Repair Damaged Ceiling Onus on Body Corporate or Owner

By Donovan Schreuder on Mon, 16 Aug 2010 at 14:57
Hi.
My wife and I have been living overseas and returned to SA in July 2010.
My wife owns a flat and there was damage to the roof in December 2009. A special levy was paid in respect of the repairs needed to the roof. On returning we inspected the flat and noted there was water damage to the ceiling, which was caused as a result of the damage to the roof. We spoke to the chairlady of the BC, whose unit is adjacent to ours and she stated that she and our neighbour had had the repairs covered by the BC's insurance policy and that we needed to get a quote and submit it to the BC. We actioned this and upon submitting this the BC has stated that we need to pay in full for the repairs as they have now changed insurers and the tenant should have made them aware of the need for repair.

Now, I do not believe that it is fair for the two units on either side of ours (who are owned by members of the BC) to be repaired and for ours not to be. The tenant is a young African lady and would not have been aware of what to do, the BC was in full knowledge that we were not located in SA and never mentioned any issues in other correspondence with us regarding damage to any units in respect of the damaged roof.

Am I mistaken? I would appreciate any advice in this respect.

Replies

Mike Addison replied on Tue, 17 Aug 2010 at 08:02

Hi Donavan
It would seem that the insurer at the time agreed to pay for resulting damage (will have to have been sudden damage/one event). Since the roof damage is being paid by way of special levy, it can be assumed that the roof needed maintenance repair ie lack of maintenance was probably the actual cause of the damage.
It is reasonable that the insurer cannot be expected to pick up a tab months down the line, no matter who the insurer is, old or new. I feel that the owner should take responsibility for damage ie any damage for an insurance claim (usually a condition of the policy) must be reported within 30 days and if tenanted, I feel that the owner or his/her agent should regularly inspect the premises or alternatively, hold their tenant responsible.
If there was damage, and reported immediately, and the insurer would not pay for reasons of say it being maintenance related, then you would look to the body corporate to reimburse you if your loss is result of the bcorps negligence in not keeping the roof in a good state of repair. (Also debatable - lets leave that argument for the legal experts).
In your case, I think 8 months after the event might be pushing it ie can you reasobaly expect the bcorp to come to the party when the damage was not reported within a reasobale time? My view is that 30 days or so is a reasonable time, especially if tenanted.
This is purely my opinion and not directly an insurance question, however, this sort of scenario is so common - we deal with these matters / debates almost daily.
Mike Addison

Please contact Willie van Wyk on 0861101220 for any advice and quotes on Sectional Title Insurance or visit our website on www.bestsure.co.za

Retirement will cost you lots - survey

The cost of retirement is far greater than most pensioners believed at retirement it would be. Only 40 percent of pensioners now believe they saved enough for retirement.

But the message is getting through to retirement fund members - 75 percent of active members now believe they need to start saving for retirement at age 20, although 19.4 percent are of the opinion that it can be left until age 30.

However, only half of active members say they are on track for a financially secure retirement.

These are two findings of the Sanlam Employee Benefits Benchmark annual retirement survey.

For the 2010 survey Sanlam included extensive research on the attitudes and experience of both active retirement fund members and pensioners.

The pensioners surveyed have a message for those people still saving for retirement: you must start checking whether you are saving enough money for retirement more than 20 years before you retire.

Even those pensioners who believe they saved enough are worried that their money may run out if they are in retirement for an extended period because of increased longevity.

About 30 percent of the surveyed pensioners, whose average age was 67, indicated that they are already experiencing financial difficulties and are being forced to cut back on non-essential items.

Almost 75 percent of the pensioners get a pension of less than R10 000 a month. Against this, the average amount active members who were surveyed earn now is R15 449 a month.

The survey confirms earlier research by Alexander Forbes, which showed that retirement fund members are going into retirement without having saved for long enough and are compounding the effects of their lack of savings by retiring too early. And most pensioners find they have not taken sufficient account of the costs of retirement, particularly medical expenses.

Of the 250 pensioners surveyed, the average period of contributing to a retirement fund (an occupational fund or a retirement annuity) was 26.6 years.

The average age of retirement was 59, with almost 60 percent having no choice about retiring early because of retrenchment or disability. Consequently, their pensions are lower than expected.

Most active members expect to have retired by the age of 61.

Other facts revealed by the pensioner survey include:
• The vast majority say if they could have done anything differently before retiring it would have been to plan better and save more;
• More than half the pensioners believe you have to save a capital amount for retirement in excess of 10 times your final annual income.
• In worst-case scenarios, 12.1 percent of the pensioners forced into early retirement say that early retirement had "huge financial implications" for them, with 16 percent depending on others for additional income, 3.4 percent having to sell their homes and 5.2 percent having to give up their medical scheme membership;
• Almost six percent of the pensioners live with relatives;
• Many pensioners go into retirement having to use lump sum payments from their retirement savings or other savings to pay off debt, and almost six percent continue to pay off a home loan;
• About 35 percent of the pensioners had to cut back on spending because of the economic recession;
• About 54 percent of the pensioners have other investments apart from their pensions;
• Of the surveyed pensioners, 16.4 percent changed jobs at some stage, and of these 44 percent cashed in their retirement savings, leaving them worse off in retirement;
• More than 40 percent of the pensioners received pre-retirement advice from employers;
• Of those who received financial advice before retiring, 71 percent received advice based on a financial analysis, with the vast majority then understanding their needs in retirement;
• Most pensioners spent lump-sum payments received at retirement within 30 months; and
• There are 27 percent of pensioners who still manage to save money every month.

Risk cover vs savings
There is a slow increase in the number of retirement funds offering flexible death and disability benefit life assurance options.

This is despite the fact that the combined retirement savings and death benefits of most young retirement fund members will not be adequate to meet the financial requirements of their dependants without the member taking out additional individual risk policies.

The Sanlam survey has found that the level of death benefits has slowly increased, from 3.2 times your annual pensionable salary in 2006 to 3.6 times this year.

The majority of retirement fund members (67.1 percent) say risk benefits are equally as important to them as retirement savings.

Of those funds that allow you to decide how much life assurance you require (reducing the amount that goes to retirement savings), the compulsory average minimum benefit is down to 2.3 times annual salary from 2.5 times last year.

Members who do have this choice have chosen a level of 3.7 times annual salary on average - down from 4.7 times last year.

The average cover for a lump-sum disability benefit is down to 2.6 times annual salary from 2.7 times last year.

The number of funds with capped premiums for death benefits, reducing the benefit, has dropped from 45 percent in 2008 to 33 percent this year.

Funeral assurance is now offered by 62 percent of funds, up from 50 percent in 2006.

You might be paying for choice, even if you're not using it
You are probably paying more in investment costs than you need to because of the investment choices occupational retirement funds offer.

The Sanlam survey has found that 55 percent of funds now offer members investment choice - up from 45 percent in 2006.

But 65 percent of members do not make active decisions themselves. They rely on a default choice offered by most funds or the choice is made on their behalf by retirement fund trustees.

Only 25 percent of members of large retirement funds - those with 5 000 members or more - take advantage of investment choice.

But 88 percent of funds that offer investment choice charge all members a flat fee for the right to choose. So members not exercising their choice are subsidising those who do.

About nine percent of funds surveyed limit investment choice to certain categories of members, who are considered better equipped to deal with the choice.

The majority of funds that offer choice normally have a range of four or five options, and only 6.4 percent of surveyed funds offer more than 10 options. Only one fund offered a complete fruit salad of almost unlimited choice through a linked investment product services platform.

The number of funds offering a sharia-compliant portfolio has increased from 17.3 percent last year to 23.6 percent this year.

The number of funds which deliberately invest money in socially responsible investments (SRI) has increased from 16.5 percent in 2008 to 17.5 percent. An average of 9.3 percent of the total assets of these retirement funds are earmarked for SRI.

The survey also reveals there is a trend to allow retirement fund members to switch investment options more often. This year, 34.5 percent of funds allow daily switching, which is more than double the figure of two years ago, while 22.7 percent of funds allow monthly switching. A once-a-year restriction is down to 28.2 percent of funds - from 31.9 percent in 2006.

The top investment choice for members is in what are called lifestage portfolios. These are portfolios that gradually decrease the proportion of assets held in equities to reduce volatility risk (the risk that markets could crash shortly before your retirement).

The next most popular choice (47 percent) is smoothed bonus portfolios, which guarantee all or part of your capital and smooth returns over good and bad years.

According to the survey, the lifestage portfolios are becoming more sophisticated. A few years ago these portfolios moved everyone into the same asset class mix at the end stage. The survey has established that 43 percent of lifestage funds now offer multiple end-stage profiles, with the profile being aligned to the type of annuity you will purchase.

For example, if you intend to purchase a guaranteed annuity (pension) - where a life assurance company takes the risk of paying you a pension for life - the end stage of your lifestage portfolio will have a lower amount invested in riskier equities than the end stage if you intend to purchase an investment-linked living annuity (illa),

With an illa you choose the underlying investments and take the risk that you will have a sustainable pension for the rest of your life.

Currently, 59 percent of people reaching retirement prefer illas.

Most lifestage portfolios (39 percent) are 100 percent in cash by the time your retire, and a further 30 percent have a conservative 30 percent of assets in equities.
• The Sanlam survey comprises four separate studies, which this year involved getting the opinions of 200 retirement fund principal officers, 100 participating employers of umbrella retirement funds, 750 active fund members and 250 pensioners. It involved 200 stand-alone retirement funds and all nine major umbrella funds offered by the financial services industry. The survey is conducted annually.

Please contact Jooste Henning at Bestsure on 0861 10 12 20 for great retirement planning.

Editor : Bruce Cameron

Beware of investments that sound too good to be true, says banks registrar

Illegal investment schemes, involving billions of rands, are becoming ever more sophisticated, exposing you to a greater probability of being ripped off, says Errol Kruger, the Registrar of Banks.

In the past five years, R13.7 billion has been invested in schemes that are, in fact, illegal deposit-taking operations that contravene the Banks Act. And it has cost R59.3 million for the registrar to investigate and close down the schemes.

In an interview following the publication of his 2009 annual report on bank supervision, Kruger says schemes that contravene the Banks Act have moved from simplistic pyramid schemes to far more complex structures.

And he says investors keep falling for the schemes because of their own greed.

One of the duties of the Registrar of Banks is to investigate people and institutions suspected of taking deposits from you in contravention of the Banks Act.

It is a criminal offence to take deposits from the public if you are not a licensed bank or have a specific exemption from the requirements of the Banks Act.

Kruger says that illegal deposit-taking normally involves investment schemes that "are generally operated on a fraudulent basis and are harmful not only to the established banking system, but to the economy as a whole".

And the chances of ever seeing your money again are exacerbated by the fact that the funds are often transferred abroad in contravention of exchange controls while also avoiding tax liabilities.

The number of suspected illegal deposit-taking schemes being investigated by the registrar hit a five-year record of 21 complaints in 2009, and a total of 35 schemes have been investigated. Kruger says this is not the total number of possible illegal schemes - it is only those that have been reported to the registrar.

He says in new schemes lawyers and accountants are being used to find ways around laws that are there to protect consumers, and you should not be taken in by assurances from a scheme's accountants or lawyers.

He says an example of a complex scheme was the Careturus/Sun Homes product, which was closed down by the Reserve Bank in 2007 for contravening the Banks Act. Investors were encouraged to put their money in a product which ostensibly had property as an underlying investment, but, in fact, did not.

The biggest warning to you should be any promises or "guaranteed" high returns. Guaranteed returns of 30 percent a year were offered in the Careturus/Sun Homes scheme.

Kruger says newer-model schemes being offered to investors entail the deposit of a large sum of money (R100 000 plus) in a property scheme with promises that you will receive returns of as much as 25 percent a year.

He confirmed that he is currently investigating various property syndication schemes for contravention of the Banks Act.

He warns that regulators cannot protect you in advance.

"The problem with most of these schemes is that the first people investing usually make money, but the following investors are the ones who lose out," he says.

By the time contraventions of the Banks Act come to his attention it is too late.

Health warnings
Kruger says that to protect yourself against scams you should do the following:

Don't rely simply on checking whether an adviser selling you a product is registered with the Financial Services Board as a financial service provider (FSP) or is a representative of an FSP before investing your money. You also need an independent expert such as a lawyer, accountant or your bank manager, or even all three, to check the product or proposal. This is particularly important if the product is not specifically regulated. Unit trust funds and endowment policies, for example, are highly regulated, but property syndications are not.

Don't be rushed into a decision by warnings that any delay in taking action will mean you lose out on the opportunity to invest.

Don't be mesmerised by your own greed. The old adage always applies: "If it sounds too good to be true, it nearly always is too good to be true."

Don't be taken in by glossy brochures.

Avoid complex schemes. The more complex it is, the more likely it is attempting to sidestep protective laws and regulations.

Check whether the people promoting the scheme and the type of scheme have a sound track record. You need to ask for references and do such things as check out the scheme and its promoters on the internet.

Source : B Cameron
For great investment advice please contact Bestlife on 0861 10 12 20

Carrots and sticks: how SARS plans to make you pay up

Tax return filing season for indivi-dual taxpayers began this month, with the tax authority enhancing its carrot-and-stick approach to ensure that you meet your tax obligations.

The stick has a lot more whack this year, which means there are fewer places to hide for taxpayers who do not file their returns and pay what they owe.

Over the past few years, the South African Revenue Service (SARS) has been making it easier for you to comply, introducing measures such as:

eFiling for taxpayers who have access to the internet;

Electronic returns that you can complete, with the help of SARS staff, at SARS branches;

Returns that contain only the sections you need; and

Returns that are pre-populated with your salary details.

This year, SARS has made further refinements to make it easier for you to fill in your return and pay your tax by, for example:


Giving eFilers access to faster computer software;

Scrapping the need for people who do not owe provisional tax to file provisional tax returns;

Improving the ability of SARS Contact Centre staff to track all your interactions with SARS and to help you resolve a query; and

Allowing you to access your eFiling profile, regardless of whether or not you use a tax practitioner.

But, having made it easier for you to do your part, SARS's focus is now on bringing people who should be paying tax, but who are not, into the net. SARS's approach in this respect is two-pronged:


Tougher penalties for people who fail to submit their returns and pay what they owe; and

Using information from arapidly spreading network of third parties to verify what you declare, or uncover what you fail to declare, on your income tax return.

SARS using 'agents' to check up on your financial affairs
SARS is using information about your affairs that it has obtained from a variety of other sources.

Initially, SARS received information about your salary from your employer only. Now, SARS is also receiving third-party data about the interest you earn on your investments, the sale of shares, your medical scheme contributions and your retirement annuity contributions.

SARS is working towards being able to verify all the information you enter on your tax return with the data it obtains from third parties, Mark Kingon, the group executive of business systems at SARS, says.

SARS is in the process of obtaining information from life assurance companies about your contributions to income protection schemes. Information about your vehicle and the claims you make against a travel allowance will be the next data that SARS will use, he says.

Anthea Scholtz, a director at Deloitte, says Deloitte is aware that certain car dealers that sell and service vehicles have been sentletters that request them to supply SARS with information aboutvehicle values, financing agreements and odometer readings. It is expected that SARS will use this data to cross-check the information you enter on your tax return about your vehicle and its use, ultimately ensuring that you qualify for the tax deductions that you may claim against your travel allowance.

