Techinisurance:Technology and insurance solutions

Technology is used extensively by businesses of all sizes to streamline processes, track business decisions and activities, and manage their financial and business risks, many of which are comprehensively insured. One critically important area of business, however, remains technologically challenged and largely uninsured.

Whether a company is manufacturing products or delivering a financial service, everything tends to be managed using some form of technology and a variety of software applications. In addition to this use of technology, business owners are also able to insure themselves against most fortuitous perils that threaten the well being of their enterprises.

Labour risk management lags behind

That being said, an area of business that remains constantly technologically challenged in most organisations is none other than the one that manages labour problems. Even large companies which have an HR department that deals solely with the CCMA and Union activity, have a tough time dealing with the flood of labour disputes and disciplinary issues that have become commonplace in South Africa. Coincidentally, this area also remains uninsured in over 75% of local enterprises. The question that begs answering is "Why?"

Is it possible that business owners and directors do not perceive the labour risks in an organisation as serious or frequent enough to manage or transfer? Or perhaps it's that the labour problems do not pose enough of a threat to warrant the use of a specific IT system or the purchase of an insurance policy?

Tangible and highly probable risk

It's improbable that the answer to these questions is "yes". The 160 000 labour disputes at the CCMA and bargaining councils each year tell us these incidents happen frequently. In fact, if one does a comparison with the statistical probability of a motorist being in a road accident, the odds are actually higher that an employer will be taken to the CCMA in any given year. It is also unlikely that the labour problems do not pose a significant financial threat with employers spending almost R20bn each year to manage discipline and disputes.

Technology and insurance synergy

It is therefore highly likely that technology and insurance, "technisurance", are not sufficiently utilised in these areas simply due to a lack of awareness. It is only in the last 18-months that IT companies have been working with specialist underwriters and labour experts to develop systems that are able to reduce the time and resource wastage associated with managing discipline, while also eliminating the costs associated with labour litigation.

Underwriters also look favourably upon employers that have implemented systems to ensure compliance with the company's own code of conduct, and have even gone so far as contributing toward the cost of these tools or granting premium reductions. This makes the combination of IT and insurance a very affordable risk management solution.

Broadening the brokers' offering

So, with the HR environment producing more incidents that have potential to cause loss than any other part of the business, it makes good sense to track and or transfer these exposures. For brokers to properly consult to clients they should be aware of these specialist products, the extent of the cover available and the cost implications and they would do well to refer them to employment practices liability specialists for this specialist information.