INSURANCE Source www.santam.co.za
AVOID INSURANCE PITFALLS For business clients, an
The financial gross profit often
underinsurance shortfall can be
takes account of various direct
disastrous. When clients experience
manufacturing costs, for example,
business interruption they often find
wages, factory overheads, water
their cover falling short, which may
and lights etc. The Insurance gross
mean they are unable to continue
profit, however, takes account of the
trading and they could be forced
uninsured costs as chosen by the
to close their business. According
client. These uninsured costs would
to Karin Lombard, manager in
be indicated on the policy schedule,
the Santam Complex Claims Unit,
and as standard would include
underinsurance is the biggest reason
“purchases; bad debts; and
for unhappiness at claims stage.
discounts received and allowed”. By calculating the insurance gross
businesses and their management
best suited to mitigate the risks
don’t necessarily have the time
that are specific to your business
or expertise to navigate the wide
and your industry, and they are in
spectrum of insurance products
tune with an evolving risk climate.
available, and this is why the
All of this, put together, saves time,
intermediary is so important.
money, and effort and, in many
He or she knows your business,
cases, ensures the continued success
knows what insurance products are
of the business.”
WATCH OUT FOR THESE THREE
profit based on only the uninsured
COMMON PITFALLS:
costs, the rate of gross profit
1 Calculating gross profit correctly
would be higher, enabling the
The most common errors that are
client to pay the on-going expenses
made when insuring for business
such as wages, factory overheads,
interruption occur when the gross
water and lights.
profit of a business is miscalculated. The client is insured against applying
3 Ensuring that an adequate
the rate of gross profit to the
indemnity period is chosen
reduction of turnover, not against the
The indemnity period chosen needs
total reduction in turnover.
to be sufficient to allow for the building re-instatement, sourcing/
Branch Manager A well established national hardware wholesaler requires an operationally minded manager at its branch in Meadowdale, Johannesburg.
Requirements • B.Com degree of similar qualification with Accounting as a subject • Substantial managerial experience in a similar environment • Be pro-active by nature and the ability to perform well under pressure • Have good staff relations to maintain a productive working environment • Have a decent level of computer literacy.
Remuneration will depend on the candidates work experience, qualifications and abilities.
Please submit your CV to jobs@on-top.co.za 30 | RETAIL OUTLOOK JANUARY 2018
The gross profit sum insured should:
ordering and commissioning of a
• Include VAT
new plant, equipment, machinery
• Reflect a 12-month period where
etc. as well as returning to the
the maximum indemnity period
pre-loss production and turnover
is 12 months or less; or the
levels – in other words, the recovery
appropriate multiple of the annual
period. The length of the period
turnover where the maximum
would need to be sufficient to
indemnity period exceeds 12
cover from the date of the incident
months
until the business is no longer
• Cater for trend, taking cognisance of a loss that may occur close to or at the end of the insurance period.
affected by the disruption. It is important for intermediaries to fully understand the nature of a client’s business. You may have
2 Understanding the difference
to call upon your client’s auditors
between financial and insurance
or accountants to provide further
gross profit
insights and information.