"We are anticipating that SARS will increasingly start to engage with third parties or form relationships with them, so that they may act as 'agents' to supply data to SARS which can then be used by SARS to verify information in individuals' tax returns," Scholtz says.

The draft Tax Administration Bill, which is expected to be tabled in Parliament before the end of this year, proposes that SARS be able to list the third-party returns it requires in a public notice, and this will include information regarding assets under the control or on the premises of third parties, such as yacht clubs.

Minister's warning
Earlier this year, Minister of Finance Pravin Gordhan warned that the tax authority will soon have greater access to information about the foreign investments held by South African residents.

The next big move by SARS to obtain third-party information and put it to good use will start over the next few months, when anyone who receives any kind of employment income will have to be registered for tax purposes, regardless of whether you work part time or earn below the tax threshold (the income level at which you start to pay tax - currently R57 000 a year for people under the age of 65).

The registration of everyone who is paid by employers who deductPay As You Earn tax from employees does not mean that SARS will expect tax returns from all these employees. Currently, SARS does not require tax returns from people who earn a taxable income of R120 000 or less a year from a single employer, unless they have other income or deductions to claim.

But if you are registered for tax, SARS will be able to match the information on the income tax certificates - also known as IRP5/IT3(a) certificates - that are issued to you against your tax number.

It will then be able to identify people who should be paying tax but are not because they earn small amounts from multiple employers.

Employers are now expected to submit your salary and tax deduction details to SARS twice a year, with the first biannual reconciliation due by October 29.

When employers submit thisreconciliation, they will be expected to supply the income tax reference number (if you are registered for tax), identity number, bank details and address of every person to whom they have paid remuneration since March 1 this year. This means that employers have to collect the required information from all their casual workers.

If an employer fails to provide SARS with the information, it could be subject to a penalty equal to 10 percent of the total amount of tax it deducts from all its employees during the tax year.

Once SARS has received an employer's first biannual reconciliation, it will check if any employees are not registered for tax. If this is the case, SARS will use the employees' identity numbers, bank details and addresses to issue them with a tax reference number.
After this initial bulk registration process, SARS will expect employers to use an online process to register for tax purposes any employee who does not have an income tax reference number.

Tax audits
Besides using third-party information to pre-populate your tax return and verify the information you declare, SARS is using a wider source of information to audit taxpayers' affairs.

If SARS picks up some information from a third party or receives a tip-off that makes it believe you have not declared all your taxable income and capital gains, SARS may subject you to an audit.

The audit will attempt to establish whether or not your lifestyle and assets are in line with your declared income. To do this, SARS will make use of data from a number of sources, including banks, insurance companies, stock exchanges, the deeds office, the Company and Intellectual Property Registration Office, the National Transport Information System, other government departments - such as home affairs - the media, your friends and associates.

SARS spokesman Adrian Lackay says that in the past two years more than 10 000 taxpayers have been subjected to an audit.

Ask for a provisional tax form
The first deadline for provisional taxpayers for the 2010/11 tax year is Tuesday, August 31.

SARS is no longer sending out returns to all provisional taxpayers, because many forms are not returned or are returned with data that indicate that the taxpayer is not liable for provisional tax.

If you need a provisional tax return, you must request one from SARS. Taxpayers who do not have to submit such a return will not have to request a form or submit one, even if they are registered for provisional tax.

If you should have submitted a provisional tax return but you have not, SARS will be able to detect this when you submit your annual income tax return, and you may be charged interest and penalties.

Managing your eFiling tax profile
Taxpayer-centricity is a new eFiling function that gives you full control over and knowledge of your tax affairs. This function is available to you regardless of whether or not a tax practitioner submits a tax return on your behalf. It will ensure that you "own your own profile", whether you want a tax practitioner to have access to your return or prevent a practitioner from having access to it.

Currently, the taxpayer-centricity function is available only for income tax (ITR12) and provisional tax (IRP6).

When you register for eFiling, you will be asked whether you want to "Obtain shared access", "Remove tax practitioner access" or take "No action". Choosing "Shared access" enables you to retain access to your return and all correspondence from SARS while also allowing a tax practitioner to access your online return and correspondence.

If you choose to remove a tax practitioner's access to your return, you will block that practitioner from accessing your return and prevent any correspondence from SARS being sent to him or her.

Taxpayers who are already registered for eFiling have the same options, but in order to access them they need to log in, click on "Home" and then choose "Tax types". Then, after selecting your provisional tax, your income tax or both, choose "Click here to edit the access to your tax types".

Stiff penalties if you try to duck your tax obligations
In October last year, SARS announced stiff new penalties for people who fail to register for tax, file returns or pay tax.

The penalties apply monthly - not just once off - and begin at R250 a month for an assessed income of up to R250 000 a year. The penalties increase steeply from there - for example, R500 a month for failing to file a return or pay tax if your assessed income is up to R500 000 a year, and R1 000 a month for an assessed income of up to R1 million a year.

The penalties are in addition to the interest you will be charged on any outstanding amounts at the official rate of 9.5 percent.

In January, the first round of penalties, which amounted to R130 million, was imposed on 230 000 taxpayers who had returns outstanding for multiple tax years. Earlier this month, SARS reported that, as a result, 31 273 taxpayers had paid R33.8 million in penalties and 83 016 returns had been submitted.

However, some 180 000 errant taxpayers ignored the penalty notices, SARS said, and it now plans to deduct the outstanding penalties from their salaries.

SARS commissioner Oupa Magashula says that in August SARS will ask the employers of these taxpayers to notify them that their employers have been requested to deduct outstanding penalties from their salaries in September, unless they contact SARS and make arrangements to pay what they owe. SARS says it has the power to do this in terms of the Income Tax Act, and the relevant section of the Act has been subjected to judicial scrutiny and found to be constitutional.

For defaulters only
SARS has emphasised that this measure is only for taxpayers who are in default and who have failed to respond to repeated warnings.

If you are one of these taxpayers and your employer believes that you will not be able to afford the deduction for outstanding penalties, your employer can contact SARS about reducing the monthly amount that will be recovered.

Errant taxpayers can also contact SARS regarding the payment of these penalties. If you have good reasons for failing to comply with your tax obligations, the penalties can be waived.

SARS has said that if its attempts to recover the penalties from errant taxpayers through their employers fails, it will be forced to appoint banks with whom these taxpayers have accounts to act as SARS's agents to collect the outstanding amounts.


If you have not declared all your income or assets for tax purposes and SARS is not yet on to you, make use of the voluntary disclosure programme that is due to begin on November 1 and will run until October 31 next year.

Check the terms of your insurance policies to avoid nasty surprises

Now that the worst of the recession is behind us, it is even more important that you review your short-term insurance policies regularly, because you face receiving only a partial payout or having your claim rejected if your policy is not up to date with, for example, the insured value of your possessions.

Debbie Barret, the general manager of marketing at First National Bank (FNB) Insurance Brokers, says many consumers are still under pressure following the recession and "may be tempted into false economies by failing to review their policies".

To guard against costly surprises, FNB Insurance Brokers advises that you review your policies and pay particular attention to any restrictions and exclusions. Barret says the "grey areas" include:

Personal belongings. Barret says under-insurance is a major problem. You should regularly review your policies and the value of your insured items to take account of inflation.

For example, if you bought a TV set five years ago for R3 000, a similar replacement today would cost far more than R3 000, and you need to update your cover accordingly. If you fail to do this, you risk a partial settlement of your claim. For example, if you took out cover for R250 000 on your personal possessions and the insurer finds that your possessions were actually worth R500 000, the insurer is likely to apply the rule of average and will pay you only 50 percent of your claim.

You should do an annual inventory of your insured items - your insurer can refer you to a valuer for this purpose and, in some cases, your insurer will pay the valuer's costs.


