The responsibilities of trustees and executives impacting community and collective property schemes, including golf estates, have become more onerous, due to specific legislative requirements in the Community Schemes Ombud Service (CSOS) Act. This, says Karl Bishop, head of Santam Specialist Real Estate, has a significant impact on the property insurance solutions provided to consumers, and calls for highly specialist insurers with thorough knowledge and understanding of all the risks involved in this burgeoning industry to ensure policyholders are protected.
“Real estate insurance has become increasingly complex, and it is therefore imperative the collective property scheme market has the assurance of a strong, stable, specialist insurance company with the technical expertise to tailor appropriate and comprehensive solutions for this industry,” says Bishop.
“Our solutions provide compliant cover, as well as a number of tailored added benefits for property schemes which standard short-term insurance does not offer.”
Santam Specialist Real Estate was rebranded at the end of 2016 from C-Sure – the first-ever specialist sectional title insurer in South Africa, which since its inception has provided insurance solutions on the Santam licence. Santam Specialist Real Estate now offers a diverse range of specialised insurance solutions for the collective property schemes industry – including sectional title schemes, home-owners associations, sectional title office parks/blocks and retirement villages – as well as the broader real estate industry, including property developers.
As former head of Niche Business at Santam Specialist, Bishop is ideally placed to carry the business forward in the specialist real estate sector. “Santam’s legacy as the market leader in South Africa, coupled with the group’s rapid expansion into a number of emerging markets in Africa and Asia, is invaluable. Santam Specialist Real Estate thus has a sound heritage to build on – we intend to offer differentiated and innovative products as we embark on our new journey,” he says.
Bishop says extreme weather conditions had a significant impact on the way this market is insured, with widespread damage due to floods, hail and fires placing immense pressure on claims and repair turnaround times of insurers. “For this reason it is so important to be insured by a company with a vast and mature claims network and capability, to minimise the impact on policyholders. As South Africa’s largest short-term insurer, Santam is also a financially sound, profitable company with an excellent record.”
Geysers and the resultant damage caused by burst geysers make up the majority of claims volumes. However, storm/ water and lightning damage claims typically have the highest value per incident when compared to all other types of damage – with the increase in severity of natural events, this is on the increase.
The rise in the number of property developments where people live, work and play, as well as group and cluster housing schemes – gated villages controlled by home-owners’ associations – has necessitated customised solutions for this type of community living.
Special features of the policies offered by Santam Specialist Real Estate include public liability cover, trustee liability, cyber risk cover, fidelity cover (including computer crime), business glass cover and water heating systems (electric and solar) cover. Santam also offers extended cover for managing agents where such agents administer the scheme on behalf of the scheme’s trustees.
Bishop adds that Santam Specialist Real Estate works with brokers to provide the best possible insurance solutions. “Our team of experts offers personalised attention and product structuring services to ensure our solutions are more than just desk-top insurance quotations.
“In South Africa there are approximately 44 000 sectional title schemes, both commercial and residential, with this number rising each year. My unconfirmed estimate is that this translates into premiums in the region of R4 bn and R6 bn per annum in this specialised market. This should translate into claims paid by insurers of between R2 billion to R3 billion every year.”
Bishop says that Santam Specialist Real Estate will launch a commercial sectional title product at the start of April this year, as well as two innovative products aimed at assisting real estate developers, which will be available from mid-2017. The Commercial Sectional Title product is designed to cover the insurance requirements of Body Corporates and combines cover for Buildings, Common Area Contents, Money, Fidelity Risk, Machinery Breakdown, Liability, Trustee Liability, Employers Liability, Voluntary Workers Personal Accident, Claims Preparation Costs and Water Heating Systems. All Risks, Electronic Equipment, Irrigation systems, Cyber Liability and Group Personal Accident are optional.
“We believe our insurance solutions will also be easily customisable for markets on the rest of the continent and as such we will be looking to partner with the local insurance partners of Sanlam Emerging Markets in the Southern African Development Community (SADC) and East Africa regions in early 2018,” says Bishop.