellers, what may be sacrificed along the way is the context and sound best position to help companies design products to suit client’s needs. advice that an adviser can provide. Powell adds that clients often will Sitting and consulting with clients instead of presenting them with a make their decision based solely on the price, without being able to sale’s pitch is the future of the industry. compare the benefits of the insurance package with those of other products on the market. This future is neither far-fetched nor is it far off. The Financial Planning Institute recently released its new Code of Ethics where it says that Consumers also run the risk of purchasing insurance policies that don’ advisers need to sit and consult with clients on a regular basis to cater not provide them with the cover they need. for their needs. The days of the broker following suit cannot be far off.

22 SHORT-TERM SA_worldsbestbeaches

The reasons you love South Africa, are the reasons we do too.

| SA’s largest empowered short-term insurer | ‘A’ rated | www.nnac.co.za | FSP No: 2603 Opportunities and challenges for brokers and insurers on the rest of the continent

The African continent is the one of the last frontiers for business expansion on the planet. The continent is home to some of the fastest growing economies on the globe and a growing middle class. The development of the African middle class will lead to an increase in asset accumulation as consumers buy household goods, cars and property, all of which need to be insured. This has led to a flurry of international and local brokers setting up businesses and offices in some of these markets. With international brokers moving into these countries in large numbers, Nigeria in particular, we believe a business model that combines ethics and robust processes will be a powerful competitive advantage. Many of these brokers are looking for reputable insurance partners and we believe Mutual & Federal will be a natural partner to them. We also believe our presence in these markets is a powerful signal to our local brokers to also consider these markets for expansion.

Recently, Old Mutual purchased a majority stake in UAP Insurance, giving us reach into six countries in the Eastern African region: Kenya, Tanzania, Uganda, South Sudan, Rwanda and Congo. This acquisition affords us a key foothold in the significant East African hub. We will continue looking out for any opportunities that may present themselves to enable our journey to being an African financial services champion.

Challenges

However, doing business in the rest of the continent is far from easy. There is an acute lack of technical, underwriting and actuarial skills in most of these markets. The South African short-term insurance sector is as competitive and advanced as any industry in the world and as an industry we should leverage that expertise to make inroads into the under serviced but rapidly growing African market.

The second challenge is largely regulatory with insurance regulators in certain markets not issuing new operator licenses. As a result, the mode of entry into some major markets is only through acquisition, as regulators are not issuing new operator licenses with an aim to ensuring that the markets consolidate. This has driven up the competition for assets that come up for sale in addition to bumping up selling prices of those assets. Regardless, we have been able to conclude transactions in both West Africa and East Africa and have found that there is a vibrant, albeit small, insurance industry in both locations that is poised for growth. By Mark Weston Executive for Rest of Africa Our local competitive edge

Having recently spent a month in East and West Africa, it is clear that marrying South African expertise and financial standing with the market knowledge of our local partners in those countries, offers a compelling business competitive advantage.

A key success factor within these markets is implementing a bespoke solution for each market rather than just copying and pasting South African solutions, as there are several fundamental differences between the South African market and the rest of the African continent.

Our aim is to introduce world-class insurance with proper governance to our new acquisitions.

The future

Mutual & Federal’s parent company, Old Mutual Plc, has a strategic objective to build an African financial services champion and short-term insurance will be vital in meeting this objective. We are looking forward to working closely with our brokers to reach this ambitious goal, as we believe it will result in a triple-win situation for customers, our brokers and us. The car that never breaks down RADAR/6874/FANews/E This is the car that got our mutual customers to the wedding, that kept the bride-to-be as happy as pie, that didn’t break down. Because, this is the car that got its tyre fixed on the way to the church, with just one phone call. At Mutual & Federal we care about our mutual customers, which is why you can motorsure offer them motor insurance that includes free emergency roadside assistance. Motor-only insurance that protects motor vehicles against accidents, fire and theft.

Plus a whole lot more: Emergency: Home assistance Medical assistance Roadside assistance

For more information email us on [email protected] or visit www.mf.co.za

motorsure is underwritten by Mutual & Federal Insurance Company Limited (FSP 12)

A member of the Group

Authorised Financial Services Provider IT’S THE END OF THE The world that we are living in is inherent with risks. No longer do we only have to worry about man made challenges, but we now have to contend with natural catastrophes which are occurring on a more frequent basis.

ccording to reports by This shows that there is a significant insur- In April, a magnitude 7.8 earthquake global reinsurer Swiss ance gap when it comes to natural disas- struck Nepal and neighbouring countries, Re, total economic losses ters. While some may think of insurance as triggering a humanitarian catastrophe. from natural catastrophes a grudge purchase, it is when a significant Around 9 000 people lost their lives and and man-made disasters event occurs that you see its true value. approximately 500 000 houses were reachedA approximately $85 billion in 2015. Think of Hurricanes Katrina and Sandy and destroyed. Economic losses are estimated Insured losses, however, were just $32 the damage that was left in their wake. to be more than $6 billion, of which only billion. Insured losses from natural catas- around $160 million are insured, owing to trophes were lower than in 2014, while A year of perils the country’s low insurance penetration. man-made losses were higher. The Swiss Re report points out that losses were caused by various severe natural The slow killer Crunching the numbers catastrophes across different perils in These disasters have an immediate impact The figure expected at the end of 2015 2015. These included windstorms, hurri- when it comes to casualties and deaths. was down from $113 billion in 2014 as canes, earthquakes, flooding and wildfires. But there are other slower killers. South well as the previous 10-year loss average Africa is experiencing its worst drought in of $192 billion. Natural catastrophes A February winter storm in the US was over a decade with farmers seeking relief caused $74 billion in losses and man-made the largest loss-making natural disaster far and wide in an attempt to produce disasters the remaining $11 billion. of the year, resulting in insured losses of some yield from their farms. more than $2 billion. Low activity during Of the total economic losses, $32 billion the North Atlantic hurricane season kept While we have recently been receiving were insured (vs. $35 billion the year the total global insured loss low. some relief in terms of rain, it has come before), with $23 billion triggered by too late. natural disasters, down from $28 billion Large disasters occurred in many other in 2014. This is also below the annual parts of the world also, contributing to News website IOL reported in January average of $55 billion for the previous the total number of fatalities more than that farmers currently have their highest- 10 years of natural catastrophe insured doubling from the previous year to around ever debt with South African banks of losses. 26 000. more than R125 billion ($7.5 billion) at

26 SHORT-TERM WORLD as we know it a time when a drought, caused by the He said that to give you an idea of how And this was before the claims from the lowest rainfall on record, is withering significantly catastrophic weather events 2015 drought came in. One shudders to cornfields and discouraging the planting of can impact our business; we can compare think what that final figure will be. crops. the claims for 2014 and 2013. In 2014, Santam’s net catastrophe claims were Interesting read Rainfall last year was the poorest since R187 million, significantly lower than While the current drought is having an records began in 1904, the South African the R280 million claimed in 2013. This is acute impact on the South African public Weather Service said on Thursday. El because a number of catastrophic weather and the economy, it is interesting to see Nino, a movement of warm water in the events in 2013 resulted in a loss-making of that global insurer Allianz reports that Pacific Ocean that typically leads to a rise R142 million. South Africa is more concerned about in temperatures and a drop in rainfall for other perils. South Africa, has left farmers with what The turnaround in the claims environment is expected to be the smallest corn crop in 2014 resulted in an underwriting profit According to the Allianz Risk Barometer since 1995. They will also probably sow of R251 million in that year. This aspect the top three leading risks for businesses the smallest area with grain since 2011, of our planning and underwriting is very in South Africa are cyber incidents (42%), according to the government. much at the mercy of the weather. business interruption (BI) at 32% and changes in legislation and regulation The strain on farmers’ finances comes He adds that the below average rainfall (26%). as South African banks, which have total and drought of the past four seasons has lending exceeding R3.29 trillion, contend resulted in unfavourable insurance results Macroeconomic developments and with increasingly indebted consumers. for multi-peril crop insurance and forced market developments feature strongly as The strain on households has worsened insurers to revisit their underwriting risks for businesses in the rest of Africa because of accelerating inflation and rising strategies to ensure the sustainability of and Middle East while political risks (war, interest rates, caused partly by the more the sector. terrorism and upheaval) rank higher than than 40 percent slump in the rand against any other region. the dollar since the start of last year. A few years ago, in response to changing weather, Santam restructured the core The area is the only one to rank power Summertime sadness composition and ratio of its hail and multi- blackouts (5th in South Africa and 10th in Before the worst of the drought had peril crop insurance to try and ensure the rest of Africa and Middle East) in the taken a hold on the South African farming sustainability for both farmers and Santam. top 10. These risks are appearing for the industry, FAnews spoke with Gerhard This relates mainly to insurance products first time for both South Africa and the Diedericks, Santam: Head of Agriculture, for grain crops, insurance against hail rest of Africa and Middle East. Last year’s to discuss the impact that droughts have damage, and multi-peril crop insurance, Africa and Middle East responses were on the insurance industry. which includes drought cover. included as part of the Europe, Middle East and Africa region.

Turning to cyber Allianz reports that cyber incidents gained 11 percentage points year-on-year to move from fifth position (first in South Africa and fifth in rest of Africa and Middle East) into the top three risks for the first time on a global scale (28% of responses).

Attacks by hackers are becoming more target-oriented, lasting for longer and can trigger a continuous penetration. While cyber-attacks are increasing both in frequency and severity, companies should not underestimate the impact of an operational failure in today’s highly digital and connected industries. The report goes on to add that a simple technical failure or user error can result in a major IT system outage disrupting supply chains or production.

While a cyber-attack cannot be seen in the same light as a catastrophic event, how far-fetched is this notion? If we look at the South African Revenue Service and the amount of sensitive data that it holds, a large scale breach would have a significant impact on the public which could have catastrophic consequences. If you think back to the Sony hack in 2014 or the target hack in the same year, perhaps reinsurers should look at cyber-attacks as catastrophic events.