All-risks cover. This cover applies to personal portable items. You may assume that cover for such items is included automatically in your household contents insurance. However, you should specify expensive items, such as laptop computers and cellphones, under your all-risks cover, because the maximum all-risk amount may not be sufficient to cover the replacement cost of the individual items. You should also specify your jewellery and expensive branded goods, such as designer handbags.


Home damage. Full homeowner's insurance is far from automatic. You have a duty to ensure that you maintain your property. For example, if you fail to maintain your roof and allow your gutters and down-pipes to clog up, a claim for rainwater damage may be repudiated.


Car value. You should check the value for which your vehicle is insured. If it is insured for market value, the insured amount should decrease each year as your car's market value decreases and your premiums may increase less dramatically. Your insurer will increase your premiums to a certain extent to cover the contingency of a motor vehicle accident where your car needs to be repaired.

If your car is insured for its replacement value, the insured value is unlikely to decrease each year but will be adjusted by the insurer for inflation.


Car hire. In terms of your policy, free car hire may be available following an accident, theft or hijacking, but there may be exclusions or restrictions. For example, you may have free car hire only if you use a particular car hire company or you may be restricted to only five days of free hire. So, you may not have the blanket cover you assumed.

NOT TAKING COVER CAN LEAD TO RUIN FOR SENIOR CITIZENS
Senior citizens on fixed incomes who have been hard hit by the low interest rates of the past two years are reducing and, in some cases, cancelling their short-term insurance to save costs.

But the consequences of dispensing with insurance can be disastrous for pensioners, Debbie Barret, the general marketing manager for First National Bank Insurance Brokers, says.

She says senior citizens may face huge claims to cover their third-party or personal liability exposure, which could ruin them financially. Third-party insurance refers to cover for any claims made by a person other than the person whose property you damage. For example, if you are involved in a car accident where you are at fault, you may be liable for the damage to the other driver's car, as well as for any injuries sustained by the occupants of the other car.

Third-party insurance is not restricted to car insurance. Personal liability insurance covers you for instances when you may be held personally liable to pay compensation because your negligence or that of a member of your household resulted in accidental damage to someone else's property or in personal injury or death.

Barret says it is important to be aware of the following if you are considering self-insurance:

Self-insurance is most appropriate for high-net-worth individuals who have cash reserves and the discipline not to spend their emergency funds. "Self-insurance for the average consumer is apt to degenerate over time and become non-existent, leaving you exposed to dire financial risk," she says.


If you believe that you can make self-insurance work, you should make sure that you have sufficient funds to cover any third-party and personal liability claims against you, because such claims can run into millions of rands.


Older people sometimes qualify for reduced premiums, because they constitute a lower risk as a result of their experience and more prudent lifestyles.


You and your broker should regularly review your insurance needs to ensure that you have the appropriate level of cover in place. This applies not only when you have accumulated more possessions but also if you have downsized.

Barret says while disciplined and prudent older people are less exposed to certain risks than are young people, in some respects they are more vulnerable. For example, she says, a younger person who earns a salary may be able to replace his or her losses, whereas a pensioner who relies on a fixed monthly income often lacks the financial resources to make good a major loss.

Please contact Bestsure on 0861 10 12 20 to make sure you are correctly insured.

Resource : Personal Finance

Geyser Insurance

The geyser has become one of the biggest challenges for insurers, underwriting managers and trustees wishing to manage their premiums. We are told that roughly 70% of all claims are geyser related – in other words, repairs, replacement and damage resulting from leaking or burst geysers.

So, how does this affect the owner? How does this affect the trustee?

A lot. An insurer, like any person in business, needs to make a profit. This means that a claim ratio of 60% is more or less the break-even point. Does this sound like gobbledygook? Let’s put it more simply. For every R100 of premium received, the insurer cannot afford to pay out more than R60 in claims on average. This is usually viewed over a historically averaged three-year period.

Take an average building of 30 apartments. The body corporate would normally pay about R2,000 per month on premiums, or R24,000 per annum. The average geyser costs about R6,000 to replace. Throw in a bit of resulting water damage, and the claim can rise to R10,000 or beyond. Three claims like this in a year (or R30,000 in claims versus R24,000 in premium income) equals a 125% claims ratio. What does this tell us? Well, it is simple mathematics. To achieve a 60% claims ratio, assuming the above scenario to be the trend, the insurer would have to double premiums. This answers the question: double the premium and everyone’s levy contribution goes up roughly R800 per annum each.

There is, of course, also the question of what constitutes a “burst geyser”.

“Bursting” can be defined as “to break or cause to break open or apart suddenly and noisily, especially from internal pressure; explode”. Let’s face it: geysers do not usually explode or burst. They corrode and eventually give in. Simple wear and tear and corrosion are sped up by lack of maintenance – this is the stark reality.

Lack of maintenance? How so?

In non-technical terms, geysers are manufactured out of steel and are glazed inside so that the steel and water do not meet and start the process of corrosion (or rusting). Geysers come off the factory assembly floor and are immediately transported about, to the retailer, in the plumber’s van, before they are finally installed. Along the way, the geyser is bumped and knocked. You can imagine all the glazing chips and imperfections by the time the geyser is finally installed. So, bearing this in mind, rust now starts forming where there is no protective glazed area. Geyser manufacturers thus also install a manganese rod called a “sacrificial anode”. This removable rod performs a specific job through a natural process of decay until it is shed or worn away. It may take 12 to 18 months until this anode needs replacement. The rod’s residue is transferred to the exposed chipped parts, effectively “coating the chips” and thereby preventing or minimising decay. Thus, if after 18 months there is nothing left of the anode, the geyser speeds up its internal decay process, and within 36 months or so, the decay causes serious malfunctions and a new geyser is required. This is what the experts tell me.

Does this sound like an insurable event?

Insurers have been paying these claims and have simply tried to “price it in”. If a plumber replaces a geyser and tells the insurer that it was a burst geyser, who can argue? An assessor, yes. But at what further cost? An extra R2,000?

Let’s take a look at what the rules say.

On one hand, rule 29 says, among other things, that the geyser must be insured to full replacement cost against bursting, subject to the trustees’ negotiation of excess premium and rate. On the other hand, rule 68 says that the owner is responsible for her geyser’s maintenance, even if it is located in the common area somewhere. So, the body corporate must insure the geyser against insurable events but the owner must maintain the geyser. There can be no arguing about that – provided that prescribed or standard rules apply.

Insurance policies are structured in different ways in an attempt to manage this high-risk area. Some policies work on a sliding scale basis – the older the geyser, the higher the excess. Others offer full geyser cover for a certain amount per month per geyser. Some offer a maintenance plan to take control of the unnecessary replacements that occur, and so on.

If trustees are concerned about non-burstings (in other words, unmaintained old geysers that cause much higher premiums and result in a watered-down insurance cover), the trustees can instead self-impose excesses. In other words, trustees can usually negotiate with the insurer for a lower rate where higher excesses are applied for geysers. A R4,000 excess on a geyser (where it may have been R1,000) may radically improve the claims ratio and lower the rate or premium achieved. This is where I would say that the trustees are acting in the best interest of all the owners, because they are negotiating the most appropriate terms and rates for the body corporate so that premiums remain reasonable and sustainable for all owners.

The ideal scenario is that owners work together and arrange for a plumber or a specialist service provider to change anodes and check geysers for faulty valves, for example, on a regular scheduled basis. By doing this, they are maintaining their geysers and reducing costs all round. This is the challenge.

Rules may need to be tweaked to allow them to be easily amended, so that the body corporate can take charge of geyser maintenance in certain circumstances. A complex with all geysers situated outside on common property can more easily be maintained by the body corporate, rather than when 30 owners must call in 30 different plumbers, especially when some owners may be away. Presently, the prescribed rules do not cater for this.

