1. SOUTH AFRICAN INSURANCE ASSOCIATION
Titel hier
presented by
John Doe
Date here
SOUTH AFRICAN INSURANCE ASSOCIATION

2. SAIA: Electricity Distribution Industry
presented by
Debbie Donaldson
26th July 2012

3. SAIA: Electricity Distribution Industry
Role of short-term insurance
ESG risks
Current insurance services
Learning's
Recommendations for future sustainability

4. The Role of Insurance in the Economy
A key risk management tool in normalising financial losses
A catalyst in driving risk management behavior across communities that benefit from the financial protection
A key enabling mechanism for economic activity
A catalyst in the financial investment flow needed for sustainability

5. Sustaining the role of the industry
The ability of the short-term insurance industry to remain relevant,
inspire confidence in stakeholders,
offer
products and solutions within the South African market
in such a way
that
we promote
and
not harm
our environment or our communities.

6. Current situation : Top 10 ESG Risks
Environmental Risks
Social Risks
Governance Risks
How we manage our impact on the environment
Dual economies
Information Management
Lack of investment and maintenance of infrastructure
Increased crime and corruption
Image and reputation
Lack of transformation
Legislation & regulatory capacity
No real market growth
Human Capital Skills
June 2011
Have adopted UNEPFI : Principles for Sustainable Insurance

7. Key underlying challenge
AN INCREASING LEVEL OF SYSTEMIC RISK
Driven by the growing interconnectedness between the physical, economic and social environments in which we live
Source: WEF Global Risk report 2012

8. Insurance is a financial tool for unforeseen events
Current offerings
Generation
Assets and operations
Material damage and accidental damage
Distribution
Operations protection
Material damage and accidental damage
Less utilisation of insurance
BUSINESS INTERRUPTION NOT OFFERED
Insurance is a financial tool for unforeseen events
Losses that go beyond the capacity of the organisation to manage in the event of the loss

9. International markets
Current offerings
INSURED CLIENT
INSURER AND REINSURER
Risk management application
Technical and institutional skills
Effective planning in place
Clear accountability
International markets
Local insurance cover
Self
Insure
APPETITE for the size of the risk
UNDERSTANDING of the local market conditions
EXPERTISE and technical skills
The BUSINESS CASE must prevail

10. Learning’s Application of risk management
Without an estimated reserve for electricity in place insurers cannot offer business interruption as the current situation is not considered as an “unforeseen event”
Power generation and distribution infrastructure has a “design life”
The lack of maintenance is a major risk
Practicalities become increasingly expensive and impractical to manage e.g. components to repair are not available

11. Learning’s There is an appetite to insure
However, risk management principles must prevail
In the absence of this the cover becomes increasingly difficult to place
Technical expertise and experience
Operational experience - a key to sustainable insurance offers
Daily operational practice part of risk management expertise
Application of insurance at different levels of government not understood, therefore use as financial management tool
cannot be optimised

12. Learning’s
Independent and renewable energy producers or alternative distribution management
Project finance ordinarily requires risk management practices and insurance
Revenue generation capability drives investment
Business interruption becomes increasingly relevant and important
Innovative market offerings are emerging
Renewable energy power producers attractive
New market players , increase market opportunities
Experience level of operations is critical with new technology and ability to distribute

13. Learning’s Disaster risk management Resilient economic development
Recovery period from a loss takes time
Alternative reserves need to be addressed
Resilient economic development
Sustainable homes - alternative energy sources
Sustainable businesses – alternative energy sources
Frameworks and policies that support a positive consumer experience
Current investigation into energy efficient alternatives to electric geysers: affordability, skills, standards for technology, policies that enable economies of scale e.g. light bulb transition

14. Recommendations
Public private engagement through sustainable platforms: accountable, engagement, utilise core competencies
Nedlac Green Accord
Enabled an investigation to proceed by the insurance industry, government departments focused on enabling frameworks and delivery mechanisms
Still to be seen whether we will address a concrete outcome, but the roles have shifted.
Department of Cooperative Governance
Disaster Risk Management Centre and the insurance industry
Drafting of a Memorandum of Agreement
Adopt a municipality
A SAIA member and 5 municipalities
Business Against Crime as a vehicle has worked for a different application

15. Recommendations Risk based planning
Maintenance of existing infrastructure as we do not have clear reserve or alternative
Systemic review of the risk (multiple role players, multiple impact areas) - what areas produce maximum impact ?
Drive sustainable “behaviour “
Technical skills deployment through a mechanism that there is an appetite for
Maintenance program
Ensure predictability on issues that are within our control
Strengthen shared information pools and access to information for profiling of risks - multiple stakeholders and decision making required
Ensure polices that create predictability
Constant change : decreases predictability, decreases risk sharing options

16. Titel hier
presented by
John Doe
Date here
Thank you!