Taking on the thatch risks

Thatch risks were traditionally very difficult to place in the local market, due to a shortage of reinsurance capacity and the high risk involved. Thatch Risk Acceptances spotted this gap in the market and has, for the last 10 years, provided a competitive and comprehensive alternative solution for brokers.

FAnews spoke to Natasja Blok at Thatch Risk Acceptances (TRA), to find out why the product has been so successful and what lies in the future.

Q Tell us briefly about TRA and the rationale behind its creation?

TRA was established on 1 July 1998 with the specific aim to service the diverse and demanding needs of the thatch risk market. Having identified a clear gap in the market, TRA stepped in to make the cover available locally, with a competitive rating structure.

Since then TRA has established itself as a market leader in underwriting thatch risks and will continue to offer the broker market an independent avenue with specialist expertise.

We operate in partnership with Compass Insurance, an "A" rated Short-term Insurance Company that only deals with underwriting agencies - a unique approach to business.

Q How has the portfolio grown since the start-up?

The company has experienced steady growth over the past nine years. It started from a zero base in 1998 and ended 2007 with a Gross Written Premium of just below R65 million.

Q What distinguishes the TRA cover from that of general insurers?

We are the only company to specialise exclusively in domestic thatch insurance and over the years we have built up a definite understanding of the requirements linked to this market.

We offer a complete service to our broker/client base, with a full mandate from Compass to provide quotations, issue policies and manage the entire claims settlement process.

Due to our levels of expertise, we can underwrite each thatch risk on its own merits and do not just apply a loading on the normal rating for non-thatch properties.

Our distribution channel is exclusively via our broker network and we do not make use of the direct marketing avenue at all.

Q How does your policy wording differ from the standard industry policy wordings?

Houseowners and Householders cover is on an All Risks basis, resulting in a much broader policy wording. This means that each and every possible peril is covered, except those that are specifically excluded. Exclusions mostly relate to damage caused by lack of maintenance, which no policy covers.

Our extensions have higher limits and Accidental Damage is automatically included up to the maximum building and contents sum insured. Additional fees, such as for architects, consultants and charges for debris removal, are covered subject to sufficient sums insured.

Q What protections must a client have in place?

As we underwrite each risk on its own merit, the required protections will vary depending on a number of factors. For example, we use a lightning density flash chart to determine whether we would require lightning conductors in a specific area. As a general rule of thumb we do not require these in the Western Cape but certainly in Gauteng.

Q How are the rates determined?

We have a very strict rating and underwriting model which ensures that every broker will get the same quote from the company. We have structured some exclusive broker schemes, but unless it is scheme business, the same rating will apply irrespective of the broker’s portfolio.

Our sophisticated service is based on the individual client’s own merits. We offer competitive base rates and reward clients for additional built-in risk-reduction measures. Some of the additional safety measures we take into consideration include:

* Fire-retardant treatments

* Roof drencher systems

* Concrete underlay

* Dedicated hose reels

* Strategically-placed fire extinguishers

* Fireplace design

* Proximity of the building to the nearest fire station

Q Can any broker place business through TRA?

We will only do business with brokers who are registered Financial Service Providers. Once the broker has completed the necessary documents, these are sent to Compass for approval. If we receive all the necessary documentation, we can have an agency approved and loaded within 24 hours.

Q How do brokers access quotations?

Each quotation is subject to a completed questionnaire which is available from our office, as well as an easily downloadable PDF document from our website. As soon as we receive a fully completed questionnaire, the broker will receive the quotation within 24 hours.

Q What commission structure is in place?
We pay brokers the full legislated commissions and they start earning commission from the first policy they place with us. We do not require a minimum amount of business before we start paying commissions.

Q How is TRA structured to ensure efficiency and service for brokers and clients?

We operate from Cape Town, from where all administrative procedures are handled, including claims, policy administration and accounts. We also have a regional office in Gauteng to service the brokers in this area.

Q How are the claims assessed?

We only use independent assessors who have built up the necessary expertise over the years to deal with thatch related claims. We have a countrywide network and make use of various specialist suppliers in our claims handling process.

Q What are the most significant successes achieved and challenges faced by TRA?

Over the past nine years we managed to build an excellent brand name in the market and we are very well supported by the broker community.

During 2006, we experienced the biggest claims we ever faced since our existence. As these claims were handled exceptionally well, we proved that we have the ability and expertise to handle and wither the storms. We received many compliments for our fast and efficient levels of service.

In 2006 we also started using our own IT platform for the first time, which was an enormous learning curve for all our staff and quite a significant milestone to achieve.

Like many other FSP’s, we also face the challenge to ensure that all our employees are FAIS compliant and have processes in place to constantly train and develop staff.

Q What does the future hold for TRA?

We have taken a strategic decision to refocus the company as a purely domestic thatch underwriter with effect from 1 March 2008. There are many exciting developments and we will be looking at the viability of spreading our wings wider than Cape Town and Gauteng to obtain a marketing presence in other areas of the country. We also want to enhance our IT platform to speed up processes and ultimately deliver a faster and better service to our brokers.

For more information visit http://www.tra.co.za/