The way forward is going to be for legislators, together with input from the industry, to allow some flexibility in who can maintain the geyser. Meanwhile, trustees need to engage more with their brokers or insurance advisors about higher claims ratios and find the best alternative for all the owners, even if this means imposing higher excesses.

Please contact Willie van Wyk at Bestsure on 0861 10 12 20 for best advice on sectional title insurance

Source : Mike Addison

How to assure your biggest asset - your income

In the first of our "How to manage life assurance" series, we look at why you need life assurance. Life assurance enables you to face the risks of life with greater confidence in the knowledge that, if anything happens healthwise to prevent you from earning an income, you and your dependants will be able to maintain your standard of living.

Ask most people what their greatest asset is and most will immediately think of the big-ticket items they have purchased, such as their house or car. The more financially savvy will think instead of their investments and retirement savings. Younger individuals who have not yet accumulated many assets may even believe that they have no "great" asset.

All are wrong, Andrew Warren, the marketing executive of Liberty Retail, says.

If you dig beneath the surface, you will realise that all the assets you own, and those you hope to own in the future, had to be purchased and, except for the few of us that inherited large sums of money, we generally have to work to earn the income we use to purchase our assets. Without income, it would be impossible to amass the material wealth and tangible assets we desire now and in the future.

So the greatest asset you own is not your house, car or retirement fund but your ability to earn the income that funds those things. It is the earning potential locked up inside you - and the value of that asset is realised with every pay cheque, bonus and promotion - that leads to your greater wealth.

On this basis, younger people are immensely wealthy; they have their whole working careers ahead of them and, as such, hold a tremendous store of future potential income. As time passes, they convert that potential into actual income, which funds their living expenses, pays off their student loans and allows them to buy their first car.

As their debts are cleared and the car is paid off, they start to save and invest some of their income to generate financial assets that will grow with time so that eventually, when their working career is over, it will be these saved-up financial assets that will sustain them in retirement.

Like all assets, your future potential income must be protected. Premature death, disability or illness may prevent you from realising the full value of your earning potential.

If you are older and close to retirement age, you will probably have achieved most of your earning potential. If you are severely injured in an accident and have made adequate provision for your retirement, you will probably be able to survive financially without having to work again.

But if you are young and are badly injured in an accident and consequently are unable to work, you will still have to support yourself and any dependants you may have now or in the future. No one will simply give you the money.

In other words, the disability you have sustained, if permanent, could limit your future earning potential.

There is only one way for most people to counter the loss of potential future earnings: by having life assurance against the risks of life, be they an accident or a debilitating disease. Life assurance companies offer a range of products that can ensure that your full potential is reached, no matter what may befall you along the way.

Your income asset or your potential future income is greatest when you are starting out in life, because your potential for earning an income is over a longer period. When you start off in life, you tend to have a very large amount of future potential income and a very small amount of financial capital.

Hedge against disaster
Warren says taking out life assurance should not depend on how healthy you are or how risky your lifestyle is. However, health and lifestyle do affect how accessible life insurance is and how expensive it is for you to buy.

Having good health and a safe, healthy lifestyle does not mean that you do not need life assurance. You can never foresee what may happen tomorrow.

Instead, the need for life assurance depends on how large your future potential income is or, to put it another way, how much you or your dependants stand to lose financially in the future should a disruptive event occur.

Events are random, and it is the magnitude of the impact of those events that determines need. You cannot say for sure when an event may occur, or if it may occur at all. Insurance is a great way to hedge your future potential income and make it safe so that you can invest to achieve your life's goals successfully.

So your future potential income asset is the foundation of everything, including the planned accumulation of wealth.

Most of us are under-assured
You are most likely to be under-assured and need to have a financial health check-up soon to ensure that you and your dependants are properly protected against the unexpected.

Two years ago, True South Actuaries & Consultants undertook research that showed that the vast majority of South Africans are under-insured against risks such as death and disability. The research found the average household earns R60 000 a year (R5 000 a month). At the time of the research the average amount by which the average household should have been assured against death was between R431 000 (if your dependants tightened their belts and did away with all luxuries) and R531 000 (if you wanted to preserve your dependants' standard of living). But actual life cover averaged a mere R239 000. These are the lump-sum amounts that would be needed to generate a monthly income to sustain your dependants. So, if you are Mr or Ms Average and the main breadwinner in your family, and you die or are disabled today, your family would have to cut its living standards by up to half. The annual cost for the average household to get its life cover up to the ideal level would be between R1 330 and R2 322 a year. The total amount that South Africans would have to spend to be properly assured is R34 trillion. Their cover is about R10 trillion short (or R5.6 trillion if their dependants tightened their belts).

To have sufficient life assurance to maintain your current standard of living, you should be paying premiums of about 3.9 percent of what you spend each month on living expenses. To meet a belt-tightening budget, you would have to pay premiums amounting to about 2.2 percent of what you spend each month on living expenses. Again, this is if you are Mr or Ms Average.

The three main risks to your ability to earn an income
1 Dying too soon
This is the risk of death, robbing your dependants of the asset of your future potential income, especially significant if death occurs early in life when your potential earning asset is large but you have little in actual accumulated assets.

Dependants may include your parents who have not planned properly for their retirement.

When you are younger you are likely to use debt to finance assets, particularly for big-ticket items such as a home. Loss of income plus debt could condemn your dependants to poverty and the loss of your home.

To cover both your unrealised income potential and your debt you need life assurance against premature death.

2 Reduced ability to work
A health event can compromise your ability to work or lower the size of your future potential income asset. You may suffer an event that affects your income potential but does not necessarily lead to disability. For example, you may have a non-fatal heart attack that places "workstyle" constraints on you in the future, such as no longer being able to work as hard or take on as much work stress and pressure as was possible in the past, thereby possibly resulting over time in fewer promotions or, if you are self-employed, worse business results.

For this you need dread disease life assurance.

3 Becoming disabled
A health event can prevent you from working altogether and result in you losing your entire future potential income asset from the date of the disability event until death.

A total loss of income has the same financial consequences for your family as your death, except you survive to experience the lost income with your family members.

To cover yourself and your dependants, you need disability and/or impairment assurance.

In most cases, the amount of assurance you need in simple terms is the difference between your earning potential plus debt and your accumulated investible assets.

Source : Personal Finance

The worst mistake to make with your life policy

Thousands of South Africans take out life insurance and other long-term risk policies each year, paying their monthly premiums religiously until policy maturation or claim date. You would think – after years of dedication – policyholders and beneficiaries would be bashing down their insurance company’s door to receive their payout. But this isn’t always the case. Policyholders sometimes lose track of policies while insurers cannot always trace beneficiaries when payments are due. Each year thousands of rand slip through the cracks to end up on insurers’ books as unclaimed benefit.

“An unclaimed benefit is a claim on which a notification has been received, but following notification of the claim all attempts to locate the claimant prove unsuccessful,” says Jimmy Miller, Senior Manager: Claims at Metropolitan Retail. These unclaimed benefits are typically spread between maturity and death benefits on life policies, with a small percentage generated from funeral business. Metropolitan Life reports the total value of all outstanding claims at year-end 2009 was R1.458bn. Old Mutual – one of South Africa’s larger insurers – had approximately R3bn in unclaimed benefits on its books at that date. “It should be noted that if a policyholder fails to claim benefits at maturity, the policy proceeds are shown as unclaimed benefits with effect from the maturity date, so the figure quoted includes benefits subject to claim,” adds Piet Spreeuwenberg, Client Services Manager at Old Mutual.

What happens to unclaimed benefits?

Life insurers have different internal policies for dealing with unclaimed benefits. Metropolitan says all claims are followed up for a period of three years after notification, in accordance with the Association of Savings and Investments South Africa (ASISA) Code on Unclaimed Benefits. Most insurers make use of external databases in an attempt to locate beneficiaries before writing off such claims to an inactive account. Old Mutual also makes use of financial advisers and tracking agencies to trace beneficiaries.

