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Sarma Conference - August 2014 - CivilSure presentation by Dan Payton
- 1. CivilSure CivilSure - Dan Payton ACII Suretimes Insurance Administrators (Pty) Ltd Registration Number 9921189 FSB number 1962 The Road Ahead
- 2. • ARROWSMITH –maker of arrow heads • BLADESMITH – sword maker or knife maker • BROWNSMITH - works with copper or brass • BLACKSMITH - works with steel and iron • COPPERSMITH - worked with copper • GOLDSMITH - maker of gold articles • GUNSMITH – designs and builds guns • SILVERSMITH - maker of silver articles • JACK-SMITH - maker of lifting machinery • LOCK-SMITH – assembling and designing locks • SHOESMITH - cobbler, one who shoed horses • METALSMITH - metal worker • SUCKSMITH - one who made ploughshares • TINSMITH – tinker with tin CivilSure - Dan Payton ACII
- 3. What is a Tribesmith? “…A person who Identifies a group of people who are connected to an idea, occupation or industry…” What is a Tribe? “A tribe is a group of people connected to one another. A group needs only two things to be a tribe: a shared interest and a way to communicate.” CivilSure - Dan Payton ACII
- 4. CivilSure - Dan Payton ACII
- 5. Mandate CivilSure - Dan Payton ACII Capacity Building Strategic Value Adds
- 6. CivilSure - Dan Payton ACII Strategic Value Add
- 7. CivilSure - Dan Payton ACII Typically, the responsibility for concrete failure can generally be assigned to one or more of the following in the supply chain of Ready - Mix: 1.Ready Mix Supplier; 2.Concrete Contractor Finisher; 3.General Contractor; 4.or Aggregate Supplier
- 8. • Incorrect selection of materials • Errors in design calculations and detailing • Poor construction methods and inadequate quality control and supervision • Chemical attack • External physical and /or mechanical factors including alterations made to the structure CivilSure - Dan Payton ACII
- 9. Where did the concept of Insurance come from? CivilSure - Dan Payton ACII
- 10. But what if the cargo can’t be divided? CivilSure - Dan Payton ACII
- 11. CivilSure - Dan Payton ACII
- 12. The value of the total cargo of 10 ships was 1,000 gold coins CivilSure - Dan Payton ACII And each ship carried goods worth 100 gold coins So then each merchant pooled 10 gold coins to get a total of 100 gold coins in the pool 100 100 100 100 100 100 100 100 100 100
- 13. CivilSure - Dan Payton ACII 100 100 Cost 10 gold coins = for 100 gold coins
- 14. If pooling of risks is so simple, why does the Ready Mix industry struggle to get CivilSure - Dan Payton ACII Concrete Failure Insurance and why is it so expensive?
- 15. • The Ready mix suppliers in South Africa are FEW in number and are considered a small pool of similar high rated risks • The Ready mix suppliers do not shop at the same insurance shop, so the benefit of the Law of Large Numbers is not achieved by the insurers • For a risk pool to remain viable, it must be of sufficient size and comprised of a broad cross section of risks • To the Insurer the bigger the pool and a spread of risks, the smaller the risk of losing a large amount of money. At the same time, the bigger the pool, the more likely it is that you'll have a claim, because somebody in the pool will be unlucky. CivilSure - Dan Payton ACII
- 16. • “…Rating wise, this becomes a bit of a challenge as to make the programme attractive to the client(s) volume will be one of the drivers in this regard. It is difficult for us to evaluate this as we are not party to the “global” turnover of the members...” CivilSure - Dan Payton ACII ANDREW BROWN and KEITH MUMFORD
- 17. Tribe Benefit • When one insurer underwrites a Pools of similar risks – that risk will exhibit stable and measurable characteristics that enable actuaries to estimate future costs with an acceptable degree of accuracy. This, in turn, enables actuaries to determine premium levels that will be stable over time, relative to overall trends. CivilSure - Dan Payton ACII
- 18. R10 Million Turnover Rate Excess 7 Days strength notification Excess 14 Days strength notification Excess 28 Days strength notification R1 R50,000,000.00 .070% R15,000 R30,000 R60,000 R50,000,000.01 R100,000,000.00 .065% R25,000 R50,000 R100,000 R100,000,000.01 R250,000,000.00 .055% R35,000 R70,000 R140,000 R250,000,000.01 R500,000,000.00 .050% R45,000 R90,000 R180,000 R500,000,000.01 Plus .048% R55,000 R110,000 R220,000 CivilSure - Dan Payton ACII R50,000,000.00 *R2,558.49 per month * R100,000,000.01 *R4,020.48 per month * Minimum Monthly Premium R3000.00 * Excludes VAT and Broker Fee – Subject to a satisfactory Claims History of the individual SARMA member. The rates are subject to the Group SARMA members claims history and may increase. Rates quoted are an indication only. A Proposal form to be completed to secure rates. Strategic Value Add
- 19. Annual Risk Premiums collected Discount on premiums passed to all members R1,5 Million *10% R3 Million *15% R4 Million *20% CivilSure - Dan Payton ACII * The Annual Premium collected - Excludes Admin and Broker Fee . Calculated annually in March. Subject to Annual review by the insurer. The insurer has the right to decline this offer should the scheme claims be excessive Strategic Value Add
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- 21. CivilSure - Dan Payton ACII
- 22. CivilSure - Dan Payton ACII
- 23. CivilSure - Dan Payton ACII R1,000,000.00 R964.91 * R500,000.00 R482.46 * * Risk Premium and Admin Fee - Excludes VAT and Broker Fee – subject to a satisfactory Claims History of the individual SARMA member – these rates are only a indication and subject to a quote based on claims. Strategic Value Add
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- 27. • Achieving economy of scale • Increasing bargaining power • The Discounts not based on the individual business size but on the size of the group as a whole and then passed on back to the indvidual • Adding values to individual business as products previously not available to the smaller player now become readily available • Obtaining new services CivilSure - Dan Payton ACII CivilSure The benefits of the SARMA Pool?
