MM III - why all the hype?

In February 2007 the SAIA advised its Members that the use of the word "Multimark" is to be discontinued. What is all the hype about?

The actual statement from the South African Insurance Association (SAIA) said "that there should no longer be reference to the Multimark Policy wording in our industry." The notice went on to say "With effect 06 February 2007 the SAIA will be working on converting the Multimark Policy wording to a set of Industry Guidelines."

A rose by any other name…

Two things must be mentioned in this regard. Firstly, while the term Multimark is no longer to be used by the industry, I think that for the next 40 years this term will still be used by us to identify the type of policy we are talking about.

Secondly, the last paragraph seems a contradiction of the previous statement since, if we are not allowed to mention the word Multimark, why convert the wording? So everyone continues to use the wording but without reference at the base of each page.

Although the Multimark wording has been with us for some 40 odd years, it is amazing how few people in our industry have actually read and understood what is, and what is not, covered or available. The wording has always been just a base minimum policy wording. It was never designed to be an industry wording set in concrete.

So why all the hype?

Risk carriers and intermediaries are all 'up in arms' saying that they now have to re-draft a wording to cater for commercial client's business insurance needs. Trainers are also wondering how they are going to train staff in business insurance, if there is no longer an industry standard.

The reality is that all you need to do is replace the references "MM III 1997", and the like, to something that relates to you and a year, or other form of identification. This will have the effect of smoothing over the transition and with the correct education, keeping the intermediary happy, even if they have not read the old MMIII wording.

Time for innovation

However, now comes the time for innovation and development of your own business insurance policy wording. Please do not deviate from the old MM III document. Rather add clauses and extensions to the base wording so intermediaries training can be quick and painless. Rather add the 'non existent cover titled Subsidence and Landslip' automatically at no additional premium (as often done in Personal Lines policy wordings) than develop a new wording requiring hours of tuition. At least by adding this non-existent cover wording you just need to advise the intermediary that "Subsidence and Landslip is now automatic in our wording." The intermediary is then aware of how your wording differs from others.

Intermediaries are also trying to develop their own commercial business policy wording, based on the old MM III but due to time and available internal resources someone is charged with 'cutting and pasting' wordings from other policies that then becomes "our client specific policy, developed to enhance our client's business insurance cover."

Responsible advisors

However, what I have seen and audited leaves me speechless and annoyed with how irresponsible some organisations are when it comes to product development and marketing. A simple example of a "cut and paste" can be seen in the first Electronic Equipment Section wording used in the MM III wording. Unfortunately it took some three years before it was rectified. The MM III wording uses the term 'first amount payable' but the first EE Section used the term 'excess'. There were many other errors.

FAIS requires that you explain the product (both good and bad aspects) to your client allowing them the opportunity to make an 'informed decision' as to what to purchase. Insurance has not changed, to any large degree, for some 400 years. It does surprise me that a large section of our industry has not learnt the basics, even after earning their 30 or 60 NQF Credits as required by the FAIS 'Fit and Proper' requirements.

Perhaps the 'hype' is due to us loosing our 'professional' knowledge. Anyone who understands how to draft an insurance policy, and at that had these same drafted wordings win Court cases, knows that with over 40 years of MM III development by professional technicians whose combined knowledge was over 180 years split between insurer and intermediary, is not something you throw away with the bath water.

Continue to use the MM III wording, but identify your changes and make sure that the reader, marketer understands what you have done and why.