“Life assurance policies sometimes have specific maturity dates (this is no longer always the case, as many of the newer generation policies are ‘open-ended’) in terms of which benefits become contractually due,” says Spreeuwenberg. Unclaimed benefits are typically accounted for by the life insurance company and either held in the final investment structure (if appropriate) or swept into suspense accounts awaiting claim. Spreeuwenberg says these funds continue to generate returns as “determined by the nature of the underlying investment portfolio or policy.”

A policy with a fixed maturity date (such as the majority of retirement annuity and endowment policies) earns returns similar to short-term cash instruments, since the proceeds can be claimed at any time. These returns are adjusted for income tax and administration fees. The return earned in the case of ‘open ended’ contracts is typically the same as the underlying investment portfolios. Benefits on risk benefit policies (such as policies predominantly providing for death cover) are calculated in accordance with the contractual provisions which differ from contract to contract.

How to claim these benefits

There are a number of ways for policyholders to trace unclaimed benefits. The majority of the country’s life insurers follow processes as set out in the ASISA Code on Unclaimed Benefits already mentioned. “Claims against funds moved to the inactive accounts are always honoured,” says Metropolitan. “To access these funds beneficiaries can contact the insurer directly, or the offices of ASISA, who should assist them to claim outstanding benefits.” If you think you may be a beneficiary under a policy you should contact your life assurance company with as much detail as possible. Useful information would include the policy contract document, the identity document of the claimant, bank details of the claimant, a death certificate (in the event of the death of a life assured) etc.

“Most people claim within the first three to six months after the maturity date and 80% of customers claim within three years,” notes Spreeuwenberg. If you suspect you are due an unclaimed benefit we urge you to take action now and help to put a dent in the billions of rand lying on insurers’ books!

Premiums determined by who you are, how you buy and how you behave

Over the years insurance company rating structures have become progressively more complicated leaving many people wondering why they are paying more for insurance compared to a spouse or neighbour driving the same vehicle as theirs.

Gari Dombo, Managing Director, Alexander Forbes Insurance explains that “an insurer will calculate the average cost of different types of risk by examining claims histories. Premiums and discounts are calculated based on the ratio of factors that contribute to or reduce risk, with assumptions of future trends and profit being factored into the calculation.”

When making these calculations insurers do, however, remain mindful of the need for their pricing to be fair as well as competitive enough to attract and retain clients.

“It is as important for consumers to understand how these assessments contribute to their premiums as it is for industry players operating in a highly competitive insurance market” says Dombo.

Rating factors such as gender, marital status or age are used to estimate the risk involved in every individual’s situation and lifestyle. This is combined with the rating that the actual item insured attracts, such as the vehicle make and model, replacement value of the television set or security features in a home.

In the personal insurance market, it is essential to have motor vehicle rating structures that take into account the specific make and model of a vehicle since different vehicles have different repair costs. For example, “the most expensive components of one vehicle may be in front where collision damage is more frequent while another vehicles’ expensive components may be located in a less dangerous place” explains Dombo. This might make the insurance on the first car more expensive than the second, even if the first car was less valuable.

“The status of the driver is also an important factor in premium calculation” adds Dombo. For example, a young inexperienced driver purchasing a high powered vehicle with expensive parts, will be considered a high risk. This will be reflected in a comparatively high insurance premium.

So, when purchasing a new vehicle, “one should take particular notice of the insurance cost that it will attract” warns Dombo.

Another strong indication of future claims is a policy’s claims history. As such, “making sure there are no errors recorded against it can greatly improve the premiums an insurance company is willing to offer” advises Dombo.

Furthermore, it is essential for insurers to ensure fair contribution to the risk pool by rewarding clients with low claims frequencies, either with no claims bonuses or with lower premiums - a saving that clients enjoy up front every month.

That said the key element remains that the premium payable by each category of client should be enough to pay the claims and servicing cost of all the clients in that particular group of clients.

Certainly, “cross subsidisation of a high risk group by a low risk group is unsustainable and won’t last much longer in the current insurance market ” says Dombo. It is much fairer to profile each individual risk and rate it accordingly so that a person pays a premium appropriate to his or her risk profile.

So while getting fair and equitable rating right is the key to ensuring that clients get their money’s worth, in reality, “the claims of the unfortunate few will always be covered by the contributions of the many, this is the principle of insurance” concludes Dombo.

Please visit http://www.bestsure.co.za/ or contact 0861 10 12 20 for more info.

Source : Fanews

Severe SA weather patterns lead to spike in insurance claims

Increasing weather-related damage to property as a result of severe weather conditions over the past year, has led to a sharp rise in insurance claims by homeowners in South Africa. As a result, homeowners are being urged to review their home insurance policies ahead of further expected cold spells and rainfall in the coming months.

According to Andrew Lilley, Chief Operations Officer of CIB Insurance Solutions, this year alone there has been a 30% increase in weather-related insurance claims for property. “Heavier than normal rainfall resulted in abnormal flooding in both Joburg and many coastal areas over the past year, prompting a spike in insurance claims from homeowners. With the rainy season starting again in the Western Cape, we expect this to increase further in the coming months.”

Lilley says that while normal rainfall is not likely to cause damage to houses, the heavier rains that are now being experienced in South Africa mean more homeowners are starting to file claims for leaks in their roofs, as well as rising damp and flooding.

“Many of these claims are justified as homeowners take out buildings insurance specifically to deal with such problems, however, people must be aware that there is also some responsibility placed with the homeowner to upkeep their home properly.”

He cautions that if your property has not been properly maintained then this could cause a problem when submitting a claim. “If you notice damp or moisture occurring on the ceilings or walls of your house and don’t have this seen to, it can lead to a serious problem later on.”

Lilley says it is important homeowners start looking at their home as they would their car. “If your car is damaged or starts making a strange noise, you take it straight to a mechanic to have it looked at. The same should be true for your house. A property needs the same level of attention and a small cost for maintenance now is far better than the cost of fixing a more severe problem later on.”

“People often consider vehicle insurance to be more important than home insurance, as they are more concerned about the theft of their vehicle than anything else. However, it is just as important to make sure that your home is adequately insured, particularly with the increase in serious weather conditions,” says Lilley.

Lilley says homeowners can do some basic checks in order to minimise the possible impact from severe weather conditions:

· Ensure that your property has adequate drainage;

· Make sure that all roof surfaces are maintained on a regular basis;

· Check that your roof and ridges have been adequately waterproofed;

· Ensure that all gutters are clear from obstructions or blockages;

· Have your house checked twice a year for signs of damage and wear and tear.

Source : fanews

WHY IT'S IMPORTANT TO HAVE A WILL

Death is not a pleasant topic, but neglecting to get your affairs in order can leave your loved ones dealing with more than bereavement.

If you die intestate, without leaving a valid will, your assets will be divided as provided for in the laws of succession. Only your family qualifies as heirs in terms of the laws of succession, however, they may not inherit in the proportions that you had in mind. Winding up of your estate will also take longer and your loved ones will pay more estate duty than would have been the case if you'd had a valid will.

What makes a will valid?

You must be older than 16 years and be of sound mind when drafting your will. You must sign every page in the presence of two competent witnesses, who are not beneficiaries in terms of the will. The witnesses must also sign every page. It is preferable that your will be drafted and typed by a professional. Handwritten wills or a will typed by you is not invalid but may lead to misunderstandings and even malpractices. The will must also be dated at the end thereof. If you are at all uncertain about the drafting of your will consult a attorney, accountant or trust company. It costs a few hundred rand but is worth the expense.

What must be written in your will?

