Not so simple

(10.8.04) Cre8, the research and development arm of Alexander Forbes Risk Services, has introduced a comprehensive insurance range to address the numerous and increasing risks facing South African schools, dubbed Educ8.

"This is the first comprehensive insurance offering of its kind to meet the distinctive and ever changing risk requirements of South African schools," says Peter Olyott, executive director of Cre8.
 

According to Olyott, insurance cover for South African schools today requires more than traditional insurance for explicit risks such as fire and theft.

"There is an increasing concern for implicit risks such as the onerous responsibility or risks that teachers, schools and even school governing bodies and its management have," he says. 

"In addition, the school itself may be considered a jurist person with legal capacity of being sued and as such a claimant would be able to cite either the school itself or its governing body as a defendant. 
 

“Consequently the school's reserves and even its future viability could be threatened.  Clearly this is of utmost concern where the finances of the school and its members are interlinked.”
 

Since school governing body members are entrusted with the management of the school and its' funds and risks, they face similar liabilities to that of other trustee groupings such as medical aid or provident fund trustees, putting their personal assets at risk. 
 

“It follows that these organisations need to undertake a complete enterprise-wide risk assessment as would other state and commercial enterprises,” Olyott says.
 

“Traditionally, schools may have focused only on the education of children, now they need to have business skills as well in order to chart their way through an increasingly complex risk environment.
 

Olyott believes that although insurance is one of a number of solutions, the emphasis should firstly be on the risk management process. 
 

The on-line risk library, a web-based centre for excellence, provides members with a comprehensive set of internationally recognised Best Practice Standards.
 

Furthermore, he says schools have a unique situation in that they are dealing with minors, and South African law requires that extra care be taken regarding the safety and security of pupils. 
 

“Even though an incident may occur while a scholar is still a minor, it may be some years subsequent to the incident that a claim is submitted for an event that occurred while a scholar was a minor,” says Olyott.
 

There is also a personal accident protection which has been specifically developed to help the school with the financial implications resulting from accidental death and permanent disability, protecting both the scholars and the parent or guardian.
 

Other examples of embedded risks that could arise at schools is the hire-out of school facilities, usually to earn additional revenue, which could inadvertently incur liabilities that the school never intended to, unless the contractual arrangements are attended to properly.
 

Olyott also says that schools have an obligation to ensure that vehicles hired by schools to transport pupils to and from sports activities are suitable and carry adequate passenger liability insurance cover.
 

One of the components of the range, provides a 24-hour medical and life assistance service that assists pupils and all school personnel in the event of a medical emergency on the school premises. 
 

Part of its offering is ambulance service, medical information, guaranteed hospital admission, HIV Advice Info Line, trauma line Childline, Tutor Line and even Career Counselling. 
 

Although this offering is only now being offered to South African schools, a similar offering has been available for tertiary institutions (universities and colleges in South Africa) for the past five years and has resulted in a savings of over R6m, through its distinct business model.