SHORT-TERM 27 KEEPING UP with the Joneses Have you ever had to make contact with a client regarding their policy only to find out that their number or email address has changed? What about making that courtesy follow-up call that another team member had already made without your knowledge?

ue to the uncertainty and By cleansing data; you improve the data mandatory fields for data information is frequency of clients chang- quality, however instead of doing a data advised; ing their details, whether it cleanse which may happen quarterly, • Validate information: to ensure the may be their number, email implementing a data strategy process - which accuracy of contact data, encourage address or even workplace, could be integrated as part of daily routines - the policyholder to complete manda- Dthis can lead to dirty data which can contain is best practice. tory fields and to verify it at the point of errors such as spelling mistakes or punctua- capture for clarification; tion errors, incorrect data, or even data that Start internally • Analyse data: although manual processes has been duplicated. In any data strategy development process, are very time consuming, these can be the first place to begin would be to start implemented over a certain timeframe Vital importance analysing internal data to source where any depending on the size of the organisation The policyholders contact data is the most errors may occur, what types of mistakes are or database. With manual processes, the vital information to a variety of departments usually made, the effect it has on different possibility of human error could creep in; within an insurance organisation. Should any departments and on the organisation as a however, use of correct software tools of this data be inaccurate; a broker or adviser whole. could automate processes; and, may take on an unknown risk, provide an • Educate staff: you may want to host incorrect rate quote for a new policy and A data strategy process of possible solutions training sessions, create a procedure won’t be able to report the correct taxes. can then be determined around this analysis. manual or video to educate new staff According to Larry Seltzer who wrote an Although there are no conventional solutions members on the importance of data article Health insurers getting bad data from or strategies for every organisation due to quality. healthcare.gov, insurers told the Wall Street their own data quality needs, by not address- Journal that they were receiving erroneous ing data quality issues, you will be facing a Brokers and advisers need to acknowledge application data from the troubled health- tedious task ahead on a tremendous scale why this is all so essential for business along care.gov site. further down the line. with the negative effects that dirty data can create as well as the benefits of clean The data included duplicate enrolments, Look towards combinations data, which can increase the operational spouses reported as children, missing data These guidelines may be combined with one proficiency and the policyholders overall fields and suspect eligibility determinations. another to improve data quality: experience. One company also reported that some • Create a backup: before you start applications contained three spouses per to clean your data or make any other application. changes, it is vital that you keep a copy as a backup in the event something does Stripped of impurities not go according to plan. Backing up on Brokers and advisers need to treat data as an a regular basis can prevent you from data asset; they must know how to cleanse dirty loss and implications; data and how to maintain it. Data cleansing, • Maintain a style sheet: in order to Kelly Barron also known as data scrubbing, is the process make data entry easy and to maintain Marketing of amending, removing and even merging of consistency for crucial data quality, having Consultant dirty data. standard data entry formats which have Tial Technologies

28 TECHNOLOGY

FROM PAPER TO DIGITAL: survive the journey... Are we ready for the digital age? What does it even mean for our businesses to survive in a technology driven world?

he effective use and analysis of data has become a Once a data standard has been set, brokers will need to perform a regular topic of discussion in an industry impacted by detailed gap analysis between their current data and the chosen data disruptive technologies. It is also being driven by evolving standard. The results of this exercise will provide a good overview of customer behaviour. the current state of the data, as well as highlight any changes that will be required for compliance. TThis has been done through the rise of the digital native, as well as the growing focus on treating customers fairly. Aligning to the data standard can be capital and labour intensive, however partnering with the correct insurer can make a huge differ- Starting the journey ence. This will help brokers obtain the necessary resources required Many insurers have already started their data transformation journey, to transform the data. which allows them to tap into the growing amount of data available through disruptive technologies such as telematics and social network- Brokers may also adopt other strategies to close the gap. After the ing. system changes have been implemented, strategies such as a big bang approach - fix everything now - or a piecemeal approach - fix Coupled with this, consumer behaviour has become increasingly on renewal - may be adopted. Strategy selection will depend largely sophisticated and more demanding. By harnessing technologies such on the size of the portfolio, the effort required and the resources as portals, mobile devices and social networking, consumers have available. access to a world of information related to pricing, coverage and customer experience. Maintain the standard Once the data has been fixed, the standard must be maintained to Getting personal ensure that the correct information is captured, in the correct field, Through enhanced analytics, insurers are able to profile consumers according to the correct format. A governance framework and plan is accurately, as well as penetrate the market with products that will key to ensuring that there is no regression on quality. satisfy their needs and provide proactive customer service. In addition, the governance framework must take into consideration Given that most insurance placements continue to be conducted the rules stipulated in the Protection of Private Information Act which through brokers, they play a vital role in an insurer achieving its data is likely to be implemented in the near future. transformation strategy. Brokers who engage customers face-to- face are well positioned to help insurers gain a better understand- There is no doubt that sustaining data quality will require a cultural ing of consumer behaviour in an ever-changing market; enhancing shift. Employees involved in day-to-day capturing must understand consumer experience. the need for accurate data and the implications of missing or incorrect data. The benefits of using data are not restricted to insurers alone. Brokers can also benefit through effective analysis of consumer markets and Fixing core data is the catalyst for benefits and the initiating stage for product offerings. This analysis allows for better risk selection and the using big data. In the end, it is those who possess quality data, and rendering of appropriate advice. utilise their data effectively, who will remain competitive.

Sadly while core data is available, its quality is questionable. In order to draw meaningful insights, data must be relevant and presented in the correct format.

Setting the standard To resolve this, the first step for brokers is to identify an industry data standard to which they can align themselves to. Alignment to data Abdool Rahiman standards such as STRIDE and ACCORD will allow for uniformity, Head: Claims Operations and will be extremely useful for data transfer between broker and & Transformation insurers. Zurich South Africa

30 TECHNOLOGY FUTURE PROOFING with a purpose

The world of business is changing rapidly and it can be hard to know where to focus your efforts to future-proof your brokerage and stay relevant.

his is particularly acute in the South Africa. The media house is worth and This order will be driven by young minds. financial services industry estimated R850 billion – that is more than “Experts predict that three billion new where new business is hard to the gold and platinum mining industries put minds will join the global economy in the come by. Speaking at the 2015 together. Naspers started as a print media next 10 years, which means trillions of Santam Conference, futurist company but now diversified into digital dollars of buying power that cannot be TAnton Musgrave gave his insights into the avenues like internet and TV media as well. ignored. What does this generation want? world as we are experiencing it now. They want to feel relevant and they want Futurists suggest that eventually most flexibility. They are online 24/7 and expect Not an ordinary world vehicles will be autonomous, which will brands to respond to them within minutes, Musgrave pointed out that the world is hugely impact on the two biggest employ- not days. volatile, uncertain and complex at the ment verticals in the world: agriculture and moment. Events such as Asian stocks transport. Autonomous vehicles are already Retain the human factor market losing ground and becoming volatile being used in agriculture in the US. As The way in which clients interact with is at times unheard of. The world is going change happens in one industry, others will companies has changed. Gone are the days through a period of churning – a concept in be affected too. of picking up a phone and asking an expert Hindi culture where either highly negative when Google can solve most problems if or highly positive things come about. A lot “As the internet of things is spreading, the correct search is done. of this outcome depends on our choices. businesses need to wrap their heads around The future is a result of the choices we make the massive complexity of all this new data, “We have to ask ourselves what it is that today and how we choose to think about and the opportunities it creates. From humans can offer that robots or the internet the future. pregnant moms with data chips that track cannot? The answer is creativity, empathy the development of unborn babies to organs and innovation,” Musgrave said. He “Companies fail because they simply miss submitting data, there is a huge explosion of challenged intermediaries to think about the the future. We are so busy dealing with information that can be harnessed to propel engagement model in their own business. the present that we often forget to pause your business, if you understand how to How can you show empathy, be more and think about the future. We don’t have use this information to create value for your involved in your community and be more enough curiosity; we don’t make enough clients,” said Musgrave. connected to the world around you? time available. Stop using popular methods such as SWOT and competitor analysis – New world order In closing, Musgrave mentioned the well- you are analysing your business of yesterday. Everything is driven by algorithms these days known Simon Sinek book Start With Why. Ask yourself what kind of business you want as behaviour is tracked based on mathemati- It asks why some people and organisations five years from now,” said Musgrave. cal formulas. For example if 300 people ask are more innovative than others? “The Google the same thing, they will get 300 answer is simple; they all think, act, and Dramatic changes different search results because Google communicate in the exact same way; the Musgrave used the example of Naspers personalises results based on what it thinks complete opposite of what everyone else to illustrate how industries are changing in you like. does.” 

TECHNOLOGY 31 INVESTING with an ‘undo’ button in challenging times

The first full week of market activity in 2016 was a reminder of how volatile global markets have become.

n just five days of trading, the Shanghai An alternative option is structured products term. Additionally, investors give away rights stock exchange fell by 8.5%, the S&P that provide both capital protection, and to dividends, and must always understand 500 shed 4.4% and the Rand blew out in many cases, the opportunity for some that they are taking on the credit risk of the from R15.48 against the dollar to over form of gearing, or accelerated gains. These issuer. R17 before regaining a little respect- products usually reference a mainstream Iability at around R16.80. index or indices, but alter their risk-reward Hit reset profile. However, for many, these factors may not For investors and advisers alike, these kinds be as important as having the capital protec- of developments are very unsettling. Structured products allow advisers to tion. It is effectively investing with an undo determine their client’s target return and button, as where markets fall the capital Local uncertainty then review and assess the level of risk to protection can reduce or eliminate losses In South Africa, the FTSE/JSE All Share Index Investor capital associated with the delivery completely. produced a total return of 5.13% last year; of that return. Of particular attraction to but the outlook going forward is not favour- the South African Investor over the last few Investors can select an investment product able. years has been the ability to access offshore which meets their objectives, either by way markets and gain Rand hedged investments of access to foreign markets, or through the Political challenges, economic stagnation, that also offer a level of capital protection. shape of the payoff. In short, these invest- Rand weakness and higher inflation means Costs associated with structured products ments are doing what they say “on the box”. that it is difficult to be optimistic about future are disclosed and included in the payoff returns. profile of the product, and in many cases are As always, financial advisers should only proving to be lower than those associated consider structured products as part of a This kind of uncertainty dictates that any with traditional solutions. diversified portfolio and based on the inves- investment has to be very carefully consid- tors specific needs and circumstances. ered. Cash, as always, provides safety, but Looking at history in an environment where inflation is moving If you looked at long term returns of the upwards, it does not offer the prospect of various asset classes, from a return perspec- real returns after tax. tive, history shows that the best is typically equity and the worst is typically cash. From Mitigate the risk a risk perspective it is usually the inverse, This suggests that anyone looking to put with cash being the least risky and equities money away for three to five years and the most. What structured products do is hoping to see a real return on that invest- capture equity type returns, but reduce the ment is forced to take some measure of risk to be closer to that of cash or bonds. risk. The questions for financial advisers to consider are, how much risk is appropriate This creates two benefits: if the index and what can be done to mitigate it. falls over the investment term, the capital protection kicks in, and if the index grows, One could take out insurance in the form of the structured product can often provide Japie Lubbe putting options that guarantee your client’s equivalent or even enhanced returns of Head: Investec Retail Structured Products, capital. But these are relatively expensive and the index. The full benefit, however, is only Cape Town will reduce the upside potential. realised if the product is held to a specific Investec Bank

32 INVESTMENTS SOLVING THE PUZZLE With high levels of uncertainty, both globally and in South Africa, which are likely to keep market volatility elevated in 2016, it is important for of longevity equity investors to recognise that they could be their own worst enemy.

his is a threat if they decide to sell out of the equity market or switch to a different investment after a substan-in the market tial downturn. By doing this, they risk erasing the valuable long-term gains they have built up over time, and not Tbenefiting fully from their existing investment strategy. No full benefits here It has been shown that most investors are definitely not reaping the full benefits of equity markets over the long term. An eye-opening study covering the entire US mutual fund industry, Dalbar’s Quanti- tative Analysis of Investor Behaviour, has demonstrated how the average US equity investor experienced a return of only 3.79% per annum over 30 years (1985-2014), compared to 11.06% per annum from the US S&P 500 Index, an enormous 7.27 percentage point difference per annum.

