High number of millionaires in South Africa highlights need for specialised insurance

Christelle Fourie, Managing Director of MUA Insurance Acceptances.

According to The Wealth Report 2015, which was recently released by Knight Frank supported by Standard Bank Wealth and Investment, individuals with at least $30 million in assets in Africa will increase by a massive 59% over the next 10 years, stronger than the 34% projected global growth.

This report comes on the back of the 2015 Wealth Report released by New World Wealth earlier this year, which revealed that the city of Johannesburg has the highest number of South African multi-millionaires. The report further detailed that a total number of 990 high net worth (HNW) individuals live in the city followed by 380 multi-millionaires based in Cape Town, 120 multi-millionaires in Durban, 110 in Pretoria and a further 460 HNW individuals living elsewhere in the country.

While it is positive to note the high number of uber-wealthy living in South Africa, Christelle Fourie, Managing Director of MUA Insurance Acceptances, says that these HNW individuals face a unique challenge when it comes to protecting their assets. "When insuring the wealthy, their different tastes and lifestyles need to be taken into account by the insurance company."

She explains that some people enjoy highly public roles, entertaining guests at parties, fundraisers and art exhibitions. "Others may collect vintage automobiles, rare pieces of jewelry or expensive pieces of art. The risks that confront each individual's personal assets can vary, which is why a tailored approach to insurance needs to be taken."

"Homeowners who have international designer furniture, such as an Italian De Padovo dining room suite, in their home which is subsequently damaged by a geyser bursting in the home, will not be satisfied to replace this suite with a locally manufactured furniture brand. This is where the benefits of a specialist insurer who understands the preferences of the client come into play," she says.

Fourie states that another important factor for HNW individuals to bear in mind is taking the exchange rate into account when insuring their luxury items. "The value of an item that was insured five years ago is likely to be worth a very different value now due to fluctuating exchange rates. By simply keeping the item insured for the same amount as five years ago may not allow the owner to replace the same item now in 2015."

For example, if someone purchased a diamond ring in 2007 valued at R65 000, the current replacement cost of the ring could be as much as R120 000 due to fluctuations in the price of gold and other precious metals, so it must therefore be insured for this higher amount in case of loss, theft or damage.

By doing a full valuation at inception of cover, the HNW individual can be assured that they are paying the correct risk premium and will not be underinsured when it comes to claims stage, adds Fourie.

"The security and privacy of clients remains a critical throughout the process of evaluating and insuring your possessions," explains Fourie.

"Regardless of your status or net worth, it is important to stress that all evaluations and personal information of clients are kept confidential at all times."

"High net worth consumers need to be aware of their insurance risks and be proactive in working with their insurance provider to ensure that they receive appropriate and adequate cover to suit both their assets and unique lifestyles," concludes Fourie.