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Chapter 1. SA General Insurance Market (8 Policy Types: (Property,…
Chapter 1. SA General Insurance Market
8 Policy Types:
Property
Transportation
Motor
Accident & Health
Guarantee
Liability
Engneering
Miscellaneous
Insurance Companies:
Most are proprietary, some are still mutual
Lloyd's:
Market framework for insurance business to be done
Placed directly with members, grouped into syndicates. Syndicates managed by managing agent that provides an underwriter.
No joint liability, profits in proportion of participation
Mostly long-tailed, three-year accounting basis
End of 3 years a Reinsurance to Close (RTC) is enacted
STIA allows Lloyd's to write business in SA
Self-retention Groups:
Captives:
Provide insurance to a parent company
Can front through an insurance comapny
Fill gaps in insurance market, not otherwise available (niche)
Manage insurance spend of large companies/groups
Focus on risk management
Reduce market cycle impacts
Gain tax, legislative or regulatory advantages
Access to Reinsurance market
Cell Captives:
Insurer allows 3rd parties to write on their licence (rent-a-cell)
Profits and losses in a cell can vest to the cell owner
First Party (relates to cell's own risk)
Third Party (relates to third parties)
Combined Cells (combination of above)
P&I Clubs (Protection & Indemnity):
Cover marine insurance on a mutual basis (mostly liability)
South African Special Risks Insurance Association (SASRIA)
Govt owned company that covers certain perils - only one allowed (like riot, terrorism,etc.).
Admin fee paid by insurers through premium collection
Must hold an underlying fire policy to obtain cover
Road Accident Fund (RAF)
Bodily injury, loss of income, dependants' support, funeral costs, non-financial loss
Currently requires proof of fault (a downfall)
Funded by fuel levy
Lots of fees currently go to lawyers, looking to improve this
Caps and limits apply, since large claim
Acquiring Business:
Broker, bank (bancassure) or Underwriting Manager (UMA)
UMA must use a broker
Expert or specialist in their field
Share in profits, not losses
Can carry losses forward
Collect Underwriting & Admin fees (% of premium)
Manage and pay claims
Agreed under a binder
Staff employed by insurer
Internet, telesales, post
Intermediary Guarantee Facility (IGF) - allows broker/UMA to collect the premiums
London Market:
Centred at Lloyd's
Large portion of Global insurance and reinsurance
Co-insured due to large nature (on the slip system)
Other Industry Bodies:
SA Insurance Association (SAIA):
Represents industry
Majority of insurers are members
Ensure a sustainable and dynamic industry
Negotiate on behalf of industry
Institute of Risk Mgmt SA (IRMSA):
Share common interests, theories, research, discussion, forums, dialogue, Professional Standards, Legislation analysis
Admin of Business:
Most info. held electronically - both policy and claims details, can run into legacy issues
Must be able to issues policies, make amendments, renew policies
Allow for possible multiple claims and multiple claimants