- 28. • As Smiths • Knowledge of segmented construction markets • Inherent risks known of that market segment • Specific Insurance packages for specific risks for a specific market segment • Access to other products CivilSure - Dan Payton ACII CivilSure What does Civilsure do?
- 29. Any Questions CivilSure - Dan Payton ACII
- 30. CivilSure CivilSure - Dan Payton ACII MotorSure (Pty) Ltd Registration Number 9921189 FSB number 1962 The Road Ahead Thank You
Editor's Notes
- Introduction – Greetings Dan is my name and I am from Civilsure Let me tell you about the Smiths
- The name SMITH was an old English term meaning ONE WHO WORKS IN METALS – Precious and semi precious It was related to the word SMITAN and SMITE Smite means to Strike or Hit So Smiths were CRAFTSMAN HITTING Metals and serviced the community with vital products for daily living
- Modern Day Word smith The Tribesmith does not work in metal the tribe smith works with people He follows specific communities of people and serves as a mentor to that community - The Tribesmith Acts as a communicator, teacher or trainer to the tribe And the aim of the Tribesmith is to enable the organization to become more tribal, Tribal – means keeping the community knit together through communication, education, products and anything else that goes with the Tribe
- These are the fine tribes I follow
- My Mandate from SARMA is Increase the size of SARMA membership by providing purposeful value adds to the SARMA members
- I start with the toughest and trickiest type of insurance to obtain in South Africa FAILURE of READY – MIX That being INSURANCE that pays for the Rip and tear so that the ready mix can be poured again and the Consequential loses that attach to a failure This type of Insurance is not readily available in South Africa and when obtained it is normally very expensive
- When the SHIP hits the CAN who is to blame Responsibility for concrete failure involves more than one party This is a risk that insurance companies do not readily insure in South Africa
- THE FAILURE OF READY – MIX No matter what the reason or the cause – it takes a small hole to sink a big ship – All companies are held VACRIOUS liable for the acts of their staff – so when your staff or your batching computers get it wrong the consequences can be costly Spar story
- Several hundred years ago some merchants looking to ferry cargo thought of spreading their risk by shipping each person’s cargo in different ships. Common sense told them that the probability of all ships going down on the same journey around the same time was much less than just one ship drowning. The formula worked
- Much later, when the academicians got into the story, they showed through theorems and numbers what the sharp business minds knew intuitively: the risk of all ships capsizing tends to be zero
- This problem can be bypassed by pooling in money that would equal the cargo of one ship. For example if the value of cargo of say 10 ships was 1,000 gold coins and each ship carried goods worth 100 coins, each merchant pooled in 10 gold coins to get a total of 100 gold coins. Whoever lost a ship would get the pot of gold. And this is how pooling of risk came into practice. The merchants came together to pool their resources to ensure that the burden of loss is well spread out (losing 10 gold coins for the certainty of getting either the cargo back or 100 gold coins). The basic premise of insurance is to identify the risk of an event happening and then spreading out the risk among all the people who face the same risk and are prepared to pay a small sum to get protection from that risk.
- This problem can be bypassed by pooling in money that would equal the cargo of one ship. For example if the value of cargo of say 10 ships was 1,000 gold coins and each ship carried goods worth 100 coins, each merchant pooled in 10 gold coins to get a total of 100 gold coins. Whoever lost a ship would get the pot of gold. And this is how pooling of risk came into practice. The merchants came together to pool their resources to ensure that the burden of loss is well spread out (losing 10 gold coins for the certainty of getting either the cargo back or 100 gold coins). The basic premise of insurance is to identify the risk of an event happening and then spreading out the risk among all the people who face the same risk and are prepared to pay a small sum to get protection from that risk.
- If pooling of risks is so simple why does the Ready Mix industry struggle to get Concrete Failure Insurance ?
- When one insurer underwrites a Pools of similar risks – that risk will exhibit stable and measurable characteristics that enable actuaries to estimate future costs with an acceptable degree of accuracy. This, in turn, enables actuaries to determine premium levels that will be stable over time, relative to overall trends.
- You get the insurance broker who is add The insurance underwriter who is ANAL The Engineer who says give to me I can build it Andrew Brown and Keith Mumford - who may be known to some of you Andrew built roads and bridges for a national construction company
- We are like Gary Player – the more we practise – the better we get - We believe if you chase 2 rabbits you will not catch one and for this reason we chase the construction industry Concrete PUMP – is your remote Insured – Explain