An unforeseen, unintended and usually undesired event or occurrence
Business that an insurer does not usually accept, but will accept as a gesture of goodwill, to
accommodate the broker or client.
Means certification, usually only for a specified period, giving a person, body or organisation the
capacity to fulfil a particular function. ABC Insurance has been accredited as a provider of training
and education by INSETA, in terms of the quality assurance system set up by the South African
Qualifications Authority and the Act.
An event or damage that is the result of natural causes, without the intervention of human beings,
such as flood, lightning and earthquake. Contrary to what some insurer staff may say when claims
arise; acts of God are definitely insurable and are included in the Insured Events in material damage
policies.
A policy where the actual sum insured, value or figure on which the premium is rated (e.g. salaries) cannot be ascertained at inception of the policy. A realistic estimate is used and a provisional premium is charged. At the end of the period of insurance (e.g. at renewal) the correct sum insured/figure is provided to insurers and the premium is adjusted – the client receives a refund or pays an additional premium.
An agreed sum insured to be paid in the event of a total loss. For example, the value of a specified item on an All-Risks schedule. Vintage motor cars on a motor policy may have an agreed value, because it is not easy to establish a “market value”.
An occupational assessor in the context of insurance learning and competency is a person who has qualified in terms of legislated requirements and who is registered with and authorised by INSETA to measure the evidence of competence put forward for assessment by members of the insurance industry, against the requirements of unit standards.
A method of settling disputes legally, without the need to go to court. In insurance, arbitration may be used when the amount of a claim, not the liability of the insurer to pay, is in dispute. A suitably qualified person whose appointment is agreed by both parties would hear both sides of the case and give a decision.
Property or financial instruments that can, if necessary, be converted into cash (e.g., by selling them).
In insurance terms, this is the loss of clients and/or premium income, such as in “Our objective in Personal Lines Group Schemes is to reduce the attrition levels to 15%. This means that we aim to retain at least 85% of that client base.”
A provision of a policy that reduces a claim when the sum insured is less than the actual value or replacement value of the property insured. The insured is considered to be his insurer for the difference. For example, a house is insured for R100 000, but the real replacement value is R200 000. If it suffers storm damage of R15 000, the insured will be paid only R7 500, because the sum insured is only 50% of true replacement value. Average does not apply to agreed value policies nor, usually, to “first loss” policies, such as Theft and Money.
A measurement that sets required levels. For example, in ABC Insurance we may set ourselves a benchmark of 25% revenue growth per annum. If we achieve less than this, we are below the standard we set. On the other hand, if we achieve 25% revenue growth p.a., while our competitors are achieving less than 25%, we can truly say that we are setting the benchmark for the industry – i.e., we have set a standard, or level, that others are still striving to reach.
An identifying trademark or name. The brand characterises the product and should epitomise the personality, values and qualities of the product. The ABC Insurance brand should therefore mean, to those who hear the name: reliability, unsurpassed service, quality insurance products, value for money, talented and caring people.
A full-time, professional insurance intermediary who represents his/her client in dealing with insurers. E.g. insurance brokers often act on of behalf of insurers, as well as on behalf of clients because of the nature of their agreements with Insurers, particularly in the Personal Lines segment. For example, brokers may have authority to quote premiums on behalf of insurers and can accept/reject proposal forms on behalf of insurers
The document that sets out who we are, what we are, what we are striving to achieve in a particular period of time (our objectives), our plans of action (strategies), who will take leadership and be accountable for the completion of tasks – and by when – and how we will measure our progress and success. Although the staff who make up ABC Insurance have many and varied tasks, all of them play a part in achieving the goals of the Business Plan by successfully achieving goals in their own “piece of the action”.
A strategic information tool. In the case of a branch of an insurer, this Business Intelligence is the information that is readily available regarding product sales, the numbers of clients retained, claims ratios per insurer and per product, the quality of business written by regions/branches, numbers of retail clients lost and the reasons for losses, etc. All this information is essential for accurate forecasting and essential to monitoring and controlling our business. It allows us to make informed decisions and, if necessary, to change direction in mid-stream. There are no nasty surprises, because we know how we are doing, every step of the way.
A part of a business operation that can be measured as regards its own income, expenses and profitability. Its tasks, objectives and strategies will differentiate it from the rest of the organisation, but it remains an integral part of the organisation. For example, in ABC Insurance there are three main Business Segments that make up the overall operation. These are Personal Lines, Commercial and Corporate.
