Mitigate your risk, and better protect what’s yours
Prevention is better than cure when it comes to managing risk, says Andre van der Merwe, head of Hollard Broker Markets’ Corporate Property Centre of Excellence.
In an article in the September 2015 edition of COVER magazine, Van der Merwe argues that this concept should enjoy more focus in the relationship between insurers, intermediaries and their clients.
“Each partner in the short-term insurance value chain should always remember that it is better to mitigate or prevent the many risks that businesses face rather than trying to ‘fix’ things following a loss event.
“It is only when the steps taken to mitigate a risk fail, that insurers make good on the promise to return firms to their pre-loss position as quickly as possible and with the minimum disruption,” writes Van der Merwe.
A holistic approach to risk management and business insurance is more important now than before, because of South Africa’s ever-changing risk environment.
“The risk landscape, whilst not hostile, is indeed extremely challenging, and requires that insurers work closely with brokers and risk managers to limit overall exposures to risk events,” he says.
Fire and adverse weather events are common risks, but Hollard is able to assist clients with cover for risks not experienced until now, such as inconsistent power supply and cyber-crime.
“We have a deep understanding of the risks that businesses face and are ready, with the assistance of our experienced commercial insurance broker partners, to assist businesses both with risk mitigation strategies and with structuring suitable insurance solutions that will pay out when the mitigation efforts fail.
“An experienced insurer can help businesses to secure cover for risk events that were previously unheard of,” says Van der Merwe.
But he notes that the message is getting through to company executives, and commercial and property insurance constitutes a growing segment of the insurance market.
“The need for more comprehensive insurance cover appears to be getting through to local business owners and executives. According to the Financial Services Board’s industry statistics, the commercial and corporate segments of the short term insurance market have grown at 9% per annum over the past four years, topping the growth achieved in the personal lines (private households) space.
“Businesses now account for almost half of all short-term insurance premiums, accounting for R46-billion of the R94-billion collected in the latest year. Most of this business is facilitated by intermediaries,” he says.
Van der Merwe argues that local companies are struggling in the current economic climate, and they should not “drop the ball” around risk mitigation and insurance cover.
“It is precisely in these gloomy times that businesses should increase their vigilance by aggressively scanning the risk environment, reviewing their short-term insurance policies with assistance from an experienced broker and making sure that that all possible loss events are covered.
“Insurance that covers a firm for every conceivable risk is a ‘must-have’ for South Africa’s business executives as they navigate today’s complex risk environment, but it must go hand in hand with proper risk mitigation and recovery strategies,” he concludes.