The year 2011 was reported to be the costliest year in South Africa’s recorded history from a natural disasters point of view which denotes the importance of insurance, said at Lion of Africa Insurance manager of corporate sales Anwa Adams.
Economic losses associated with natural disasters amounted to over R160 billion due to flooding alone, said Adams. These losses highlight the importance of companies preparing for catastrophes well in advance.
Adams pointed out that it was not possible to predict catastrophic event but corporations can prevent devastating financial losses.
“A catastrophe is an extensive and widespread event which results in large scale loss and damage to property and life, adversely affecting business operations. Catastrophe cover provides indemnity against such disasters to ensure continuity of business. The absence of inadequacy of catastrophe cover could result in gross financial loss or even worse, closure of the affected organisation,” said Adams.
According to Adams, catastrophe protection includes insuring key employees against accidental death and/or injury. He warned that companies need to be prepared for sudden calamities whereby valued employees die in accidents such as plane or car crashes. He referred to the tragedy where the CEO of Italtile, Gianpaolo Ravazzotti and eight of his colleagues and business partners died together in a plane crash.
“It is tragic and unpredictable accidents like these that highlight the severe impact loss of employees can have on a company’s operations, as it could take months before suitable replacement candidates are found,” says Adams.
According to Adams, it is the broker’s duty to ensure that the client has adequate and appropriate coverage for their assets. He says risk management solutions that identify, assess and mitigate risk and exposures should be carefully explained to any business owner.
According to Adams some of the most common risks for corporates include; loss or damage to the insured’s property caused by fire, storm, wind, water and earthquake. There were also business interruption losses following theft of stock, money, goods in transit; employee and director liability, personal accidents, crime and machinery breakdown.
“It is not possible to predict when these risks may become a reality and it is too late to react once they have occurred. With the correct levels of protection in place, businesses can ensure that damaging effects of catastrophes and interruptions are mitigated,” he says.