To put this in perspective, an additional 7% per annum return over 30 Obviously they must avoid panicking and selling out of their equity years would give an investor seven times more capital. investments in downturns. However, it is not easy to fight against human nature. To help avoid this, it’s important that investors’ expec- Why the huge difference? tations are correctly managed upfront, before they invest in equities. Why this huge difference? The Dalbar study found that it had little to do with which equity unit trust - or fund manager or ETF - the inves- One way to do this is to ensure they understand likely market tor had chosen. Rather, it was due to panic. volatility: since 1928 the US S&P 500 Index has experienced market downturns of 5% or more an average of 3.4 times per annum During downturns, investors switched out of their equity funds and (according to S&P, BofA Merrill Lynch). into other assets (equity or other types), that were seemingly better- performing. In 16 out of the 20 years studied, they typically chose a Another powerful tool for managing equity volatility is to have an sound alternative. investment time horizon of at least five years. While over only one year there can be a very wide range of outcomes for equity returns, However, in the four years in which they were wrong, they got it over periods of five years and more, this range narrows considerably, badly wrong, wiping out all of the previous years’ gains and more. and the probability of any negative return outcome falls significantly.

Acting irrationally Financial advisers can also play an important role by managing clients’ It is no coincidence that the four bad years were those in which there expectations and helping them stick to a personalised long-term were extreme market falls - such as those in 2002 and 2008 - which financial plan. Their value added from choosing an appropriate fund led to irrational investor behaviour. This highlights how just a few manager or even structuring a portfolio is secondary. Prudential has moments of panic can wipe out many years of hard-won returns. long advocated the benefits of using a financial adviser, and the Dalbar data on the actual investor experience show why. In fact, Dalbar found that investors only stay invested in an equity fund for an average of 3.3 years. This is too short of a period to be able to benefit fully from equity market returns, since the market moves in cycles. Equity fund manager performance also typically shows value on a cyclical basis.

With investors switching out of their selected equity unit trusts nearly every three years, it is not surprising that the return they receive is far more dependent on their own behaviour than on fund performance.

Improving returns Pieter Hugo So how can investors improve their own returns outcome in 2016 Managing Director and beyond? Prudential Unit Trusts

INVESTMENTS 33 SUSTAINABLE INVESTING – the new investment horizon Can we continue to sit back and say that responsible investing is a foreign notion? Investors are increasingly interested in the influence of environmental, social and governance (ESG) factors on their portfolios, driven partly by a desire for sustainable outperformance and to do the right thing.

lack of potable water, acid portfolios with their interest in responsible managers who are collectively responsible mine drainage, income investing. for assets in excess of $59 trillion; about half inequality, corruption and of all institutional assets globally. executive remuneration are Because of their size, asset managers are in just a few of the ESG issues an influential position to positively influence Signatories must acknowledge the relevance Acompanies and governments face globally. ESG policy and practice in the corporates in of ESG factors to the long-term health and which they are invested. stability of the market and incorporate these As these issues can significantly influence into their investment decision-making and investments, incorporating ESG is becoming Settling fears ownership practices. The initiative aims to an industry-wide standard. Asset managers Investment managers and their clients have contribute to the development of a more are grappling with how best to assess ESG historically been concerned that responsible sustainable global financial system. and how they apply and measure the impact investing automatically means a sacrifice of these considerations on investments. of returns. While there is no conclusive Locally, CRISA provides the investor evidence that incorporating ESG results in community with guidance on how to give Social consciousness better investment returns, we believe this effect to the King Report on Corporate A November 2015 Morningstar report - approach helps us assess operational and Governance in South Africa (King III) as well What Factors Drive Investment Flows - found financial risk, which leads to better evaluation as the UNPRI initiative. that investors expressed a strong preference and forecasts. globally for funds that invest in a socially Potential challenges conscious manner. However, questions still remain over the lack Asset managers implementing ESG principles of agreement on what exactly constitutes into their portfolios view active ownership The report found that equity funds that say sustainable investing and the absence of a and investing for the long term as funda- they are socially responsible receive 0.40% standardised audit system to assess company mental to influencing corporate behavior. greater flows a month than funds that do activities across sectors. This can be done through proxy voting not. and continuous engagement with company For example, companies in the paper management. According to the report; we do not have any and forestry industry such as Mondi and strong story to tell for why this difference Sappi stand out because of the WWF and This kind of pressure can encourage compa- exists, though these differences do seem to ISO14001 certification requirements for nies to change and become better corporate be ingrained and persistent. Investors nearly forestry conservation. This level of disclosure citizens, and is more effective than selling out universally preferred funds with socially is not required of companies in other indus- a position. conscious agendas. tries. As ESG disclosure is not mandated, it often depends on company budgets and A watershed year capacity. 2015 saw a significant increase in the integration of ESG principles globally into the invest- A unified approach ment decision-making process. According The UNPRI initiative and the Code for to a recent Wall Street Journal article, there Responsible Investing in South Africa (CRISA) was a 29% increase in signatories to the enforce the values of ESG. United Nations’ Principles for Responsible Investment (UNPRI) initiative last year. Large The UNPRI is an international network of international financial institutions BlackRock investors working to promote responsible Henry Munzara and Goldman Sachs have also launched investment. It has over 1 380 signatories, STANLIB Head of Research investment products to help align investors’ including asset owners and investment & Theresa Heath: STANLIB Equity Analyst

34 INVESTMENTS RAGING BULL AWARDS recognise excellence

The Raging Bulls Awards, brought to you by Independent Media and Personal Finance, recently hosted its 20th annual awards. This prestigious event honoured the star managers in South Africa across a range of funds.

In recognising the stars of the collective investment industry, the awards were made on the basis of top performers, best risk-adjusted performers and the best unit trust management companies in different categories.

Top performers on a straight performance Risk-adjusted performance over five years basis over three years Best South African Multi-Asset Funds On A Risk- Best South African Equity Funds Adjusted Basis • Best SA Equity Industrial Fund: Sim Industrial Fund • Best SA Multi-Asset Low-Equity Fund: Nedgroup Investments • Best SA Equity Financial Fund: Nedgroup Investments Financials Stable Fund Fund • Best SA Multi-Asset Medium-Equity Fund: 27four Balanced • Best SA Equity Resources Fund: Investec Commodity Fund Prescient Fund Of Funds • Best SA Equity Smaller Companies Fund: Sim Small Cap Fund • Best SA Multi-Asset High-Equity Fund: Rezco Value Trend Fund

Best South African Multi-Asset Funds Best South African Interest Bearing and Multi-Asset • Best SA Multi-Asset Flexible Fund: Autus Bci Opportunity Fund Income Funds on a risk-adjusted basis • Best SA Multi-Asset Low-Equity Fund: Autus Bci Stable Fund • Best SA Interest-Bearing Variable-Term Fund: Absa Multi-Managed • Best SA Multi-Asset Medium-Equity Fund: Platinum Met Balanced Bond Fund Prudential Fund Of Funds • Best SA Interest-Bearing Short-Term Fund: Coronation Jibar Plus • Best SA Multi-Asset High-Equity Fund: Autus Bci Balanced Fund Fund • Best SA Interest-Bearing Variable-Term Fund: Absa Multi-Managed • Best SA Multi-Asset Income Fund: Prescient Income Provider Fund Bond Fund • Best SA Real Estate General Fund: Absa Property Equity Fund • Best SA Interest-Bearing Short-Term Fund: Atlantic Bci Stable Income Fund Best (SA Domiciled) Global and Worldwide Funds on • Best SA Multi-Asset Income Fund: Prescient Income Provider Fund a risk - adjusted basis • Best SA Real Estate Fund: Absa Property Equity Fund • Best (SA Domiciled) Global Equity General Fund: Old Mutual Global General Equity Fund Best (Sa Domiciled) Global And Worldwide Funds • Best (SA Domiciled) Global Multi-Asset Low-Equity Fund: Sanlam • Best (SA Domiciled) Global Multi-Asset Flexible Fund: Old Mutual Global Cautious Fund Of Funds International Growth Fund Of Funds • Best (SA Domiciled) Global Multi-Asset High-Equity Fund: Corona- • Best (SA Domiciled) Global Multi-Asset Low-Equity Fund: tion Global Managed [Zar] Feeder Fund Nedgroup Investments Global Cautious Feeder Fund • Best (SA Domiciled) Global Real Estate Fund: Oasis Crescent • Best (SA Domiciled) Global Multi-Asset High-Equity Fund: Sanlam International Property Equity Feeder Fund Global Balanced Fund Of Funds • Best (SA Domiciled) Global Multi-Asset Flexible Fund: Marriott • Best (SA Domiciled) Global Real Estate Fund: Catalyst Global Real International Growth Feeder Fund Estate Prescient Feeder Fund • Best (SA Domiciled) Worldwide Multi-Asset Flexible Fund: Marriott • Best (SA Domiciled) Worldwide Multi-Asset Flexible Fund: Flagship Worldwide Flexible Fund Of Funds Ip Worldwide Flexible Fund Of Funds Best Offshore Funds On A Risk-Adjusted Basis Best Offshore Funds • Best Offshore Europe Equity General Fund: Templeton Euroland • Best Offshore Europe Equity General Fund: Templeton Euroland Fund Fund • Best Offshore USA Equity General Fund: Stanlib Offshore America • Best Offshore Usa Equity General Fund: Franklin Us Opportunities Fund Fund • Best Offshore Far East Equity General Fund: Ashburton Chindia • Best Offshore Far East Equity General Fund: Ashburton Chindia Equity Fund Equity Fund • Best Offshore Global Real Estate General Fund: Catalyst Global • Best Offshore Global Real Estate General Fund: Sarasin Ie Real Real Estate Ucits Fund Estate Equity Global (Gbp) Fund • Best Offshore Global Fixed-Interest Bond Fund: Stanlib Multi- • Best Offshore Global Fixed-Interest Bond Fund: Sanlam Global Manager Global Bond Fund Bond Fund • Best Offshore Global Equity General Fund: Nedgroup Investments • Best Offshore Global Asset Allocation Fund: Flagship International Global Equity Fund Flexible Fund INVESTMENTS 35 Are your clients in a position to live life uninterrupted?