The money, our own or borrowed, that we have to fund a project or venture. Capital can also be used to describe our staff and expertise – Intellectual Capital.
Make the most of, exploit, benefit as much as possible from. For example, if we develop a new product that cannot be matched elsewhere in the market, we should capitalise on it before our competitors can copy us.
A risk retention mechanism whereby the facilities of an established insurance company are used in return for a fee. It can perhaps be compared to a sectional title body corporate, where the body corporate is the insurer and those using the insurance company’s license and facilities are the unit owners.
In our case, this is making clients aware of their rights as policyholders, of what cover they have under their policies and what is not insured, what to do in the event of a loss/claim and the procedures to follow when they want to contact us regarding policy changes or claims. “Uneducated clients make uneducated buying decisions”.
The philosophy that whatever we do in ABC Insurance, we do it with the interests and needs of the client in mind, with the intention of retaining the client.
A “Yours forever” relationship between our clients and ourselves, developed through the client’s trust in our people, our expertise and our service.
Measured feedback from our clients about how they feel regarding our products, staff (attitude, etc.) and service.
The spreading of a risk between two or more insurers, where each insurer receives a proportionate amount of the premium and is responsible to the insured for its proportion of claims.
Insurance where the policyholder is not a person and/or the risk is not domestic, for example the policyholder is a company, closed corporation, partnership or sole trader. An income is derived from the business.
The part of a country’s law built up from customs and usages which have become recognised by its courts and incorporated into the law of the land.
What someone knows, understands and can do, at least to a level that has been agreed as acceptable. Competence in policy issue, for example, means that a clerk knows how to load information from a proposal form correctly and can produce an accurate schedule for attachment to a policy wording.
It is all those visual elements (including the logo) that distinguish an organisation from its competitors. It is the organisation’s visual statement to the world of who and what the company is and how it wants to be viewed by the world.
It is how the world actually views the organisation and it can be very different from how the organisation would like to be seen. The difference could be a “communication gap” or an opportunity to rethink its strategies. We are all responsible for ensuring that ABC Insurance’s corporate image, or reputation, out in the public domain is what we’d like it to be.
A loss directly arising from another loss. For example, if my factory is damaged by fire, I will be unable to make and sell my products. As a result, I will lose the turnover (income) that I would have earned if the fire had not happened.
An unforeseen occurrence.
The way available money for costs/expenses is allocated among the various expenditure items on a budget.
An intentional, legally binding agreement between two or more parties. A lease, for example, is a legally binding contract between the owner of a building and his tenant.
Selling or creating an awareness of products outside one’s own product mix. For example, we do cross-selling when we introduce our commercial clients to products offered by our personal division.
The accepted behaviour and custom of a group of people, population of a country, or staff of a company that creates commonality among those people. For example, we have a Service Performance Culture that unites us in seeking opportunities for service quality, whether we are directly in a service function or not. If we are not selling or servicing, our function or job should be to support those who do sell or service.
Facts, figures, information and notes, usually stored on a computer.
The collection of related information on a computer. For example, the ABC Insurance client database is the names, addresses and other information about clients, stored on the computer system
Specialised or performing, mainly, one function. For example, branches have dedicated personal lines sales staff – their function is to obtain new clients.
Same as Excess – the uninsured first amount of a claim.
The amount by which property has reduced in value due to factors such as age, wear and tear and use.
A premium paid in advance, before the actual premium has been decided. For example, if a renewal premium is still being negotiated with insurers at the time renewal date arrives, we may ask the client to pay a deposit premium based on an estimate. When the renewal premium is agreed, or at an agreed time, we will either collect the balance or refund the client if he has overpaid.
Transactions between us and the prospect or client, without involving other people. For example, direct business is business we obtain on our own, without introduction from a source outside our company, such as a sub-agent. A direct insurer doesn’t make use of brokers to provide new business.
Establishing needs and providing products/selling directly to our target markets, usually by mailshots, but also by telephone or email. It is used for volume, or mass market, business.
The duty of the parties to a contract to reveal all material facts to each other before finalising the contract, and in the case of insurance, before each renewal of the contract.
The amount or percentage of premium that we will deduct from a client’s premium because he has improved his risk, e.g., by installing an armed response alarm in his house.
A facility that enables us to conduct business electronically via the Internet.
The net value of financial interest in a project, venture, company, etc. Equitable: Fair and reasonable, such as “R75 000 is an equitable claim settlement figure for a vehicle of that age and model”.
