The current opportunities within engineering in South Africa come from two sources: government and the private sector. The Government has been talking about large infrastructure spending for a number of years but we are still waiting for much of this to take place. The private sector is spending on new buildings and some mining houses are still spending on infrastructure, although, in line with the economy, the construction sector is still down. However, there are opportunities for intermediaries to deliver specialist services and guide their clients together with tailored products within the engineering and construction classes.
OPPORTUNITIES AND CHALLENGES IN AFRICA
Development throughout Africa provides opportunities in several areas related to engineering including infrastructure; oil and gas activities off Mozambique and the creation of infrastructure connected to mining. The influx of Chinese construction firms and their general funding of projects has brought both opportunities and challenges. Hollard has taken advantage of these opportunities have now has both registered companies and selected partnerships in many African countries in order to ensure we comply with the local legislation and the ever changing conditions affecting insurance companies in the various regions. Our physical footprint throughout Africa means we can support our brokers who are targeting expansion into Africa with their clients.
SKILLS NEED TO BE RETAINED AND DEVELOPED
To fight the dilemma of the industry-wide skills and experience shortage within all categories of specialist insurance – particularly engineering – the industry needs to be proactive. Hollard is targeting universities and educational institutions in order to make insurance an attractive industry to enter for graduates. We also have a graduate and learner programme within the Hollard Academy so that existing Hollardites have the opportunity to formerly upgrade their skills without disturbing their ongoing income. Skills transfer through a mentoring programme is a high priority as top specialists advance toward retirement and it is vital that their experience should not be lost to the industry. All brokers and insurers need to be prioritising systems that guarantee expertise and general skills transfer.
CURRENT CHALLENGES IN CLAIMS and ASSESSMENTS
Due to various factors we are experiencing an increase in the value of all products which has a direct effect on our claims costs as well as the value of items being insured within the engineering sector. This is placing pressure on both insurers and brokers alike whereas insurers are finding it tougher to compete in terms of price, brokers need to ensure that their clients are correctly insured in order to avoid under insurance or no cover at claims stage. Failing to make sure that clients are satisfied at claims time is not good for client retention or the growth of a brokerage. Although we are not in control of the changes due to the rand devaluation, increases in the cost of labour, materials and spare parts; we do need to keep abreast of issues that affect insured value which are not always obvious. At Hollard Broker Markets we work as a team with brokers to make sure our clients are not underinsured and left vulnerable and therefore always engage with our brokers in order to educate them with regard to some of the risks and costs associated with the cover available and the effects on claims, including amongst others:
- It is important for the broker to know where plant is generally used and when used at remote locations the effect this has on maintenance, transport back to a place of repair and the financial impact this has on the Sum Insured as well as the productivity of their client.
- Keep abreast of all variables that affect claims such as exchange rate fluctuations on impacts imported equipment, spare parts; depreciation and increase in building materials.
- Brokers need to ensure they have a thorough understanding of the various types of construction contracts in use by the industry and what this means to the insurance required.
- Brokers need to remember that when advising their clients on an Annual Contract Works policy, the client will not have cover for those contracts with a value exceeding the maximum contract value reflected in the schedule
We are all currently operating in a very competitive environment and the better a broker knows the products they are offering their clients, the better they can serve them and ensure their clients have the right covers in place when the client needs it, especially when it comes to technical products such as the engineering classes of insurance.
Leigh Hammond, head of Hollard Construction and Engineering within Hollard Broker Markets