Clear instructions about the division of your assets after your death should be contained in your will. You also have to appoint an executor who will handle your estate after your death. The executor ensures that your debts are paid and your estate distributed to your beneficiaries in accordance with your wishes. An executor must preferably be someone with the knowledge, expertise and time to take on the responsibility. Should you appoint someone who, in the opinion of the Master of the High Court, does not possess sufficient knowledge and expertise, the Master will insist on the appointment of an agent to attend to the administration of the estate. The executor is entitled to 3,5% of the value of the estate plus VAT, as remuneration. If you have minor children a guardian must also be appointed in your will.

Remember

 Before drafting a will, make a list of your assets, ensuring that everything has been included in your will.
 Your heirs must pay 20% estate duty on assets above the first R 2,5 million rand of your estate. No estate duty is payable on assets bequeathed to your spouse. A spouse also includes someone with whom you have had a long-term relationship, even though you were never married.
 Any special arrangements regarding your funeral should be conveyed to your loved ones during your lifetime. Will are normally only read after your funeral and is it therefore important that your loved ones are aware of your wishes.
 Preferably do not leave assets such as a single house to several people as it leads to squabbling.
 If you have minor children or other dependants it is advisable that you create a testamentary trust to provide for them. The trust safeguards your assets until your children reach majority or a predetermined age. The trust only becomes effective after your death.
 Another kind of trust is a living or inter vivos trust, which is created while you are alive. You can appoint the trustees, including yourself, to manage the assets of the trust. An inter vivos trust should be considered if your assets exceed R 2,5 million. This can save on estate duty.

Please contact us on 0861 10 12 20 to assist with your will.

Insurance Blacklisting - Know your rights

People freely talk about being 'blacklisted' by short-term insurance companies. Not only is there not such a thing, there is also a wrong perception about the real situation," says Steve Zietsman, Head of Marketing and Communication at Santam, SA's largest short-term insurer.

Zietsman says short-term insurance companies have a duty to manage their risks prudently and properly in order to keep their insurance premiums at an affordable level, in the interest of its clients.

In doing so, they have to deal with three matters:

1. People exposed to unacceptably high risks

2. People who are "moral risks". This is where a fraudulent activity was identified in a persons dealing with a specific company, either in underwriting or through the submission of a false claim

3. Duplicate claims being submitted to more than one company (fraudulent claims)

It is not uncommon that an insurance companys exposure to risk becomes unacceptably high due to either the failure or the inability of a policyholder to keep risks within reasonable limits. When this happens we sometimes find it necessary to cancel such a policy, in which case the company is no longer prepared to extend the particular insurance cover to the client, given that person's circumstances.

"For instance, if a person has had a policy with us for 50 years, with minimal claims, and at the age of 70 starts becoming involved in two accidents every month. Although we will initially pay out, it becomes apparent that this person is now too high a risk - they shouldn't be driving a vehicle - and they may become uninsurable risks.

"Similarly, if a person lives in an area with high water levels resulting in frequent flooding of their home, or in a high crime area against which they are unable to provide sufficient security, they become a 'geographical risk' and may become uninsurable." However, emphasises Zietsman, should they move to a safer suburb, where flooding or robbery is less likely to occur, they will once again be able to obtain insurance.

Zietsman says even if a claimant has an excellent track record, if there is a sudden spate of claims, whether petty or large, this automatically rings alarm bells and we will investigate and cancel a policy if it is found that the risk is becoming unacceptably high.

The common perception that people who have had their policies cancelled are placed on a blacklist that is shared among other companies is altogether wrong. What is true, though, is that anyone has to disclose such information, should they be asked by another company whether they have previously had insurance cover terminated because of unacceptable risks. It is up to the other company to decide whether they are happy to accept such risk, and at what price.

A number of companies in the insurance industry also share in a common database of claims information. The aim is to identify possible duplicate claims (thus fraudulent conduct) and to safeguard honest clients from the unnecessary penalties that may result.

A company may also decide to cancel a policy on the basis of "moral risk" - where a fraudulent activity was identified in a persons dealing with the company, either in underwriting, or through the submission of a false claim.

"We constantly remind policyholders to take all precautions and care to prevent or minimise loss or damage to their possessions - if it is clear that this is not happening - it wouldnt make commercial sense for us to continue paying out claims which ultimately push up premiums for everyone else."

"If you work through a broker they will automatically take up an unjust cancellation with the insurer, however, if you do not work through a broker, you have every right to put your argument forward to the insurer directly or, alternatively, to contact the Insurance Ombudsman on 0860 726 890.

"The Ombudsman is an impartial mechanism through which the industry ensures policyholders receive fair treatment and service, and it provides a fast-acting, readily available port of call for disputes relating to claims without incurring costly legal fees", says Zietsman.

Hospitality Risk Realities for 2010 World Cup & Beyond

While the World Cup brings opportunities to the local hospitality and tourism industries, there are additional and unusual risks that brokers need to convey to their clients so that cover meets world standards.

“It is up to brokers to point out potential additional risks associated with an intense event such as the World Cup where the united passion and excitement of visitors may present unfamiliar types of risks to the hospitality & tourism industries,” says Johan Claassens, marketing manager of VEA Risk Consultants, underwriting managers and hospitality, tourism and wildlife insurance specialists, underwritten by Etana Insurance.

“Our VEA team, with our combined 80 years experience, was at the recent Tourism Indaba held in Durban. Hospitality & tourism professionals came from the entire world and it was the busiest and best South Africa has ever seen. It made us realise that our hospitality clients in South Africa need extra attention regarding this first-of-its-kind event to ensure their cover lives up to the demands that may be made of it. The job of insurance professionals is give businesses an objective view and ensure that nothing is overlooked during June and July and beyond where clean-up, for instance, could be an overlooked cost factor for those in the front line.”


Risk Exposures

Claassens says VEA Risk Consultants has found that a hospitality facility is often too close and familiar with the running of their operation under ‘normal conditions’ to consider the increased risk exposures that comes with an event like World Cup, such as:

(a) Asset Management

Congestions and delays are the least of the challenges facing businesses. Theft, Malicious Damage to Property, Fire Risks, Act of Wild Animals Damage to gardens, water features and ornaments are just some of the potential risks.

Public utilities: Telecommunications, electricity, water, gas, sewerage and waste disposals can affect the day to day operation of businesses and need specific cover.

Infrastructure: Roads, parking areas, bridges, entrance gates, lighting, signage and perimeter fencing, tend to be forgotten when the assets of business are being insured.

Clean-up: The financial implications of clearance and cleaning costs, demolition, debris removal and property protection costs after a destructive event cannot be overlooked.

Seasonal increases on stock: Expenditure on stock (wet and dry) on amenities and increased overall outlay are often overlooked.

(b) Financial Management

Fraud, misuse of credit cards, internet fraud, bilking, loss of profits and revenue.

Additional increased cost of working if an unforeseen event causes you to lower your rack rate to attract tour brokers and operators to regenerate you turnover. There is a further point of concern should the point of focus no longer be there - Loss of tourist attraction. Murder, Suicide, infectious / contagious diseases and wild animal attacks should be a point where extra care and planning is given.

(c) People Management

Using untrained or unskilled temporary staff to accommodate the higher occupancy during this time poses a huge risk for your business.

These include: Front office, kitchen, maintenance and cleaning staff.

The safety of visitors and staff needs to be a priority. Specific risks, be it wild animals, criminal elements, fire and adverse weather conditions or various liability exposures, need special attention and planning from top management down to ground level.

The duty of care is not just a buzz word, but a reality that allows no short cuts.

(d) Risk Management

Proper Risk Management should be the corner stone of any hospitality or tourism entity at any time. During the soccer world cup, a businesses Risk Management plan should be enhanced and in forced to cater for worst case scenarios.

Make sure indemnity forms are updated to meet the world standards.

Have a broad disaster management and rehearsed action plan in force for various risk scenarios.

If you have access to an Emergency Medical Intervention or evacuation assistance call centre, make sure your staff is properly informed on the procedures, emergency contact numbers and the client’s full medical history.

This is not the time to cut back on your Risk Management budget, but rather increase attention to this vital area.

“Medical Intervention and Evacuation backup is an example of essential cover hospitality & tourism professionals need and our VEA Assist 24 Hour Emergency Call Centre was recently involved in the successful evacuation of an elephant attack victim from one of our neighbouring countries. The person concerned is now in a stable condition at Millpark Hospital. The medical emergency could spring from a snake bite or someone falling down a flight of stairs, wooden decks, furniture, probably more easily than an elephant attack.

“If a traveller experiences an unexpected event such as this the host needs to be able to spring into efficient action and that’s what brokers need to convey to their clients so they are protected against all risks. Right now brokers need to redo risk evaluations to be sure.”

Source : FA NEWS

Please contact Bestsure should you need any assistance

Status of AARTO

The main purpose of the AARTO pilot since July 2008 in the municipality of Tshwane and February 2009 in Johannesburg was to, amongst others, test all the various systems, procedures and processes that are utilized in the daily operations, identify weaknesses and deficiencies with the view to develop and apply remedial measures. These related to the weaknesses and loopholes in the legislative framework, the system requirements for efficient interface with various entities and uploading to the National Contraventions Register and the on-line, real-time updating of the National Contraventions Register (NCR), etc. With the NCR being developed as a module of the eNaTIS, it offered the benefits of the interaction of the different modules contained therein for verification, such as the particulars of motor vehicles, driving licenses, operator cards, owners and operators of motor vehicles. Over the past year extensive training on AARTO legislation and the various systems and procedures were undertaken by the Corporation in all the provinces and metropolitan authorities.
In January 2010 a National AARTO Task Team was established with the view of assisting the Corporation, amongst others, to ensure the smooth operations of the pilot; to effect remedial measures to the identified shortcomings; as well as the conducting of a formal assessment of the pilot; to determine the state of readiness of provincial, metropolitan and local issuing authorities, and providing authorities with assistance in this regard; and the finalisation of a national rollout plan. A comprehensive public media campaign and consultative programme is in the process of finalization and will be introduced in due course. Radio and printed advertisements are already utilized in the media.
Early in May 2010 meetings were held with the authorities of the eThekwini, Nelson Mandela Bay and Cape Town in order to discuss the various requirements for the introduction of the AARTO system in their jurisdictions and to determine their state of readiness for such implementation.
The AARTO is in the process of being rolled out in a staggered approach and is expected to be completed by 31 December 2010. The allocation of demerit points to infringers will be introduced on a national basis from 1 April 2011. In view of the FIFA 2010 World Cup consideration is being given to move the date for AARTO implementation in other issuing authorities for later dates.
“AARTO is a law that has been in existence since 1998, after 12 years we all have to be ready to implement it. The Minister is clear on this, it has to be implemented”, said Collins Letsoalo, Acting CEO of RTMC

Source :FANEWS

Safety Tips for houses

It is important to assess how vulnerable your home is. If you have fewer security measures than your neighbours do, you are likely to top burglars' popularity lists. Corner properties, buildings situated far from others, poor street lighting, and vacant land in the vicinity increase the risk.

Walk around your property and look out for the following signs of poor security:

-Burglar proofing that is not firmly attached;
-Broken window-panes affording access to window catches;
-Badly installed locks on doors;
-Keys that can be pulled through an open window using wire or a stick; and
-Ladders left lying around.
-Once you have identified the vulnerable areas, set about correcting the situation:
-Eliminate the gaps in your security system;
-Make sure there is adequate lighting;
-Have an alarm installed or acquire guard dogs if necessary; and
-Consider having walls or fences erected.

Householders Insurance

If you have house contents insurance, you enjoy full cover for contents inside and limited cover for contents outside your building, the personal effects of guests and domestic employees, money, contents of refrigerators and freezers, mirrors and certain glass, storage costs for contents after damage, rent, fire brigade charges, medical expenses not otherwise covered, compensation for your or your spouses death, trauma treatment, veterinary expenses and guards to safeguard your home after the occurrence of an insured peril. Please refer to your policy wording for the details.
There are also a couple of optional covers to choose from. If, for example, a mongoose 'perfumes' your furniture, the basic cover in terms of the Household Content section does not provide cover in this case. If you have taken out the accidental damage extension, you would have been able to claim and this claim will not affect your no-claim bonus. Stock-in-trade is another optional cover, as is subsidence and landslip. If a pipe bursts beneath your house and it causes your building to collapse, the subsidence and landslip extension will provide cover.
For your household content, you can either draw up an inventory yourself or use Santam's inventory (English/Afrikaans) form. You can also employ the services of a professional company specialising in the valuation of house contents.
Source : Santam

Why must burglar-bars ,alarm and security gates protect a house?

Most insurers require that burglar bars and/or security gates protect opening windows and doors to your home. These anti-theft measures must be in place before an insurer will insure your household contents.
Your insurer may also insist that a 24-hour radio-linked alarm system be installed if the home is situated in a high-risk area, or if the value of your household contents is high. If these conditions are not met, it will be difficult to obtain household insurance. Non-adherence to requirements may result in a rejected claim. If you make any alterations to your house, be sure that you still adhere to the security requirements.
Please contact Bestsure if you are unsure about your security requirements on your policy.
Source: Santam

Policy Holder Rights

To enable clients to make informed decisions about their insurance, the Short-term Insurance Act now incorporates the Policyholder Protection Rules (PPR).
These rules compel brokers and insurers to reveal certain information to their clients. The essence of the legislation is that you must know who your broker and insurer are at all times. This means that the broker cannot switch your policy to another insurer without informing you of the decision in writing. As a policyholder or prospective policyholder, you have the right to the following information:

About the insurance broker:
-Name, physical and postal address, and telephone number.
-Legal status and any interest in the insurer.
-Whether or not he/she is in possession of professional indemnity insurance.
-Details of how to institute a claim.
-Rand amount of fees and commission payable.
-Written mandate to act on behalf of the insurer.

About the insurer:
-Name, physical and postal address, and telephone numbers.
-Telephone number and postal address of the insurer's compliance department.
-Details of how to institute a claim and/or a complaint.
-Type of policy involved.
-Extent of premium obligations you assume as a policyholder.
-Manner of payment of premium, due date of premiums and consequences of non-payment.

Other matters of importance:
-You must be informed of any material changes to the information regarding the intermediary and the insurer.
-If this information was given orally, it must be confirmed in writing within 30 days.
-A polygraph or any lie detector test is not obligatory in the event of a claim and failing a lie detector test may not be the sole reason for repudiating a claim.
-If the premium is paid by debit order it may only be done in favour of one person and may not be transferred without your approval. The insurer must inform you, in writing, at least 30 days before of its intention to cancel such a debit order.
-The insurer and not the intermediary must give reasons for repudiating your claim.
-Your insurer may not cancel your insurance merely by informing your intermediary. The broker has an obligation to make sure the notice has been sent to you.
-You are entitled to a copy of the policy free of charge.

Source: Santam

Bestsure Team for World Cup 2010

Here is the very succesful Bestsure Team in the swing of things on Soccer Fridays.We are proudly South Africa and will support Bafana Bafana.
GO BAFANA BAFANA!!!!!!!!

Bestsure sponsors Laerskool Muldersdrif Traffic Points man

Bestsure are proud to be the sponsor of clothes and bibs for the traffic points man of Laerskool Muldersdrif.

Hendrik Potgieter is a very dangerous road and Bestsure is honoured to make a difference in traffic safety.

Bestsure supports 2010 Soccer World Cup

Flags of all the Worldcup Teams are up in the Bestsure Offices.It created great excitement amongst staff and each division support different teams.Great competitions between the divisions will be held on a weekly basis.

Please let us know if your office are exited about the World Cup!!!!!!!