The Financial Advisory and Intermediary Services Act, 2002 (Act No 32 of 2002). This Act affects every business enterprise and persons representing enterprises who give financial advice to clients or potential clients. The advice referred to in the Act is of a nature that may influence the buying decision of the client/potential client. Briefly, the purpose of the Act is protection of the buying public by regulating those who give advice.
How often a loss event occurs. There is a relationship between the frequency of losses and the severity of losses. Small losses, such as losing pens, spectacles, etc. happen frequently, while severe losses, such as caused by floods and earthquakes, occur much less frequently.
A common pool into which premiums or money is paid and from which losses (claims) are met. Many commercial operations create their own funds to meet their own losses, this being a form of self-insurance.
The amount of a loss at or below which the insurer will not pay the claim. Above that amount, the insurer will pay the whole claim. For example, if a policy is subject to a franchise of R250, insurers will not pay claims of R250 or less, but if the claim is, say, R300, the insurers will pay the whole R300.
Applicable to a large group, not specific. For example, a generic sales skills course can apply to anybody who sells a product or service, but our staff need sales training related to insurance products.
Claims that occur within three months after inception of the policy. Green lapses: Policies that fall off (lapse) within three months after inception.
The annualised brokerage, or commission, that brokers receive from premium income. In cities a retail new business broker may have a target of R25 000 GAB per month.
The total annual premium paid by client/s before commission/brokerage is deducted.
A product that is created for a specific group of people who have something in common with each other. For example, the Group Scheme division has Group Schemes for the employees of corporate clients. Non-employees would not be permitted to join this scheme.
A dedicated person (or people) who is available to deal with queries and provide prompt assistance by telephone. A client who experiences difficulty in completing a claim form is welcome to telephone the Care Line (Help Desk) for assistance. When our employees need computer/system assistance, they phone the IT Help Desk.
1. A description of a brief overview, the main points, such as “I would like you to prepare a high-level action plan setting out what you will do to curb attrition among your commercial clients”.
2. Senior people, such as “I am attending a high-level meeting at Santam and expect their operational GMs to be there.” Usually top-level management.
The offices, systems, hardware and other resources required by a company to get the job done. In a country such as South Africa, the infrastructure is made up of roads, airfields, harbours, etc. Imperative: Something that is obligatory, non-negotiable.
Put into operation, start using. Incentive: A reward, financial or otherwise, for completing a task or reaching goals successfully.
An idea, plan or project that must be actioned in order to achieve a desired result. Innovation: Something new, such as a new product, or a new way of doing things.
The Insurance Sector Education and Training Authority. Every type of business, practice, service industry or institution in the South African economy belongs to a SETA (sector education and training authority) and pays a levy of 1% of wage roll to finance the work of the SETAs. Their purpose is to write the requirements for standards in each type of business/organisation and to maintain records of those people who meet the performance criteria. Nationally, the objective is to ensure that all the country’s peoples have equal opportunity to develop knowledge and skills and, therefore, competence.
If we say that we must integrate our computer systems, we mean that the various components must be linked in such a way as to be able to share information.
Communicating with one or more people participatively. When we sell our products via the Internet, the plan is to do it interactively so that the client can discuss his needs with us and we can provide advice electronically.
A person who arranges insurance or other financial services on behalf of another person. Investment income: Income obtained from interest, dividends or rental. The income we derive from investing premiums before paying the insurer is investment income.
A document that sets out the main tasks, responsibilities/requirements, measurements and the purpose of an employee’s job.
An arrangement between two or more parties, in terms of which they pool all or some of their resources/skills towards achieving a common goal and they share the rewards/profits in agreed proportions.
The maximum that an insurer will pay in terms of an insured event or for an insured item. E.g., if the limit of indemnity under a Public Liability policy is R1 000 000, insurers will not pay more than this amount.
An extra premium added to the standard premium because the risk is higher than a normal risk.
An emblem or device used as a badge of an organisation. It should represent what the organisation stands for and it should appeal to the target audience.
An independent, qualified person who investigates and assesses the amount of a loss on behalf of an insurer. Several insurers have their own in- house loss-adjusters or claims assessors.
The loss history of a prospect or client over a given period, e.g. 3 years. This is not the same as a Claims Experience, because if a prospect has not had previous insurance, he would not have a Claims Experience, but he may have had many (uninsured) losses.
The percentage relationship between claims and premiums. For example, if claims over a given period total R100 000 and premiums paid for the same period total R150 000, the claims ratio is 66.6%.