We all make plans for the future and we even their income and their overheads and this is why we visualise the outcome. Whether this involves a expanded our product range to include the current simple desire for good health and a long life or being Business Overhead Protection Benefit. financially free, the fact of the matter is that plans can be derailed in an instant. At the same time we added another benefit called the Business Protector that caters specifically for the Neill Müller, Head of Retail Life Insurance Product needs of self-employed professionals. Initially this Development states that “When it comes to financial benefit only made provision for a 24 month payment planning for the future most of us assume that we period but we recognise that cover for business will be able to work up-and-till a certain age and expenses seldom exceed one year and as a result we from there we can live our dreams. This involves added a 12 months payment period. earning a salary every month, uninterrupted, to make these plans a reality. However, deep down we all Pulling this through to the self-employed, non- fear that our lives will be interrupted at some point professional environment, we designed a new income which will influence our plans, either temporarily or protection solution that can accommodate the needs permanently.” of most business owner with our Business Protector for self-employed individuals. With this benefit, the He adds that “Momentum Myriad has always been policyholder has the flexibility to select a 12 or 24 the leader in the individual income disability market. month payment period. This is because we understand that our clients have different needs hence we embrace a ‘building block’ As our interaction with clients intensified we also approach as opposed to a ‘one size fits all’ risk realised that clients are looking for income protection solution.” solutions that better address their additional needs as employed individuals, hence we introduced the Group Income Top-up Benefit, as part of the newly A picture perfect story launched benefits. This unique benefit offers salary- based employees a packaged temporary income Müller further adds that “Because of our bespoke protection solution that provides maximum cover of approach to client needs, we offer clients payment the net cost to company during the group waiting certainty since the claim amount is always based on period and takes an employee’s cost to company into the highest of severity of the disability, the loss of account instead of their pensionable salary. income or the severity of impairment or illness. Along the same lines, a similar solution, called the Starting out with income protection and temporary Longevity Protector Group Income Top-up, is now income protection benefits, as the base of our available for income protection benefits with a one- income protection solutions, we soon realised that month waiting period. This gives employees access business owners have a real need to replace both to Myriad’s flagship benefit called the Longevity

36 a^[Z^chjgVcXZ Protector Benefit that provides your clients with on-going funds if they survive a moderate to severe critical illness or disability.

Expanding on this solid foundation that consists of income protection, temporary income protection and business protection, we have successfully created tailor-made packages for most possible income protection needs in the market. Neill Müller

Having reached this prominent milestone, Momentum Head of Retail Life Insurance Myriad took this one step further by creating more Product Development claim payment flexibility for all these benefits. This is achieved by giving your clients the choice of a This benefit provides a lump sum pay-out equal to regular income stream or a lump sum payment three monthly claim amount payments under the by way of our newly designed Annual Income income protection benefit to which it is linked; in the Commutation Benefit. With the latest changes in tax, event that any member of an insured life’s family this benefit paved the way to allow your clients, who passes away or is diagnosed with a critical illness. In are permanently disabled, to commute their monthly case of hospitalisation, this benefit provides a pay- income disability pay-out to an annual lump sum out equal to 50 per cent of the monthly claim amount payment. under the income protection benefit to which it is linked. Also, in the event of the insured life passing With this new feature, Momentum Myriad away, the benefit provides a pay-out that equals three acknowledges that there is always a cash flow need months’ income. associated with expenses as a result of a disability that is not linearly spread over a year and this benefit Last but certainly not the least is our new Complete aims to address that need. The Annual Income Functional Protector Benefit that is an enhancement Commutation Option provides your clients with the to our existing Functional Protector Benefit. The opportunity to make provision for more pay-out Functional Protector Benefit typically provides for a flexibility. Clients have the option, from the second monthly benefit pay-out in the event of the insured claim anniversary onwards, to annually commute life becoming permanently impaired. 25, 50, 75 or 100 per cent of their monthly income protection payments, to a lump sum.” Whereas the existing Functional Protector Benefit only covers severe impairment events at a 100 per cent pay-out level, the Complete Functional Protector Completing the picture Benefit provides for tiered pay-outs ranging from 25 to 100 per cent on specific events. Continuing on our journey to offer your clients the most holistic income protection solutions, we What makes this benefit unique is that cover is also introduced the Income Enhancer Benefit, the provided for ‘whole of life’ and once an insured life Complete Family Protector Benefit and the Complete qualifies for a pay-out, the monthly payments are Functional Protector Benefit”, Müller adds. made for the rest of his or her life. In addition, your clients with lump sum or income disability benefits He explains that “The Income Enhancer Benefit are able to convert their cover to a Functional provides your clients with 50 per cent more cover Protector Benefit and hereby whole of life cover is for the first few months following a serious claim provided.” event. There are normally more unplanned expenses during this period. This could include anything from appointing an au pair to help out around the house Peace of mind in the true sense in the event that a client’s injury requires some rehabilitation, to funding any medical expenses or Neill concludes by saying that “When we design new lifestyle adjustments that have to be made. products, we take the time to find out where the real need lies for clients. The world is changing so rapidly The Complete Family Protector Benefit and as a result clients themselves drive change. They acknowledges that additional expenses are often pave the way for new products and all that one has incurred when a family member passes away, is to do is just to stop and listen. Our passion for your diagnosed with a critical illness or hospitalised. After clients is expressed in our product design and service such an event a breadwinner is very often required to delivery because we are in the ‘people-business’ take time off from work to support his or her family, where your clients are truly valued.” which might lead to loss of income.

Terms and conditions apply. Momentum, a division of the MMI Group Limited, is an authorised financial services and credit provider. Reg. No. 1904/002186/06. 37 SMOKE SIGNALS of danger

It is always fascinating to watch a movie from the 1970s or 1980s to see how fashionable smoking actually was. Every leading man, and some leading ladies, were quick to light one up while on set.

f we fast-forward a few decades, we now live in an age where others. At the end of the day, a habit is a habit. smoking is just not fashionable anymore. This however has given rise to a new form of tobacco use which is deemed Dr Jack van Zyl, Sanlam Medical Adviser, explains the life insurer’s healthier alternatives to conventional cigarettes. E-cigarettes (or stance very clearly. He says that alternative cigarette smokers are not Twisps) advertise that they are 95% healthier than conventional able to plead innocence anymore when answering the question about Icigarettes and users of the hubbly bubbly argue that all of the toxins their smoking habits. The underwriting question concerning smoking are filtered through the water. habits is more explicit now.

Inconclusive data The life insurance industry has always applied the same underwriting While you cannot physically stop your client from smoking, you need yardstick to these alternative tobacco products but the difference now to make them aware how their life insurers regard their smoking is that the underwriting question specifically asks whether a person habits. FAnews caught up with a few life insurers to find out what their smokes cigarettes, e-cigarettes, chewing tobacco or hubbly bubbly. views on the matter are. So while in the past hubbly bubbly smokers might have answered no The first matter that we need to deal with is the issue of whether to the smoking question, they cannot do so anymore. The implication e-cigarettes and hubbly bubbly’s are less harmful than normal of this underwriting question is that when your answer is yes, your smoking. According to Schalk Malan, Executive Director at Bright- risk is rated the same as a general smoker. Rock, while evidence is inconclusive, indications point to the so called alternatives being just as harmful. Words to your clients Advisers have always played a crucial role in communicating informa- Proponents of e-cigarettes believe it is an effective smoking cessation tion from insurers to clients. So what should advisers be saying to measure and much less harmful than cigarettes. It is commonly clients? argued that tobacco cigarettes release nicotine in smoke containing 7 000 harmful chemicals (of which 70 cause cancer), while Dr Van Zyl points out that advisers should be telling clients that e-cigarettes deliver only one potentially harmful chemical, known as e-cigarette and hubbly bubble smoking is a potential harmful activity propylene-glycol (PG). that should be declared. It is not a safe alternative to smoking.

The decision makers From an individual risk perspective, it might be a less harmful activity However, a recent report by reinsurer Gen Re argues the long- if it reduces the concentration absorbed, but the habit may increase. term risks of inhaling PG remain unknown and scientific evidence to It is possible that more quantitative tests will come on the market to support the view that smoking e-cigarettes aids in quitting smoking is monitor exposure but cost will determine the implementation. inconclusive. In fact, many smokers do not stop smoking, but instead become dual-users of tobacco and e-cigarettes. Gen Re also believes more and larger long-term trials are urgently needed to establish whether smoking e-cigarettes can be an effective aid to smoking cessation.

In line with international insurance industry practice, BrightRock’s underwriters apply smoker rates to users of e-cigarettes. Bright- Rock’s underwriters follow a similar approach with smokers of hubbly bubblies.

No innocent plea Schalk Malan Dr Jack van Zyl It seems as if there is no leg to stand on for people who want to Executive Director Medical Adviser argue that the effects of their habits are any better or worse than BrightRock Sanlam

38 LIFE 39 Research indicates that, in many households, women do the budgeting. If we take this one step further, it might be relevant to ask if retirement planning will not be the perfect place to increase the female financial adviser force in your practice? Here are good reasons why this may be so.

ARE FEMALE ADVISERS taking the reigns?

etirement is undoubtedly one after female clients in a dramatic way. “About environment for expressing those responses. of the most difficult transitions a third of female advisers say they are target- A less threatening mood allows for a more in life. The question remains, ing female clients and only about 7% of male creative exploration of options available to what does a female financial advisers say the same thing,” she says. the client; a relaxed atmosphere allows for adviser naturally bring to the easier conversations. Rrelationship with her retiring clients that “Female advisers are very forward thinking serve them so well? when it comes to going after female clients The retirement transition is greatly enhanced because they see the opportunity there, when the client finds an adviser willing to be Emerging as pace setters given women’s financial power these days. in a supportive role – skilled to empower According to Amanda Smith, Senior Vice They are winning the business and they are clients to make decisions that are not easy, all President at National Financial, recent demonstrating that they can solve issues in a while ensuring that their retirement savings research demonstrates that female advisers solid and meaningful way,” says Smith. do not run out. are running alongside their male counterparts in many ways. Smith believes between male and female Encouraging more women to join the finan- advisers the playing field is level for both of cial planning industry is vital. Making space for “Female advisers are emerging as pace them. “Female clients don’t express a gender women to bring their femininity compliments setters in their use of technology, they are preference when it comes to the selec- the offering for the clients. more likely to run paperless practices, they tion of an adviser. They are just looking for are more likely to provide online services someone they can connect with, who can In concluding, the ideal view in my opinion like video conferencing for collaboration and work with them on a goals based financial is that men and women work in teams. For e-signatures for efficiency in order to attract plan. Gender doesn’t really matter; it’s the this to happen we need to attract more next generation investors,” says Smith. adviser’s ability to connect with the client women to this wonderful profession - it is that does matter,” concludes Smith. such an essential offering to clients seeking a This is positioning them as leaders when it fulfilling retirement. comes to engaging with the next generation Bringing a feminine dimension of clients, says Smith. “Female advisers are As a CERTIFIED FINANCIAL PLANNER® more likely to be adopting their practices professional who specialises in the retire- to a more collaborative style that younger ment market, I believe that female financial investors prefer. They are targeting and planners add an additional essential dimen- going after novice investors and offering a sion to meetings with clients who are facing broader range of services that are appeal- retirement, undergoing the retirement ing to younger investors with things like tax transition, or who are already retired and planning and preparation or tuition planning,” facing all the changes that this shift has continues Smith. brought.

Important differentiator When a client is facing a challenging transi- Kim Potgieter,CFP® The most important differentiator between tion such as retirement, often accompanied FPI Board Member and Director and male and female adviser practices, according by feelings of vulnerability and uncertainty, Retirement Life Planner at Chartered to Smith, is that female advisers are going a more sensitive adviser can create a safe Wealth Solutions

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As the employee benefits landscape continues to shift and On the regulatory front evolve, players in this South Africa’s retirement fund industry has already undergone far-reaching regulatory fast-transforming changes. These reforms have been talked about for years, and it is believed they are sound in the context of retirement planning – they aim to ensure that the plight of South African market are realis- pensioners is significantly improved. ing that returning to Despite significant and on-going opposition from the labour movement, T-Day has now ‘business as usual’ of been signed into law and will take effect on 1 March 2016. The new legislation will harmo- years gone by, is no nise the tax treatment of pension funds, provident funds and retirement annuity funds and longer an option. will encourage greater annuitisation upon retirement (whilst protecting vested rights).

