COM­MON PROP­ERTY, COM­MON CAUSE

An un­der­writ­ing man­ager with stay­ing power, Cor­po­rate Sure ( C- Sure) has been in the sec­tional ti­tle in­sur­ance mar­ket since 1999. Leg­isla­tive, so­cial and cli­matic changes have had, and con­tinue to have, a ma­jor im­pact on this mar­ket, prompt­ing a shift in

RISKSA Magazine - - SHORT TERM - Hanna Barry

Hav­ing made it through a few dif­fi­cult years with the sup­port of its car­rier, San­tam, C- Sure has proudly made an un­der­writ­ing profit since 2010. “This is no small achieve­ment in a mar­ket as com­pet­i­tive, chal­leng­ing and com­plex as ours,” says Zoë Todd, di­rec­tor of op­er­a­tions. San­tam adopted C- Sure into its spe­cial­ist busi­ness fold in 2008, af­ter se­cur­ing 100 per cent share­hold­ing of Ad­mi­ral Group, where C- Sure was housed af­ter its orig­i­nal car­rier, Al­lianz, pulled out of South Africa at the end of 2000. A num­ber of role play­ers in the chain, cou­pled with a range of com­plex ex­po­sures, from trustees’ li­a­bil­ity to burst gey­sers, make for a tech­ni­cally chal­leng­ing mar­ket, where the back­ing of an in­surer such as San­tam is of great value. “I don’t think the mar­ket al­ways un­der­stands and ap­pre­ci­ates the com­plex­ity of sec­tional ti­tle and com­mu­nity schemes in­sur­ance, which op­er­ates on very dif­fer­ent le­gal prin­ci­ples and re­quires some de­gree of co- op­er­a­tion from the com­mu­nity of sec­tional own­ers. For this rea­son, our prod­uct does not fit into the stan­dard com­mer­cial/ per­sonal di­vide, as it in­cludes com­mu­nal and per­sonal prop­erty risks,” com­ments man­ag­ing di­rec­tor, Charlé Hal­gryn, who has been in the po­si­tion for two years. In or­der to pro­tect home­own­ers in sec­tional ti­tle and share block schemes, govern­ment ap­proved the Sec­tional Schemes Man­age­ment Act and the Com­mu­nity Schemes Om­bud Ser­vice Act in 2011, which makes pro­vi­sion for a com­mu­nity schemes om­buds­man. These new Acts will have a sig­nif­i­cant im­pact on the mar­ket and seek to as­sist body cor­po­rates man­age and reg­u­late sec­tional ti­tle schemes more ef­fec­tively, as well as pro­vide an af­ford­able and ac­ces­si­ble mech­a­nism to mit­i­gate dis­putes. “The com­mu­nity schemes om­bud will most def­i­nitely add a dif­fer­ent dy­namic to our li­a­bil­ity ex­po­sures,” ex­plains Hal­gryn. “Along with the in­creas­ing li­a­bil­ity ex­po­sure, changes to the Com­pa­nies Act has made the need for ad­e­quate cover for the direc­tors and of­fi­cers of the com­pany an es­sen­tial for any home­own­ers’ as­so­ci­a­tion pol­icy. These new Acts are game chang­ers and we are pre­par­ing for these emerg­ing risks.”

Aside from leg­isla­tive changes, green risks and so­cial de­vel­op­ment re­quire­ments re­lat­ing to life­style en­vi­ron­ments present fur­ther chal­lenges and op­por­tu­ni­ties.

