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
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