Because of the significance of these changes, the impact on systems and the political implications for government (pushing ahead despite Labour opposition), it is anticipated that n the face of increasing there will be some reflection and significant consultation before any other major changes competition, economic uncer- are introduced. It will be interesting to hear what the Finance Minister will have to say on tainty and changing customer this matter in the upcoming Budget Speech. needs, companies will have to adapt and innovate if they wish One piece of legislation which does need urgent revision is Regulation 28 (issued under the Ito remain competitive and seek Pension Fund Act) which limits the extent to which retirement funds may invest in particular opportunities for new growth. What assets or asset classes – 75% in the case of equities and 25% for offshore investments. It is are the key trends that will impact believed such limits hold no place in a Defined Contribution (DC) environment and should our industry over the next year? be abolished. They also run contrary to the principles underlying life-stage investment portfolios which have gained in popularity among retirement funds in recent years.

Economically speaking To remain profitable and to grow as a business reduce debt. In our experience, employers are in the economic environment we are currently not doing enough to educate members about experiencing, which is likely to continue for the implications of failing to reinvest retirement some time, is very difficult. People will have savings. access to even less disposable income which will result in more debt. This will continue to be a The non-preservation of retirement funds is challenge for the employee benefits industry in having a huge impact on people’s retirement the year(s) ahead. Economic hardship has seen outcomes, but people’s short-term financial needs increasing numbers of people cashing in on their cannot simply be ignored. A holistic approach to retirement savings in order to reduce debt. the financial needs of each individual retirement fund member is crucial. The tax-free savings The 2015 Sanlam BENCHMARK Survey accounts introduced last year could go a long way revealed that 62% of members and 53% of towards creating awareness that there are other pensioners had used withdrawal benefits to ways to address these needs.

42 EMPLOYEE BENEFITS Ripples in the market As is the case in other industries, the employee benefits market will be facing increasing competition from non-traditional start-ups with innovative ideas, ground-breaking digital systems, and new ways of defining the market and engaging with clients. The retail, taxi and hotel industries are already feeling the pinch in this regard, and it won’t be Consolidation and crucial conver- long before players similar to Uber or SnapScan start to create ripples in our own industry. sations

Financial services firms will need to adopt unconventional, out-of-the- The South African retirement fund landscape has seen box approaches and become disrupters in their own markets if they massive growth of the umbrella fund market over the wish to compete with market entrants able to offer the technology- past few years, with the number of stand-alone funds enabled lifestyle solutions many traditional industry players currently rapidly decreasing as employers continue to transfer cannot accommodate. to umbrella funds. The Financial Services Board (FSB) fund list contained almost 14 000 standalone funds at some stage and I believe this number is now closer to 1500 funds.

Stand-alone funds are moving to umbrella funds for the following reasons: cost savings, better admin- Who are our customers? istration, better governance and better investment expertise. It is believed the majority of the remain- Innovative, game-changing companies such as Uber ing stand-alone funds will move to umbrella funds came into being in response to changing customer over the next few years. However, to sustain their needs in the digital era. Today’s up-and-comers current growth trajectory, umbrella funds will have to interact with brands and products differently from continue to improve on aspects such as more effective preceding generations. The employee benefits indus- governance models, simpler ways to charge fees, and try will have to adapt to the vastly different outlook improving the retirement outcomes of all employees of the so-called millennial generation – people born – including members for whom cost efficiency is vital, between 1982 and the early 2000s – especially in the as well as more affluent members prepared to pay for new DC environment where the investment risk has greater flexibility and customisation. shifted from the employer to the employee. In the year ahead, the offerings in the commercial It means providing clear and complete information umbrella fund space will increasingly evolve as the to clients, offering them highly relevant products, crucial conversations and competitive pressures and interacting with them in ways they have become continue. New-generation umbrella funds that offer used to in other industries, such as social media and the best of both the institutional and the retail worlds mobile apps. It also means greater product customi- are the likely result. sation. With the days of remaining in the employ of a single company for life long gone – millennials tend to job-hop in two-year intervals – individualisation of a member’s fund experience and simplicity has become crucial. The last word

No-one can predict what will happen next, but it is safe to assume that the current trends in the employee benefits industry will continue to force the players in this market to adapt to ensure future success.

In every challenge there lies opportunity however, we believe the funds that will enjoy the most success going forward will be those who can assist their members first and foremost – by offering simplified products and cost structures, incentives to save and preserve funds, and the relevant advice and education to increase their members’ overall financial well-being.

Dawie de Villiers CEO Sanlam Employee Benefits

EMPLOYEE BENEFITS 43 FEATURE SME & BLUE COLLAR DELVING INTO untapped market potential

Our readers are always keen to hear the expert’s opinion onn the yyearear ahead and what business might be like for the year to come. As a vvaluealue add for you and your clients, we focus on two separate features in thishis edition, namely Small to Medium Size Enterprises (SMEs) and blue collarollar workers. SME arena Small to Medium Size Enterprises (SMEs) have a noteworthy part to play in boosting our financial development rate. However, they tend to offer few incentives to their employees due to high operating costs. With the above, how do clients persuade the good employees to remain with the company when SMEs must be more nimble and strategic to compete with large companies in a sluggish economy?

This is where you come in. In this feature we take a look at your role as the adviser and the potential solutions you can offer to your clientsnts with small businesses when it comes to offering retirement planning, basic medicalmedical scheme cover, life insurance in the SME environment, some of the riskss facingfacing small business owners and how insurance can mitigate the impact of such risks.ks.

Blue collar zone On a more personal note, your clients often have the need to look after the people who have been part of their lives for a very long time. In this instance, we are referring to their domestic workers, gardeners etc.

In simply adding value to the client’s life, this feature explores the unique offerings and solutions available to blue collar workers for example, retirement or death benefits, choosing the right investment and considering when and how to tackle this challenge. You as an adviser have a role to play.

44 SME & BLUE COLLAR FEATURE SME & BLUE COLLAR Protecting future employers is a tough ask South Africa’s economic empowerment roadmap, the National Development Plan (NDP), states that by 2030, approximately 90% of the country’s jobs would have been created through small and medium-sized (SME) businesses.

een as key drivers of economic Zurich’s latest SME Survey revealed that exposures and market risks, but at an afford- growth and employment, the South African business owners view business able price. pressure for these enterprises to technologies as one of their top growth succeed in an already distressed opportunities. Seeing that most SMEs are Informed insurance advice from a broker, economic environment is unable to invest large amounts of capital in who has an in-depth understanding of the Soverwhelming. IT infrastructure, the practice of employ- risks SMEs are exposed to, will help equip ees bringing their own, often unprotected, South Africa’s entrepreneurs with the right Living with pressure devices or even software to work, increases tools to facilitate sustainable business growth Unfortunately, so many small businesses fail the risk of private company data being and protect their existing operations. to sustain themselves and realise any real accessed. profit. The reality is that 70% to 80% of small businesses fail in their first year, while Not only do some SME owners feel that only about half of the 20% to 30% remain in they won’t be affected by cybercrime but business over the next five years. most just do not have the resources (financial or otherwise) to assess and mitigate against It therefore stands to reason that a contribu- any potential threats. tor to success is planning for all possible eventualities. The challenge is that most Additional exposures small business owners do not have access Furthermore, once the Protection of to appropriate information nor the financial Personal Information (PoPI) Act comes means to prepare. Therefore, comprehen- into full effect, a number of SMEs will face sive insurance is critical in protecting this vital additional exposures, with severe legal and sector and preventing entrepreneurs from cost implications if data breaches occur. losing their life savings or pension funds. SMEs can, therefore, benefit from insurance William Surmon The unfortunate reality is that most products that not only provide cover against National Head of Sales and Distribution companies focus on risks that are likely to cyber risk from a financial perspective, but Zurich South Africa affect their bottom line rather than those also provide solutions that can assist in that could possibly destroy their business. containing reputational damage as a result of It is essential to have a helicopter view of a a hack. business at the very outset, which can be a tall ask for anyone just starting out. This is Brokers need to make sure that their where broker advice and expertise play an customers are aware of these exposures invaluable role. and are fully compliant with their insurer’s requirements to ensure they are paid out Risky business when an incident occurs. Many SMEs do not The risk environment is changing faster than realise that there are often policy exclusions ever before; brokers need to stay ahead related to the above, resulting in claims being So many small

of the curve in order to provide customers rejected. businesses“ fail to with the best advice and protection. Evolving

technology, the increased focus on the Inter- Tightening purse strings sustain themselves net of Things (IoT) and machine to machine The knock on effect of consumers who are and realise any communication (M2M), equals an increased also having to tighten their purse strings in “ exposure to cyber risk. the current economic climate will also be real profit. seen in the cash flow and profit margins At a cost of R5.7 billion, annually, cyber risk of SMEs. Accordingly, SMEs will need to is not just impacting South Africa’s big corpo- review their own spending patterns, which rates, SMEs are also feeling its substantial will require insurers to provide options that financial and reputational impact. still deliver adequate cover for increasing

SME & BLUE COLLAR 45 FEATURE SME & BLUE COLLAR Who needs ABC? Use EB instead... Employee benefits can be a beneficial tool for attracting and retaining staff. They’re therefore commonplace in the corporate world, but small and medium-sized enterprise (SME) owners often feel that these products are unaffordable, complicated, and a luxury rather than a necessity – especially when considered in the context of human resource costs and managing cash flow.

nderstandably, incorporat- and a large untapped segment of the market of whom are not saving adequately towards ing these products into their to support further growth. Intermediaries retirement, if at all. businesses is often not top need to help increase awareness about these of mind for SME owners and solutions and help improve the SME owner’s By offering a platform to force contribu- HR managers. However, we understanding of them. tions towards a retirement fund, advisers Ucannot ignore the needs of lower income can assist SME owners in understanding the earners. Through the fully managed umbrella fund importance of providing an opportunity for structure, insurers can offer SME owners employees to invest for retirement and then Providing security different categories of standardised cover help staff secure their financial future through The fact of the matter is that the need to to meet the basic financial needs of their dedicated contributions through an umbrella provide financial security to employees, for employees. The ability to offer some degree fund structure. whom providing their family with a sustain- of flexibility, customisation and choice also able income is of utmost importance, is no exists. different based on the size of the organisation. Customising contentment From the employer’s perspective, benefit In this regard, the adviser can play an impor- structures can be customised to include tant role in helping SME owners understand all of the basic elements the owner wants, that their employees are working for a pay while excluding the elements that do not cheque to meet this need, and that they offer additional tangible benefits, but will won’t see the long-term benefit associated increase costs. This flexibility also gives with the ultimate success of the business. smaller businesses the option of adopting a piecemeal approach; one where they Employee benefit schemes are therefore can start small with something like a funeral a way in which employees can derive plan and, over a period, add benefits to meaningful value from their jobs, which is better compete with those offered by larger why they should never be considered a organisations. luxury for SMEs. In the lives of staff, they are Walter van der Merwe necessities in the modern era. In addition, employees can choose to CEO increase the extent of their cover. This FedGroup Life A buffet of choice aspect is what could be considered the To this end, financial service providers have luxury element of employee benefits – the created products that cater to the specific degree of cover – but the cover itself is an needs and circumstances of the SME. This is absolute necessity. because the economies of scale achieved by organisations with thousands of employees A helping hand enable them to adopt standalone employee The role of the financial adviser and broker The ability to offer

benefit funds as the associated costs and fees would be to help structure the most “ are cross-subsidised. suitable solution based on affordability, and some degree of

to continue to advise on how that should flexibility, customi- However, SMEs lack the volume needed change over time based on the changing to make standalone funds a viable option, requirements of the business and its staff. sation “and choice which is why umbrella funds were created also exists. and offer a suitable alternative. This approach also gives advisers an opportunity to address the growing need to There are already a number of specialised assist employees in saving for their retire- providers that focus on this market segment, ment. The local SME sector supports a large with sufficient volume to sustain this business proportion of the workforce, the majority

46 SME & BLUE COLLAR FEATURE SME & BLUE COLLAR Mapping sustainability for blue collar offerings The sustainability of Small and Medium Enterprises (SMEs) is imperative in reviving the South African economy, and all efforts need to be made to ensure SMEs succeed.

he reason is simple, according these include costs, administration, as well as of their businesses, making the provision to statistics by the Association high staff turnovers. of employee benefits the least of their for Savings and Investment concerns. However, there are products South Africa (ASISA) SMEs This should, however, not prevent them available that, upon sound financial advice, employ 60% of the South from making a start. The administrative can be offered at nominal costs, making small TAfrican labour force and contribute 52% to burden of retirement solutions has also companies attractive employers. the national Gross Domestic Product. reduced with the use of technology by service providers. This trend is expected to It is therefore worthwhile for small compa- Fighting for skills continue and will mitigate the cost concern nies to consider employee benefits as one One of the major challenges facing SMEs is for SMEs over time. of the ways to attract and retain staff, given that competition for skills is fierce, making that for big companies, staff attraction and it difficult for them to compete with larger Furthermore, the industry has managed retention form part of the employee value corporates. This is illustrated by the fact to reduce product costs over the past few proposition. that the proportion of companies offering years; this has resulted in cost benefits which employee benefits increases with the size of have been passed on to employers. Many the company. employers choose to change employment contracts to include employee benefits Employee benefits are an important factor when annual increases are done. This way for any prospective employee and needs a portion of the salary increase is used to to be taken into account by employers. It absorb the additional cost of the benefits. is therefore important for SMEs to offer benefits such as retirement, risk and medical Start with the basics benefits of some form. Some employers choose to start with basic risk benefits and the minimum retirement Protecting assets contributions increasing these over time. A Over and above attracting skills, offering viable solution would be for employers to employee benefits ensures that companies start by offering a retirement solution and look after their most valuable assets, their add risk or medical benefits at a later stage employees. While the majority of SMEs as employees value retirement and medical understand and agree on the importance of benefits ahead of risk benefits. providing benefits to employees, they also Arno Loots admit that it is not an immediate priority The tough economic conditions facing Head of Umbrella Fund Solutions given other more urgent business priorities. companies all over the world have seen Liberty Corporate small companies going through financial Number disparity difficulties, resulting in some experiencing In order to understand the number of SMEs problems with paying employee contribu- without employee retirement solutions, one tions. When this happens, the majority of can consider the number of participants in umbrella funds administrators have made umbrella funds against the number of SMEs it possible for companies to make suitable Employee benefits in the country. payment arrangements, within a specified period of time. are an“ important The five main umbrella funds, which form factor for“ any pro- the bulk of the umbrella market, offer A major booster solutions to less than 25 000 participants Government has identified SMEs as a major spective employee while research by ABSA found that there component in boosting economic growth. It were around 750 000 SMEs in South Africa therefore follows that a conducive environ- in the middle of 2015. ment needs to be created for the small business sector to thrive. Navigating roadblocks There are a number of reasons why SMEs Currently, small businesses are grappling find it challenging to offer these solutions; with issues that directly affect the survival

SME & BLUE COLLAR 47 FEATURE SME & BLUE COLLAR Bottom-line performance: thinking beyond the obvious A healthy workforce is directly correlated to high levels of productivity and a business’ positive bottom-line performance. Statistics show that financial and wellness factors troubling an employee lead to, on average, 20 unproductive work hours per month.

mployers can improve the The above situation causes an increase in Such solutions may help employers to lifetime financial wellness of their absenteeism and presenteeism which causes enhance the productivity of their workforce businesses by enhancing the a downturn in productivity. by improving their lifestyle through being productivity of their workforce. more active, improving their diet, helping Financial stress them to quit smoking and taking care of their EMeasuring productivity The impact of financial stress on the mental well-being by reducing their financial Employees’ productivity is generally employee includes an increase in physical stress. measured by considering their absenteeism illnesses which in turn causes an increase in and presenteeism. their health expenses and their unproductive New generation employee benefits should hours at work. The business then suffers a also include employer focussed rewards and Absenteeism refers to the loss of productivity negative impact on their bottom line due to discounts for taking care of their employees. when employees are on sick leave or family the increase in the employee’s absenteeism responsibility leave; while presenteeism is and presenteeism and increased work- You can now help your clients to increase the loss of productivity while employees are related accidents. In the end, it is both the their business’ bottom line by enhancing the at work but not engaged with their job. employee and the business that will experi- productivity of their workforce. ence a decrease in their financial wellness. Productivity is affected by an employee’s health, financial stress, work-life balance, Understanding the solution personal life impacts, stress, job satisfaction, Regardless of the size of a business, most personal characteristics and the company’s employees turn to their employer in times of characteristics. financial difficulty. Seventy-three percent of employees and 64% of employers say that Understanding the problem retirement and insurance benefits provide Poor health peace of mind for the unexpected. Healthy employees are more productive and it is in the interest of a business to help Businesses may not be able to assist their their employees to be healthy. Everyday employees with all their financial worries poor health can be caused by acute condi- but can help by providing new generation tions like flu or by chronic conditions such as employee benefit solutions designed to cardiovascular diseases and diabetes. reduce their financial stress while improving Rigitté van Zyl their health. Client solutions Although businesses have limited control Momentum Corporate & Public Sector over their employees’ acute conditions, they Integrated solutions designed to help can influence how their chronic conditions increase employees’ productivity by reduc-

are managed and improved. Chronic condi- ing their financial stress and improving their tions can be due to hereditary causes or due financial and physical health are the building

to modifiable risk behaviours. blocks for a healthy sustainable business. Healthy Hereditary conditions can be managed More well-known benefits such as retire- “ through following the correct treatment ment, insurance and medical scheme employees“ are protocol. Chronic conditions caused by benefits can be coupled with financial more productive modifiable risk behaviours are mostly caused and health rewards to encourage healthy by four main behaviours: physical inactivity, behaviour based on individual employee unhealthy diet, smoking and the harmful use health profiling. The solution should include of alcohol. These behaviours lead to condi- health and financial wellness education on tions such as cardiovascular diseases, diabe- member level to encourage them to take tes, cancer and chronic respiratory illnesses, responsibility for their own health and finan- which causes 60% of deaths world-wide. cial wellness. Supporting health education Businesses can encourage employees to benefits, members should also have access change their modifiable risk behaviours. to medical advice from qualified doctors.

48 SME & BLUE COLLAR for your financial wellness

Working together achieves the best results

Productive employees boost the endurance of any business and its bottom-line. In return they are more secure themselves.

The Clownfish and the Sea Anemone are highly dependent on the other for survival. Symbiosis between the two species is achieved in a variety of ways including a mutual protection from predators and an exchange of nutrients. To learn more visit http://www.asknature.org.

Contact your Momentum specialist for more information on Momentum’s fully integrated solutions to boost your clients’ bottom-line by enhancing the productivity of their workforce. Everyone will benefit.

Disclaimer: © Momentum 2015 Momentum is a division of MMI Group Limited, a wholly owned subsidiary of MMI Holdings Limited. The document is for illustrative purposes only and does not constitute tax, legal, accounting or financial advice. The user relies on the contents at his sole discretion. A person should not act in terms of the information in this document without discussing it with an authorised financial adviser and should seek personal, legal and tax advice. MMI Holdings Limited, its subsidiaries, including MMI Group Limited, shall not be liable for any loss, damage (whether direct or consequential) or expenses of any nature which may be suffered as a result of or which may be attributable, directly or indirectly, to the use or reliance upon this publication. MMI Group Limited (registration number: 1904/002186/06) is an authorised financial services and credit provider. MMI Group Limited is a wholly owned subsidiary of MMI Holdings Limited.

49 FEATURE SME & BLUE COLLAR A blue light brigade that benefits society Classified as lower income earners, blue collar workers make up the backbone of South African society. These include domestic workers, gardeners and casual labourers.

raditionally, most low income including unforeseen expenditure and Advisers often deal with clients who either earners have used stokvels as education. have a domestic worker who has been part a savings tool, and this is still of their family for many years, or they are a viable option. Stokvels have The major benefits of the tax free savings dealing with clients who have a very small become very popular and accounts are that there is no tax - capital company with three or four employees Tmost banks and financial service providers gains tax and dividends tax - incurred on the they would like to offer some solutions to have stokvel accounts that one can invest in investment. This is particularly good for blue in terms of retirement. As an adviser, these contributing anything between R50 to R500 collar workers who usually are under the tax options are worth considering. as a minimum opening balance. threshold and should not be paying tax on investments which they would in any other Applying social science investment eg Dividends withholding tax. According to a study done by African Response, there are 811 830 stokvels and Flexible liquidity 11.4 million stokvel members with a total This investment plan offers liquidity and estimated value of R44 billion in South there is no fixed term to the investment or Africa. There are different types of stokvels restrictions to the number of withdrawals, ranging from savings, burial and grocery which allows for flexibility. stokvels, to name a few. It is also worthwhile considering an afford- From a financial planning point of view, one able life policy and funeral cover as part of has to consider issues such as retirement their risk planning alongside their retirement and investment planning from a short-term planning. to long-term perspective for these workers. Siba Njoba The table below is a summary of the invest- Financial Planning Consultant Considering options ment options: Alexander Forbes When looking at retirement planning, one can consider a Retirement Annuity (RA) as a long term investment strategy because the funds can only be accessed after the age DETAILS STOKVEL TAX FREE RETIREMENT of 55. The major benefit for a low income SAVINGS ANNUITY earner of investing in an RA is that it will ACCOUNT provide the blue collar worker with an Reasons for •Lack of access to •Savings account •Retirement savings annuity income that the worker will receive savings funds financial services after retirement rather than the tax benefits. •Minimum contribu- •Minimum contribu- through the products due to tions depend on the tions depend on the investment affordability At retirement, one can only access up to service provider. service provider. vehicle one third of the fund value. Two thirds of •Ease of access and the fund value would have to purchase cost effective. a compulsory annuity to provide for an Benefits and •Group savings, •No tax on the •A monthly pension income after retirement. features benefits will vary contributions and on on retirement depending on the the fund growth Currently, a full commutation will be rules of the stokvel •Cost effective allowed should the fund value fall below fund. R75 000 at retirement age. This will •Easy access to funds increase to R247 500 on 1 March 2016. Restrictions •Restrictions set will •R30 000 annual •Access the funds at be according to the contribution limit to age 55. Go low cost rules of the stokvel a lifetime amount of •Access 1/3 of the The newly-introduced tax free savings fund. R500 000 funds and 2/3 has to accounts are a cost effective investment plan purchase a compul- that one can consider for their workers. This sory annuity account can be used to save for anything