Man­ag­ing the mar­ket

Prior to 2008, sec­tional ti­tle prop­erty ex­pe­ri­enced an­nual growth rates of up to 25 per cent. Al­though this has slowed, it re­mains higher than the growth of free­stand­ing homes and sig­nals the di­rec­tion that prop­erty de­vel­op­ment has taken in South Africa. Hal­gryn points out that vir­tu­ally all the new hous­ing de­vel­op­ments are com­mu­nal in na­ture. As more se­cu­rity com­plexes, gated com­mu­ni­ties and hous­ing es­tates crop up, they are be­com­ing in­creas­ingly so­phis­ti­cated, con­tain­ing sport­ing fa­cil­i­ties, club­houses, golf cour­ses, com­mu­nity cen­tres and some­times even shop­ping malls and schools. This de­vel­op­ment im­pacts on the size and scope of the risk, while cli­mate change and the need to mit­i­gate en­vi­ron­men­tal im­pact risk raises costs and places loss ra­tios un­der pres­sure. For ex­am­ple, in­stalling so­lar gey­sers is more ex­pen­sive than in­stalling or­di­nary gey­sers. C- Sure ex­pe­ri­enced the full im­pact of the col­li­sion of these two risks, ( cli­mate change and com­plex com­mon prop­erty) when in 2009, the river run­ning through a golf course in Hill­crest over­flowed. C- Sure had in­sured an up­mar­ket home­own­ers’ as­so­ci­a­tion on the course and when the river burst its banks, boundary fenc­ing had to be re­paired, the spill­ways of two dams re- en­gi­neered, a wet­land re­ha­bil­i­tated and 105 bunkers re­filled with sand. Due to it be­ing a PGA- rated golf course, only white sil­i­cone sand could be used, which needed to be trans­ported from Gaut­eng. The claim was even­tu­ally set­tled at R4.1 mil­lion, the bunkers ac­count­ing for R2.1 mil­lion and the wet­land re­ha­bil­i­ta­tion R260 000 of the to­tal cost. “Iron­i­cally, our largest claim had noth­ing to do with res­i­den­tial build­ings and ev­ery­thing to do with com­mon prop­erty,” re­mem­bers Todd. In light of these myr­iad com­plex­i­ties, C- Sure has re­alised how im­por­tant it is to ed­u­cate those par­ties who in­flu­ence the in­sur­ance pur­chas­ing de­ci­sion for sec­tional ti­tle prop­er­ties. Al­though trustees rep­re­sent a body cor­po­rate com­prised of home­own­ers, they gen­er­ally del­e­gate their au­thor­ity to man­ag­ing agents, who even­tu­ally pur­chase in­sur­ance through bro­kers. These bro­kers are re­moved from trustees meet­ings where im­por­tant decisions are dis­cussed, such as set­ting levies and choos­ing in­sur­ance cover. This means that man­ag­ing agents of­ten have the most in­flu­ence in the buy­ing de­ci­sion and many are un­aware of the risks that need to be as­sessed, bas­ing their pur­chas­ing decisions on price alone. “This ig­no­rance is ul­ti­mately to the detri­ment of home­own­ers, who are left with gaps in cover as a re­sult. We want to play a lead­ing role in ed­u­cat­ing our mar­ket to avoid this out­come,” says Hal­gryn. C- Sure is also look­ing at in­no­va­tive ways to com­mu­ni­cate with its mar­ket in or­der to at­tend to claims swiftly, make their way through each link in the value chain. “For us, the prod­uct is about the ex­pe­ri­ence and hence tech­nol­ogy is an im­por­tant fac­tor and a log­i­cal tool for our in­no­va­tion. It will en­able us to en­gage with our mar­ket, in­te­grate pro­cesses and de­liver ser­vice as ef­fi­ciently and ef­fec­tively as pos­si­ble, to the ul­ti­mate ben­e­fit of the home­owner.” Bro­kers will con­tinue to play a key role in this strategy and Todd be­lieves that C- Sure’s re­la­tion­ship with its bro­kers has been the big­gest con­tribut­ing fac­tor to its suc­cess over many years. “We have a num­ber of bro­kers on our books whose busi­ness dates back to 1999,” she says, at­tribut­ing these long- stand­ing re­la­tion­ships to C- Sure’s sen­si­tiv­ity to the needs of the mar­ket and its abil­ity to re­spond to change and chal­lenge. “We un­der­stand the role we play in serv­ing bro­kers and pol­i­cy­hold­ers, as well as pro­vid­ing profit for in­sur­ers, and do not plan to ven­ture into other lines of busi­ness to en­sure our vi­a­bil­ity. We want to be a trusted part­ner and a grow­ing source of in­spi­ra­tion for pos­i­tive change to the sec­tional ti­tle and com­mu­ni­ties schemes mar­ket, through the prod­ucts and ser­vices we pro­vide. If we can­not add value and make a dif­fer­ence to our clients, our staff and our share­holder San­tam, we have no pur­pose,” says Hal­gryn. “Many of our com­peti­tors sell pe­riph­eral cov­ers that are not rel­e­vant to the in­sur­ance needs of sec­tional ti­tle prop­erty. These cos­metic en­hance­ments do not drive our busi­ness. Rather, our com­pet­i­tive ad­van­tage is around en­hanc­ing the mar­ket’s pro­fes­sion­al­ism and im­prov­ing ser­vice de­liv­ery turn­around times by con­nect­ing the mar­ket for the ben­e­fit of the home­owner,” she con­cludes.

Charlé Hal­gryn, Man­ag­ing di­rec­tor

Zoë Todd, Di­rec­tor: op­er­a­tions

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