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Monday, November 1, 2010
Figuring crime response

Latest crime statistics published by the South African Police Service (SAPS) have revealed that the numbers of recorded murders fell last year, while both burglaries and robberies at residential premises increased, up 2.7% and 1.9% respectively. The report once again highlights the need for effective safety measures in homes and adequate household insurance.

The SAPS report also revealed that residential burglaries actually fell 23% in the four years preceding 2008/09. However, household robberies, a more serious form of crime, increased by 100% in the last five years.
According to Christelle Fourie, Managing Director of MUA Insurance Acceptances, the SAPS report shows that security of the home should still a very real concern for many South Africans. “It is essential that people continue to prioritise security measures in their homes such as alarm systems, security gates and burglar bars.”
She says these kinds of measures can help to deter potential criminals from targeting a property, as well assisting in reducing insurance premiums. “Companies calculate the premium someone should pay based on the level of risk that a client represents, so the more one can do to minimise the likelihood of someone breaking into your home the better your risk profile will be.”
She warns that many consumers who take out household contents insurance fail to keep the level of cover up to date with the latest prices, while omitting to include new acquisitions, exposing them to underinsurance. If a household insurance policy has cover for R150 000 but the contents are actually worth R300 000 then the consumer will be underinsured by 50%. As the premium only covers the risk of half of the household goods, then the insurance company will only pay out half of the claim: for example, an insured would receive, say, R30 000 if they filed an agreed claim for burglary of R60 000.
Fourie adds, “A piece of electrical equipment that cost R5 000 ten years ago could now cost twice that to replace. However, people only tend to assess contents on the amount they paid when it was first purchased, putting them at further risk of underinsurance.”
Over-insurance is also an important point for consumers to bear in mind. “If there are items in your home you would not want to file a claim for in the event of theft, it is important to contact your broker or insurer to make sure that these items are excluded from your policy, which would also help to reduce your premiums.”
Meanwhile, the SAP statistics reveal that commercial crime is also on the rise. This category of crime increased a staggering 295.3% between 2003/04 and 2009/10, further highlighting the risk small business owners are taking by failing to have adequate insurance cover in place. Official SAPS figures for the 2009/10 financial year revealed that business robberies increased by 4.4% to 14 534 this year from 13 920 cases in the 2008/09 year.
According to JonJon Smit, sales director at CIB Insurance Solutions, business owners need to ensure they have adequate insurance. “Given the current economic climate it is understandable that many small businesses feel they are strapped for cash. However, in light of the alarmingly high rate of business robberies, it is crucial that SMEs have the correct cover in place.
“If stock or cash is stolen, or machinery maliciously damaged during a robbery, it can have a devastating impact on a business,” he says.
With around two million small businesses in South Africa, employing just over half of the country’s total labour force, the SME market is crucial to the continuing growth of the economy. And according to the annual SME Survey released last year, small businesses continue to view crime as the biggest threat to the sustainability of their business.
Smit says there are insurance policies available that cater specifically for SMEs and are packaged to suit the individual needs of each business owner. “Every business is different and faces its own challenges.” Owners should take the time to speak to their broker about the specific threats their business might face. By being proactive and taking the time to identify any weaknesses in your company’s security systems you can reduce the risks your business faces. Security measures such as alarm systems, surveillance cameras or window bars can also help to lower the premiums for a business as it usually minimises the risks from crime and reduce claims and therefore premiums.
 

Copyright © Insurance Times and Investments® Vol:23.11 1st November, 2010
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