50 SME & BLUE COLLAR Are you looking to grow your stokvel savings?

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Investment Solutions Administrative Services (Pty) Limited is a licensed Financial Services Provider. FAIS licence number 27584. Registration number 2005/043273/07

51 FEATURE SME & BLUE COLLAR Battle tactics for the small business owner The South African economy is largely driven by small businesses, with research indicating that Small and Medium-sized Enterprises (SMEs) make up approximately 91% of formalised businesses. Further research shows that the sector employs about 60% of the labour force, and contributes roughly 34% to the country’s Gross Domestic Product (GDP).

redictions for 2016 are not too Business owners, managers and officers consequential losses, such as produc- optimistic and SME’s will have make critical decisions on behalf of the tive hours lost while the business owner/ many challenges to navigate as business and its stakeholders every day. manager is spending time defending him/ they are operating in an inter- Should it be alleged that the management herself. esting regulatory, political and team (or certain individuals thereof) has not Peconomic climate. adequately exercised its fiduciary duties to For the small business owner, such labour the business, the members could all be held challenges could pose detrimental conse- Vast and overbearing personally liable, regardless of whether there quences to the business should this risk not Recent issues that are contributing to the has been any wrongdoing. be managed on a continual basis. instability and complicating the local operating landscape include the chopping and Scenarios that could play out include that the It is important that business owners and changing of Finance Ministers in December business has not settled its tax debt and it is managers identify the risks (and potential 2015 which, among other factors, contrib- the receiver of revenue services that initiates losses) facing their specific business and uted to the depreciation of the Rand by an action. As soon as anyone alleges anything industry on a daily basis to ensure that they approximately 30%, while destabilising against management, they are obliged to adopt a proactive and holistic strategy in investor confidence. defend themselves and in so doing will incur managing, mitigating and migrating such the inherent legal defence costs. exposures. Add to this the fact that the country is being negatively affected by the worst drought in Protect assets almost 100 years with maize yields insuffi- It is therefore imperative that small business cient to meet local demand.The decelerating owners and managers address this risk to growth in China, proposed electricity price protect their own assets and reputation by hikes, and the increase of local interest rates, making sure they have Directors and Officers are yet further factors which are effecting (D&O) Liability Insurance in the event they local businesses, trade, the economy and are faced with a legal suit pertaining to their consumers; and not for the better. failure to perform duties as they relate to the company. Criminals on the rise Justin Keevy In times like these, the likelihood of small Section 78 (3) of the new Companies Act Senior Underwriter – Commercial and businesses falling victim to crime and corrup- also allows for the indemnification of Direc- Cyber Crime Division tion radically increases. tors and the purchase of D&O liability insur- Camargue Underwriting Managers Ltd ance. One may think of a D&O policy as a Unlike larger corporates, which may be able management Errors and Omissions policy. to absorb such losses, SMEs are seldom in such a position. Losses relating to crime Labour matters and fraud may have detrimental implica- A further critical issue facing SME’s is labour Every SME should tions - including the retrenchment of staff, matters. Annually, there are over 200 000

downscaling, or even threatening the entity unfair dismissal disputes heard at the Com- have a“ risk man- as a going concern. mission for Conciliation, Mediation and

Arbitration (CCMA). There are no costs agement strategy Manage your client’s risk for an employee to take an employer to the that includes Every SME should have a risk manage- CCMA, and the average award made is “ ment strategy that includes commercial 3.9 months’ pay or 3.7 months’ back-pay. commercial crime crime insurance. This cover insures against An average loss of R25 000 is suffered per insurance. losses to the insured business as a result employer, per case, and a matter consumes of employee dishonesty, computer fraud, an average of 20 productive hours. fraudulent transfer instructions, extortion and contractual penalties. This is notwithstanding other direct and

52 SME & BLUE COLLAR FEATURE SME & BLUE COLLAR Focusing on small to dream big

While there is a significant focus in larger companies on the benefits that they offer their employees, not many benefits are available in the market for smaller companies or those with blue collar workers.

or advisers who are looking for There may be better ways to house this new business in a constrained money, and there are various types of unit market, perhaps more focus trust portfolios which could be considered. should be paid to how this target We have met with stokvels which have market can be catered for. millions of Rands saved to advise them on F how to best invest this money. The South African stokvel market is believed to be worth up to R45 billion per annum Harnessing the power and represents the assets of up to 11 million Investment Solutions, along with other types members, creating huge untapped potential of service providers, is harnessing the collec- for investment products that could offer tive power of stokvels. higher returns than bank deposits. We FICA the group bank account and For any stokvel, choosing the correct invest- the proof of residence used for this bank ment is extremely important. Stokvels need account. People do not default on contribu- to understand the concept of risk versus tions, because of the discipline and peer returns. They must identify the length of pressure stokvels create. time they want to invest as well as what the investment needs to do for the group. This means it is a successful alternative to formal savings. And with stokvels growing Educating the masses faster than the pension fund industry, this The National Stokvel Association of South crucial market cannot continue to be ignored Africa (NASASA) is intent on improving by the financial services sector. financial literacy and understanding among the general stokvel community. They have partnered with Investment Solutions to Alex Forsyth-Thompson develop specific products aimed at the STOKVELS Head: Stokvel Investments at traditional collective savings market. The • Stokvels must first register with the Investment Solutions investment management company has been National Stokvel Association of South attending monthly indabas in Gauteng held Africa (NASASA). by NASASA to offer investment education • Each stokvel must have a consti- and advice. tution. NASASA has a template available. A comfortable niche • Groups must draw up a resolution By investing their money smartly, stokvels, which determines who representa- which usually save towards burial, groceries, tives and signatories are. This avoids school fees, celebratory events or, increas- rogue members making decisions. For any stokvel,

ingly, operate as investment clubs, would • These representatives will be choosing“ the cor- potentially earn interest and capital gains approved in line with the Financial

versus just having their money in a bank Intelligence Centre Act. rect investment account. • The stokvel itself will be viewed is extremely as the investor. Tax certificates and “ If a stokvel has money they will not need statements will be issued in the important. within the first year, it may not be in their name of the group. best interest to leave it in a bank account • Administration must be handled by being weakened by inflation. each stokvel.

SME & BLUE COLLAR 53 FEATURE SME & BLUE COLLAR Hand power over to the people The role of the adviser when advising SMEs on retirement planning is very clear - it is their responsibility to empower employees of these companies to build and protect lifetime wealth through the provision of properadvice.

hile their options in option to enable employees to fund for their ers in the spectrum of SMEs to access even executing this respon- retirement while leveraging the collective more streamlined governance models that sibility have expanded expertise of a trusted fund sponsor. are practically manageable for all employers. and evolved over the past decade to enable Even where SMEs have been in umbrella Advisers can therefore assess the needs themW to do so, the fundamentals of providing arrangements, there is significant scope of the SME at a structural level in order to proper advice remain consistent. for the adviser to add tangible value by advise them on the type of fund that best reviewing competing offerings as the pricing suits their operational constraints in order to Regular reviews of older umbrella funds are typically quite maximise the likelihood of achieving good For instance, regular reviews of the funding high in relation to modern product sets. outcomes for their employees. arrangements of SMEs are a prerequisite for The product structures themselves have providing good advice due to the evolution matured across various dimensions to make Employers can therefore focus on their core of product sets and charging structures that retirement provision easier for the various business activities while funding appropriately more closely align with the needs of diverse stakeholders engaged in the retirement for their employees’ retirement. sets of employers. funding process. Furthermore, advisers can play a key role in As an illustration, the rapid shift from Umbrella developments this space as the typical needs of a group of freestanding funds to umbrella funds provide As an example, recent developments in the employees within the SME are quite diverse SMEs with a practical and cost efficient umbrella space now enable smaller employ- given that the entrepreneur and their execu-

54 SME & BLUE COLLAR tive team face different sets of requirements the adviser with the opportunity to add to the bulk of their workforce. value to the blue collar staff on a bulk basis and to the more affluent employees in an In such a context, retirement annuities (RA) individual manner that integrates with their have typically been perceived to be gold holistic financial plan. standard due to the flexibility offered by this vehicle. Unfortunately, there are many Building on the concept of providing structural and product deficiencies associ- individual advice with the context of an insti- ated with RAs when compared to modern tutional structure, technological advances umbrella funds. now empower advisers to draw insights on the funds values and projected replace- Such funds now offer advisers the capabil- ment ratios per employee in real time to ity to implement default structures that act be able to provide informed advice at the Viresh Maharaj as a suitable match to the needs of the bulk workplace. Chief Operations Officer of the workforce while also providing the Sanlam Employee Benefits executive groups within SMEs access to the These high quality insights are provided same flexibility afforded by RAs at lower off of electronic platforms to equip advis- costs due to the institutional pricing provided ers to have high quality conversations with with none of the deficiencies inherent in the individuals to advise them on their contribu- RA model. tion rates, investment strategies and levels of Modern umbrella risk cover.

(See graph at bottom of previous page) structures“ provide

These are but a few of the developments the adviser with Consider alternatives that emphasise the critical role that quality Advisers consulting to SMEs therefore carry advice plays in optimising retirement the opportunity to the responsibility to consider such alterna- outcomes for the diverse individuals within “ tives for their clients in order to ensure that SMEs in the context of the operational add value they are able to provide their best advice. constraints faced by such employers - a role that will ultimately enable these individuals These modern umbrella structures provide to create and build lifetime wealth.

EVENTS&happenings

Bestmed’s music video campaign winners announced - In 2015 Bestmed invited schools across the country to create fun music videos highlighting healthy lifestyle activities in their daily routine by taking part in the Bestmed We’ve Got the Power challenge. After an amazing response the winning videos were announced. The first prize of R20 000 was awarded to Milnerton Primary School in the Western Cape. Second prize New appointments in the industry of R10 000 went to Curro Heuwelkruin in Limpopo and Rob Ferreira Hoërskool in Top row from left: STANLIB has promoted Mpumalanga received the third Prize of R5 000. Victor Mphaphuli to Co-Head of its multi- In the photo from left: Gaynor de Beer hands a cheque to Raymond Coe, Principal of award-winning Fixed Interest business. Milnerton Primary School. Mphaphuli assumed this role on 1 January 2016 and will jointly manage the business with Henk IUM offers online seamless experience Viljoen. Insurance Underwriting Managers (IUM) Old Mutual Emerging Markets (OMEM) have been making headlines with the announced the appointment of Joel Baepi as launch of their new website. Director of Governance, Regulatory and Corpo- On the new website brokers can have rate Affairs. access to some of the finest products Second row from left: Novare Group has at all times. Brokers can register on the announced the appointment of Candice Danne- site and be treated to a full bouquet of berg as Head of Marketing. product and service offerings, with indus- Agility Global Health Solutions [Africa] try insights and relevant information you announced the appointment of Patrick Masobe can apply. Be sure to visit their website: in the capacity of Chief Executive Officer (CEO). www.ium.co.za and experience the future.