The authority or instruction given by a person to another person to act on his behalf. For example, when we attempt to obtain the broking appointment to a prospect’s portfolio, we should always obtain a Mandate from the prospect, so that we know what we need to do in order to get the business. An insurer may authorise a broker to issue policies and endorsements in terms of a Mandate.
To make as big, or as many, as possible. One of our strategies may be to maximise sales through sound prospecting.
This refers to premiums actually collected from clients and banked. This means that it does not refer to “promises”, post-dated cheques in a cupboard or to the value of debit orders that we hope will go through at next month end.
To keep a regular check on and take corrective action where necessary. For instance, all managers should monitor their teams’ costs on a monthly basis to ensure that budgets are not exceeded.
Discuss with a view to reaching an agreement or compromise. For example, initially the insurers repudiated the claim, but we were able to obtain further information from the client and negotiate settlement with insurers.
What is left of our income after our operational costs have been taken off. These operational costs do not include interest payable and income tax, but do include items such salaries, commissions, sales and distribution costs and other costs incurred in operating the company. NOI is our profit before we pay interest and tax.
The present value of a sum of money compared to its value at a given time in the future. For example, if a client’s annual premium is R2 400 and he pays this premium in equal monthly instalments of R200 by debit order, he will not be paying R2 400 in terms of net present value. Because of the depreciation of currency, in the tenth month his R200 is actually worth, say, R193, in the 11th month, R188, and in the twelfth month, R182.
Those thousands of individual clients who have ABC Insurance products.
A learning outcome, as we see in Unit Standards, is what a person must know, understand and be able to do after successfully learning it.
The technology that is in the back office – the operating system.
The amount of our income, less expenses (profit) before income tax is calculated and paid to the Receiver.
The chance of an event happening.
The entity or supplier that manufactures the product for those who sell it.
The percentage relationship between profit and total income. If we make R30 000 profit from an income of R100 000, then our profit ratio is 30%. The opposite of profit ratio is expense ratio, or cost to income ratio. In the above example, it cost us R70 000 to achieve the income of R100 000, therefore our expense ratio was 70%.
A system that allows us to measure our performance in our progress towards achieving objectives and goals.
An orderly, systematic method of appraising an employee’s performance on the job in terms of the requirements of the job and agreed goals.
An arrangement between two or more parties to share the profits of a venture or enterprise. Such an arrangement encourages all parties involved to co-operate with each other and commit to the success of the venture.
The amount of our income that we have left after we have paid all our expenses, as well as income tax.
The amount by which our income grows in relation to what was achieved in the previous year.
A written agreement between a client and a service provider that confirms the requirements of the client, the services – and in particular the quantity/quality of services – that the supplier will provide to meet the client’s requirements. For example, ABC Insurance Brokers and Santam have a Service Level Agreement regarding the standards of service that the brokers and our clients can expect from Santam.
A person or organisation that has a fixed financial interest in a business venture.
A person or organisation that has an interest, financial or otherwise, in a business venture. For example, Santam is not a shareholder of ABC Insurance Brokers, but is a stakeholder in products developed by the broker and underwritten by Santam.
An identified key area in which we must perform to desired standard if we are to meet our goals. ABC Insurance’s strategic imperatives meet goals
A plan of action. The strategy could be to maximise sales by targeting a particular market for which we have a competitive product.
Law promulgated by the government. This is strict liability in that negligence need not be proven. For example, the Compensation for Occupational and Industrial Diseases Act (COID). This is a form of strict liability and no negligence needs to be proven.
Able to be maintained and kept going. Sustainable profits are therefore profits that will not drop, but will be maintained and grow.
A group of people with the expertise needed that is formed to perform a specific job.
Related to managing business matters, such as buying and selling. When a client buys insurance from us on a transactional basis, he is more likely to be swayed by facts and value for money than by any appeal to emotions. A “transactionally-based Internet presence” would allow us to do business with our clients electronically.
These may also be called “acceptance criteria” and refer to the rules governing acceptance, or renewal, of business. For example, underwriting criteria refer to the need for physical protections at the proposer’s business or anti-theft devices installed in his fleet of trucks.
A set of requirements containing specific outcomes and specific criteria that need to be met to prove competence in a particular field or task. In the insurance industry INSETA creates unit standards with the help of market subject matter experts. A number of credits are allocated to each unit standard.
The qualities, ethics, beliefs and manner of behaviour that give us direction as we strive to achieve the goal described in our Vision.
Our core goal, or the reason for us to exist.
