Sowing
seeds

in fertile soil

Insuring taxis requires no small amount of faith. As a Christian,managing director of Vulindlela Underwriting Managers (VUM), DaveGould, says his faith in God enables him to keep going strong in a
tough market. His is a good news story about what VUM is doing toprotect and promote the cause of small business owners.
Hanna BarryAn avid surfer, paddler and ultramarathon runner, Gould ran adairy farm for two-and-a-half years
in KwaZulu-Natal before starting
his own brokerage in 1991. Over the next 15years, he grew this into a multi-branch businessand then launched VUM in 2006 in Durban.
Having sold taxi insurance as a broker, he knewthat there was limited choice. “I did research
for at least a year and consulted with various
insurers to see who could offer a platform forus, eventually signing with Santam in 2006,”
he recalls. The first three years were tough,as Gould sought to grow the business into asustainable concern, while having to cover
fixed expenses.
Now that the business is financially stable,premium payments remain an ongoingchallenge and underline the need for efficientsystems. “It’s really about staff and systems.
Our staff members are highly engaged, whilea paperless, scientifically rated and workflowbased management system ensures careful
control over policy administration,”
explains Gould.

Dave Gould

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2“Rates on taxis have dropped by 25 per centover the past four years, despite the highrisks they pose. Although these rates areunsustainable, it is difficult to increase the costof cover when taxi owners’ fixed expenses,
such as the price of petrol, have increased
dramatically. Taxi owners cannot pass these

input costs on to clients like many businessesdo, as passengers cannot afford to pay an extra
R1 or R2. Economically, taxi owners are underpressure and not making the profits they usedto,” he says.
As a reward for good behaviour, VUM has paid
some of its taxi-owner policyholders
R4.6 million over the last five years through acash back benefit. Known as the Zuzimali Cash
Back Benefit, 10 per cent of premiums paid isreturned to policyholders who are claim free forthree years. Unfortunately, although a benefit
the underwriting manager is proud to offer,
this is not enough to single-handedly transformtaxi drivers into law-abiding road users. “Mostowners try their best to enhance the safety ofthe vehicle and service it regularly, but thedrivers are generally the problem. Very few
drivers actually own the taxis they drive.
This is where government needs to get involved
and insist on installing telematics devices andinternal cameras in taxis to properly police
driver behaviour,” Gould maintains. Although
not hugely optimistic that the situation will soonchange, he says that VUM will continue doing
its bit to contribute meaningfully to this market.

Looking out for the little guy
Another market in which VUM is having a
positive influence is the emerging businessmarket. After receiving approval from Santam

to create a product for emerging businesses
three years ago, VUM AssetSure was launched
to the market in August last year. “AssetSure
is a plain-language product specifically for
emerging South African businesses. The
wording and cover has been developed in sucha way that a small business owner, who doesn’t
have the legal and accounting resources of alarger, established business, can understandand use the product,” explains Gould.
A living product, AssetSure can be continuallyadapted to remain relevant to this market andhas seen considerable take-up over the pastfew months. Current policyholders include a
township tavern, spaza shop and a fledgling
plumbing business. These are businesses thatwould traditionally have struggled to obtainaffordable insurance cover.
“The small business market is considerably
under-traded by insurance brokers. Most
emerging business owners will insure througha direct insurer or their banks, but I don’t
think that commercial insurance should besold without a broker who can converse in
the client’s home language,” says Gould.
“As a client, and especially a small businessowner, having a broker on your side fromunderwriting to cover inception and claims
stage is a massive differentiator. Rates generally
tend towards the same levels between direct
and intermediated insurers, but our major
competitive advantage is the broker.”

The typical VUM broker is a black, community
broker who is fairly new to commercial
insurance, but understands and can engage
with small business owners. The UMA has
invested time and resources into training thesebrokers, growing its own business together
with them. It now has 200 brokers on its
books. “Many of our brokers would have
conventionally been selling only life insurance
products, such as funeral cover, and possibly
some personal lines insurance. Commercial
insurance is far more technical and our focus
has been to equip brokers to sell this typeof insurance.”

Building from within
As it has grown its brokers, so too VUM hasgrown its own staff members. Initially a total of
14 staff spread between KwaZulu-Natal andGauteng, the VUM team has almost tripled insize since its beginnings. These individuals hadvery little industry experience to start with, but
VUM has developed and promoted from within.
Three out of four of the company’s managers
are black, namely, the claims manager,
underwriting manager and Gauteng
branch manager. Not a question of token
appointments or window-dressing, theseindividuals were appointed solely on merit.
“Our staff is without a doubt our biggest asset,”says Gould, who has an open door policy
with employees.

He agrees with the suggestion that anorganisation’s staff complement should reflect
the market it is trying to reach. “I can’t believe
how many people don’t see that and are notengaging with the emerging market. This iswhere the growth is, as the traditional insurance
market does not seem to be growing. We are in
the right space to obtain growth, as this market
is largely uninsured.”
And it’s a market that insurers have largely
avoided due to high risks, or been unable
to penetrate due to a lack of education andawareness. Gould has a refreshingly different
take. “We tend to forget that the whole basisof insurance is shared community; contributing
towards a pooled fund so that if someone in thecommunity suffers, there is assistance available
to them. The black community fully understands
and appreciates this concept. The challengearises in trying to link that understanding withthe recognition of a need for formal insurance,
should an unforeseen event put them out ofbusiness.” In this regard, he argues that brokers
are incredibly important in this market. “Achange of mind and behaviour can be brought
about only through face-to-face discussion.”
It is this commitment to serving and engaging
with the emerging South African market, which
gives Gould the confidence that VUM will gofrom strength to strength; to be a meaningful
contributor to a South Africa that we can beproud of.

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