New appointments in the industry From left: Sanlam has announced that the Group’s former Chief Executive Officer, Dr Johan van Zyl, has been appointed to the Sanlam Limited and Sanlam Life Insurance Limited Boards as a non-executive director, and has appointed Junior Ngulube as the Chief Executive Officer (CEO) of the newly formed Sanlam Corporate cluster. Centriq Insurance appointed Nokwazi Madonsela as Account Executive, Bianca Palmer as Operational Finance Accountant and Mbali Mehlomakhulu as Client Servicing and Operations.

56 New appointments in the industry From left: The Board of The Ombudsman for Short-Term Insurance announced that Advocate Deanne Wood has been appointed as the new Ombudsman with effect from the 1st March 2016. The Board of the South African Insurance Association (SAIA) is pleased to announce the appointment of Viviene Pearson as the SAIA Chief Executive Officer. SHA Specialist Underwriters has appointed Simon Colman as the new Head of Commercial Liability Underwriting. Colman has been part of the SHA team for 18 months in the position of Underwriting Executive responsible for the Underwriting Management Agency (UMA)’s digital strategy. MUA Insurance Acceptances (MUA), a subsidiary of Lireas Holdings (Lireas), announced that Christelle Colman has resigned as Chief Executive Officer and will be leaving the company effective 31 May 2016. Christelle will join Europ Assistance as CEO effective 1 June 2016. TransUnion has appointed Mark Heymann as the new Senior Director of Commercial.

In memory of Chis Pickering It is with great sadness that we announce the passing away of Christopher Thomas Pickering. Chris joined ACE in 2013 as a business development underwriter in the A&H division and earned himself a good reputation both internally and externally through hard work, a positive attitude and a good temperament. Chris will be dearly missed by all that knew him, and it is a huge loss to the insurance industry.

Left: New appointments in the industry From left: saXum Insurance Limited appointed Ancke Barnard as Regional Administrator and Mehnaaz Khan as Head of Finance.

Tracker celebrates 75 000 vehicle recoveries BrightRock announces rugby sponsorship Tracker celebrated a major milestone in the BrightRock signed a three-year Official Associ- company’s history when it racked up 75 000 ate Sponsorship agreement with the DHL vehicle recoveries since the inception of Stormers and DHL Western Province. the business in 1996. “It is a significant According to BrightRock Executive Director achievement for us to be the first company Suzanne Stevens, the partnership reflects the in our industry to reach this target and I am company’s strong performance to date and will really proud of the great work that Tracker help fuel the growing awareness of its brand does to ensure we continue to etch high- among consumers in its target market. lights such as this into our history books,” said Wayne de Nobrega, Tracker’s CEO. BrightRock’s involvement as a business sponsor for the DHL Western Province and DHL Storm- ers teams will be visible in stadiums, with its logo appearing on the back of all match-day jerseys. “It’s a privilege to join head sponsor DHL and associate sponsors Land Rover and Adidas on the blue-and-white jersey”.

New appointments in the industry From left: ACE Group announced two senior appointments within its Accident and Health (A&H) insurance team. Mike de Jong, currently Senior Manager, A&H for ACE in South Africa, has been promoted to Head of Accident and Health in South Africa, and Ross Waterford, has been appointed to the new role of Travel Manager for South Africa and Sub-Saharan Africa.

57 Hollard’s 2016 Daredevil Run DARE TO BE BRAVE

Prevention is better than cure. Hollard’s seventh annual Daredevil run took place at Zoo Lake Sports Club in Parkwood, Johannesburg, in which thousands of brave men dawned on speedos and all things purple to run cancer out of town.

The Daredevil Run is a massive countrywide phenomenon not only about doing something a little daring, fun, unique and liberating – but about raising awareness and at the same time, using the power of collective action to inspire positive change.

5858 Cancer kiss my butt

59 The best of YOU! We all want to be the best we can be and with that being said, Gauteng Women in Insurance (GWII) in partnership with Santam hosted an event themed ‘The Best of Me’ in Sandton.

n true Oprah style, Santam opened up its auditorium doors where GWII members engaged their bodies, minds and spirits in a discussion which boasted a seat of panel members voicing their opinions on what the “Best Iof me” personally means. Panel members consisted of Angela Deh, Phemelo Ngcobo, Nothemba Madumo, Cara-Lisa Sham, Sharron L. McPherson and Anne-Marie Chidzero.

The charity of the day was The Hamlet School. GWII members kindly made donations in forms of cash or all things stationary including paper, cardboard, glue sticks, paint, pencils, erasers and toilet paper, including a R4 000 donation from Insure Group.

Lucky draws We always have a few lucky ladies walking away with prizes donated by sponsors. The sponsors are Associate Marine (AMUA), CBG, Centriq, Corporate Sure, Emerald Risk Transfer, Mirabilis, Santam – Agri, Santam – Aviation, Santam – Specialist Business, Santam – Transport, Strategic Business Development, TIC and VUM. Insure Group kindly sponsored photography.

GWII member and winner of the Be, Do, Have competition, Myrtle Da Gama, won a holiday gift voucher to the value of R20 000, thanks to Santam Specialist Business. Members also walked away with awesome woven goodie bags filled with treats ranging from Revlon hair products, to chocolates, lip balm, Fairlady and Destiny magazines.

A word of thanks GWII would like to thank Santam for their sponsorship and support and Emerald Risk who contributed to the speak- ers; Angela and friends costs. And to all the sponsors who contributed to the prizes we wish to say ‘Thank You’.

Once again, a special word of thanks to the attending GWII members who proved that they are always ready to grow and prosper to better heights within themselves –thank you, Ngiyabonga, Ndiyabulela, Dankie!

To see the photos of this event and read more on what the panel members had to say about being the best YOU can be visit GWII’s Facebook page - https://goo.gl/JoVNjR

60 61 Hot off THE PRESS

PPS launches the Global Balanced Fund of Funds - PPS Invest- LibertyLiberty also received its licence in Lesotho to operateoperate a life and ments has launched the PPS Global Balanced Fund of Funds, a health business. business The Lesotho licence will allow Liberty to further global multi-asset fund of funds that gives investors exposure to strengthen its strategic partnership with the Standard Bank group. global equities and fixed income markets via selected skilled foreign asset managers.  Hollard launches new TV commercial - Hollard launched its new TV commercial which aims to show South Africans it offers  STANLIB lists units on the Nairobi Securities Exchange - much more in the insurance world than most consumers realise. STANLIB Kenya Limited has listed the STANLIB Fahari I-REIT units “We came up with an innovative and quirky concept to show that on the Nairobi Securities Exchange (NSE), making history as it is Hollard covers everything – your car, your home, your art – even the first listed property income fund in East Africa. your pet or your doll’s house,” says Heidi Brauer, Chief Market- ing Officer at Hollard. The advert demonstrates in a fun way that Citadel acquires Consolidated Financial Planning - Citadel Hollard insures all the stuff, even the ones that go ‘woof’. Holdings Proprietary Limited has acquired 100% of Consolidated Financial Planning Proprietary Limited. The Citadel group’s total Allianz ranks most valuable insurance brand globally - Allianz staff complement will rise to over 470 nationally, including 107 has consolidated its position as the most valuable insurance financial advisers, and assets under management and advice will brand in this year’s Brand Finance Global 500 ranking. Holding rise to over R42 billion. the pole position for three consecutive years, it has become the only insurer to be included in the Top 50 of the world’s strongest  Silver achiever award for Centriq - Centriq Insurance has been brands in 2016. The Group’s brand value increased by 8.1% from awarded a Silver Achiever Award in the 2015 Deloitte Best €17.2bn to €18.6bn (US$ 20.3bn), putting Allianz at number 43 Company to Work for Survey. “The award recognizes the positive among the top 500 global brands (up from 44th place in 2015). sentiment of our employees, rewarding their commitment to making Centriq a great place to work for,” explains Centriq CEO,  Astute acquires STRIDE Switch - Astute successfully acquired Gareth Beaver. STRIDE Switch from STRIDE South Africa. With Astute’s 15-year track record in the life insurance, risk and investment space this Morningstar launches portfolios for investors in South Africa - positioned it as an ideal technology partner for STRIDE. With this Morningstar Investment Management has launched Morningstar® acquisition, Astute established a subsidiary company, Astute Short Managed Portfolios, a discretionary managed portfolio service for Term Exchange (Astute-Ste) that will hold the short-term insurance investors in South Africa. The new offering is designed to offer switches within the group. advisers in South Africa a holistic investing solution to help clients meet their investment goals.  Sanlam offers one retirement umbrella fund -The Sanlam Umbrella Fund allows members to stay in the fund into retire-  Willis Towers Watson merger successfully completed - Willis ment, removing the need to exit the fund and purchase a living Towers Watson began operating following the successful comple- annuity. The fund’s new In-Fund Living Annuity offers members tion of the merger of Willis Group Holdings and Towers Watson. access to a range of institutionally-priced investment portfolios The ordinary shares of Willis Towers Watson will trade on the within its trustee-approved investment menu. NASDAQ Stock Exchange under the symbol “WLTW.” Consort Technical Underwriters ups capacity levels - Consort  Allan Gray launches Tax-Free Balanced Fund - Allan Gray Technical Underwriting Managers announced the approval of launched the Allan Gray Tax-Free Balanced Fund allowing investors Lloyd’s Coverholder Status. In conjunction with its existing to take advantage of the Tax-Free Investment (TFI) legislation that Engineering Insurance binder, this gives Consort Technical Under- came into effect in March 2015. The Allan Gray Tax-Free Balanced writers access to significantly increased capacity levels, as well as Fund has the same objectives as Allan Gray’s Balanced Fund, the ability to satisfy any international rating requirements. but will charge a fixed fee instead of a performance-based fee, to comply with legislation governing TFI savings and investment products.

Liberty acquires Uganda short-term insurer - Liberty Holdings to our EMAIL NEWSLETTER and the Madhvani Group have concluded a transaction in Uganda at www.fanews.co.za. that will see Liberty acquire a 51% stake of Madhvani Group’s short-term insurer, East African Underwriters Ltd (EAUL).

62 Hot off THE PRESS

YOUR EMPLOYEES MIGHT BE DENYING THEIR AGE.

But you should be thinking about their retirement

Unlike most, we think about retirement all the time. Our aim is to maximise the final pay-out for every employee – not bulk up our fees with hidden costs, and complex formulas. Speak to us. We’re the independently-minded experts.

Visit age65.co.za An authorised financial services provider. 13B License: No. 24/493 63 YOU ONLY KNOW TRUST ONCE YOU EXPERIENCE IT

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