InsureTalk33: Navigating risks in a transforming landscape

InsureTalk33 took place on Thursday, 22 June 2023 from 10am to 1pm. The webinar was headline sponsored by Yard Insurance, and our theme for the day was “Navigating risks in a transforming landscape.”

Host Christelle Colman, of Ami Underwriting Managers, highlighted a few noteworthy events that took place in the month between InsureTalks. The first was the earth tremor in Gauteng on 11 June, which reached almost 5 on the Richter Scale. The second was the flooding that took place in the Western Cape, forcing many large national roads to be closed. The third event was the news that South Africans are the worst drivers in the world. (We wrote a blog about it last week.) 

“For all 3 800 of us here today, this points to the importance of having insurance, whether it’s for earthquake, motor, liability… whatever the risks are,” she said. “South Africa is a country where insurance is really, really important. And it brings us to the importance of these sessions that we have each month. When we sit around our virtual table and share knowledge and experience, we all learn from each other.”

Yard Insurance CEO Farad Kajee, together with the company’s business development head Andrew Stockton, introduced delegates to the business. Farad pointed out that we are in a totally different insurance environment to the one we were in this time last year, before handing over to Andrew, who gave an overview of how first- and third-party cell captives, as well as contingencies, work. 

“We issue shares to the value of the capital requirements to establish the cell captive,” he explained. “Just like an insurance company, the cell captive has to have liquidity and solvency according to SAM (the solvency assessment and management regime prescribed by the FSCA). Capital is calculated by actuarial analysis and includes many factors. 

“A cell captive enables direct access to the reinsurance market and any profits at the end of the period can be distributed as dividends.”

Our next speaker was Ildiko Richardson, director of Blue Anchor Risk Solutions, who discussed the legal aspects of cannabis as it pertains to the insurance industry. Her talk was a follow-on from the presentation she delivered at InsureTalk31 in April. 

“Today we’re going to be digging a little bit deeper,” she said. “We’re going to be addressing and understanding the processes that are required by this new industry sector and how one needs to consider these exposures in terms of the insurance market policies.”

Modern day greenhouses and indoor growing facilities are highly sophisticated and technologically advanced, she said. Essentially they are production-driven factories. 

“Everything is managed from water to temperatures, light, humidity and nutrition.”

Look out for these marks, which indicate adherence to various standards:

Ildiko went into some detail on the elements required and methods used to grow cannabis plants, including hydroponics, aeroponics, oxygen exposure, seed starting and potting in grow medium (with no pun even hinted at). She listed the types of policies that are available in the market for the risks associated with growing cannabis as commercial combined policies, agricultural specific insurance and crop specific insurance. 

“There’s no policy that has been able to cross over between the outdoor crop exposures and the traditional commercial or agri space,” she said. “Traditional insurance covers don’t cover the consequential loss to a crop following a peril to a building or equipment. This is where the massive gap exists. Crop covers cover the direct impact of a peril only to the outdoor crop.”

Most commercial cannabis crops are farmed indoors, either in a greenhouse or closed production system. Now imagine a greenhouse crop is damaged because of a hail storm. 

“Which policy should respond? The crop policy or the agricultural policy? Remembering that the hail damage didn’t necessarily cause damage to the crop, but it caused damage to the structure, and then the structure caused damage to the crop. A traditional commercial policy does not pay for consequential loss.

“These are the questions that have to be asked and answered at a time of loss. You can see the problems that a traditional market has when it comes to addressing greenhouse losses.”

It also doesn’t make sense to cover these facilities under buildings combined, says Idilko, especially if the very vital equipment that impacts directly on the crop are all part of the building but impact directly on the crop. Theft is also not covered… and “cannabis is a high-value crop!” The BI section also wouldn’t respond.

But more from the Blue Anchor team later. 

Next up was IISA CEO Thokozile Mahlangu, who gave an update on the association’s current activities. She encouraged delegates – especially younger insurance professionals – to focus on their professional standing and development by joining the IISA.

“Being an accredited member sets you apart,” she said. “It denotes your level of experience and expertise in the industry. It indicates that you have an intentional investment in skills development. We especially need young people around boardroom tables. We need your innovative, creative, energetic way of doing business.”

She spoke on the importance of CPD and the ways of attaining your hours during the year, as well as the AIE conference.

“Registration is still open,” she said. “You can sign up by clicking on the AIE button on the IISA website.”

Rianet Whitehead of FA News and The Insurance Apprentice (TIA) shared the latest news affecting the insurance industry. Topics included the National Health Insurance Bill, the floods in the Western Cape (and floods in general), Hollard’s new broker campaign, a few items on thecalendar.org.za, the TIA finalists who will be attending the African Insurance Exchange conference at Sun City, and the application process for next year’s TIA competition. 

After a soulful entertainment break it was back to the Blue Anchor Risk Solutions team and Ildiko Richardson, who spoke on related liability exposures for the medicinal cannabis pharmaceutical industry. 

“There is a capacity issue when it comes to cannabis insurance. There are very few companies worldwide that offer comprehensive coverages to specific cannabis operators and ancillary businesses, making it difficult for operators to prioritise proper insurance coverage versus just the lowest price. Due to massive growth in this industry it has naturally attracted a lot of interest from insurers and brokers, who are looking to get into the cannabis space.”

She added that it’s important for all parties to be familiar with the policies to avoid misunderstandings at claim time. 

“As the cannabis industry continues to grow and evolve, and legislation along with it, insurance needs to become more comprehensive. Though cannabis businesses are required to have insurance, many have found it difficult and/or expensive to secure the appropriate limits and products for true risk transfer.”

She spoke about product recall, generally accepted compliance process, the good manufacturing process, product liability covers, directors and officers, and professional indemnity, notably for pharmacists.

Ildiko reminded guests that we have no ability to sell or produce cannabis product for consumption in South Africa. Everything has to be exported. Also, cannabis is considered pharmaceutical rather than agricultural. 

Our final speaker was Nikki Bush, a.k.a. The Talent Whisperer, who spoke on gratitude as an abundance magnet for work and life. 

“Gratitude is an abundance mindset, not one of contraction,” she said. “The mood in the insurance industry is tough at the moment, as it is in most industries.”

She said we need to ramp up gratitude by “reframing where we find ourselves and reframing how we think so that we can reframe what shows up for us on a daily basis. This is the key to success.”

Nikki mentioned a number of disruptive events that have affected our lives over the past few years, including Covid, the KZN riots, floods, shipping blockages, load shedding, etc.

“When you feel like the world is punishing you it’s very easy to get stuck down tunnel number 4, which is where only negative things happen.”

She spoke about how fear can become a magnet – but so can gratitude! So let’s practise conscious gratitude in all we do.

And that was a wrap for InsureTalk33!

InsureTalk34 takes place (for free) on 20 July 2023 from 10am to 1pm. The webinar will earn you 2.5 CPD hours. You can register here.

And be sure to catch InsureTalk Live on 26 October from 9am to 3pm at The Venue in Melrose Arch, Johannesburg. Early bird tickets are on sale here for just R700. This offer ends on 31 July, after which the regular price will be applicable. 

To watch the entire recording of InsureTalk33, click on the arrow below: