The recent incidents of looting and mayhem in KwaZulu-Natal and Gauteng have once again shown that no business – particularly in South Africa – should be without adequate insurance. Surely nobody will doubt the value of SASRIA cover again, but there are other basic steps that businesses can take to improve their ability to reduce risk – and premiums.
Over the long term, a number of trends are increasing the security threats to companies. The poor (and arguably worsening) economy is driving some to see theft as morally acceptable, creating a general vulnerability. Another issue is poor conditions for drivers in the logistics industry. Long driving hours and inadequate resting periods lead to driver fatigue and, ultimately accidents that might have been avoided. At the same time, poor driver training and ineffective driver management means that bad driving behaviour is not corrected.
When it comes to improving security, the first step for the business to take is an in-depth assessment of the risks it faces. For example, an e-hailing business is most at risk from the drivers it uses, and thus the driving history and skills of each driver is highly relevant. A telematics device can also enhance the safety of drivers and passengers.
For a landlord, the location of the property is a key factor and also the security measures in place. In addition, the kind of tenants and their businesses is also important – for example, are any of the tenants engaged in hazardous activities that could threaten the building or its inhabitants?
Here are a few examples of the kinds of security measures that could be taken to reduce the risk and make your business more secure:
- For a logistics business, telematics devices that measure vehicle position, route and speed, along with dash cams, would improve the security. The same is true for e-hailing companies.
- In all types of vehicles, alarms are generally automatically included. In commercial vehicles, early-warning tracking devices are to be preferred to passive ones for the reason that the tracking company reacts more quickly to the former.
- When it comes to properties, a monitored alarm linked to armed response is very important. Other measures could include on-premise guards and physical perimeter security. Technology also has a growing role to play, and some business owners are turning to CCTV cameras more and more for monitoring of their premises either via a control room staffed by humans or now sophisticated artificial intelligence software that can detect abnormal activity. Smoke alarms and sprinkler systems are also worth investigating.
The insurer will appoint a risk surveyor to visit a property and his or her recommendations should be followed. Advise your insurer in detail of the security arrangements made, and make updates if they change.
The benefits can be substantial. Good security measures on a property could see premiums reduced by around 10%, while telematics and other electronic devices on commercial vehicles could see a 15% premium reduction.
Understand your risk
At the same time, though, it’s important to point out that security measures need to be commensurate to the risk the business faces in each case. From the insurer’s point of view, the best advice we could give would be to put a proper risk management process in place. This would involve not only assessing an individual business’s risks and putting adequate mitigation interventions in place, but constantly monitoring the threat landscape over time to identify new risks or a change in existing risks.
Risk management also has to include oversight of how the mitigation interventions are performing. If technology is in place, is it being maintained and is it integrated into normal business routines? For example, are alarms checked regularly, is there a robust roster of who is in charge of setting alarms or reading through guard reports, and does somebody analyse the reports of vehicle movements from the tracking company, and take appropriate action?
It’s worth emphasising that a security-conscious company would have processes in place to assess not just how well its risk-mitigation strategies are working but also how the insights gained from any reports could be used to improve its overall security and the general health of the business. The opportunities for improvement must be identified and grasped, wherever they come from.
Security is a challenge for South African companies, but taking the right actions can greatly reduce the risks and the associated insurance premiums – they may also help the business become more efficient.
MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970).