Dear Valued Client
This is the first publication of our new initiative to provide monthly newsletters to you, our valued clients, insured through Trafalgar Financial Services (Pty) Limited (“TFS”).
Trafalgar Financial Services (TFS) Introduction
As the first publication, I would like to take the opportunity to introduce TFS and explain fully what service(s) we provide and what support you can look forward to receiving. TFS is a fully owned subsidiary of the Trafalgar Group; founded in 1963, TFS was initially formed to house a brokerage offering to Trafalgar Property Management clients. The plethora of new legislation, primarily the Financial Advisory and Intermediaries Act and National Credit Act, have had far reaching, and costly, requirements on the way business has typically and historically been done. Having related operations housed in a standalone company has made it easier to adapt and implement the measures required by said legislation, primarily aimed at the insurance and credit industry respectively – both arenas in which TFS operates.
TFS is a specialist provider of property related financial products, simplistically arranging for insurance cover as dictated by the Sectional Title Act, as well as being able to offer (related) unique value added products in support of same, together with financing options for all residential entities of varying legal framework (bodies corporate, home owners’ associations, share block companies, wholly owned buildings, owners of individual units etc.) TFS’s product range is focussed, and clearly value add, to not only Trafalgar Property Management’s client base, but indeed the greater residential property market. Currently TFS’s client base is approximately 80% shared with Trafalgar Property Management, with an exciting and growing 20% external client base, this to the broader and greater residential market; this is not altogether surprising seeing as though our full product range does indeed have relevance to all residential properties.
As one of the oldest insurance brokerages in the country, we are also certainly one of, if not the, largest in our space, with a book value in excess of R50 Billion and premium income in excess of R50 Million specializing only in residential property, primarily sectional title bodies corporate, home owners’ associations and share block companies. Our bouquet of financial products service a niche market, being an area not typically catered for by the traditional banks who do not, for whatever reason, service financing options for residential entities unless through their high net worth offerings or to individual owners but not to collective, juristic entity bodies corporate, home owners’ associations and share block companies. TFS is now an established player in this domain, with a loan book approaching R75 million, financed primarily from in-house cash flows, with the traditional banks not readily amenable or interested in entering this space.
TFS is a specialist provider of property related financial products such as:
Insurance
Insurance cover for sectional title entities is a legislative requirement governed by the Sectional Title Act, more specifically contemplated by Rule 29 of the prescribed Management Rules set out in Annexure 8 to the Regulations promulgated under the Act. In short, the Act dictates what needs to be covered listing related requirements that the trustees are obliged to adhere to and have in place.
There are a handful of specialist sectional title insurers who specialize in related offerings, satisfying the Acts’ requirements and more. TFS has partnered with the largest players in this field, preferring to have three primary underwriting partners as opposed to diluting our greater book amongst all players. This ensures that we, TFS, are each underwriter’s primary, and most important, broker enabling us to influence related decisions so as to get the best for our clients within the confines of in-place and force cover.
While we have alluded to only sectional title bodies corporate governed by the Sectional Title Act, home owners’ associations and share block companies (obviously) do not fall within the ambit of said act, and while insurance cover may not be a mandatory, legislative requirement, prudent directors and or trustees – if not compelled to have cover in terms of their related Memorandum of Incorporation – should arrange for at the very least third party liability and common property cover.
TFS also arranges for insurance valuations and surveys for clients to ensure that sums insured are set correctly and any specifics noted accordingly on the policy.
Common Insurance Misconceptions
In Sectional Title bodies corporate, there is often a misconception as to the extent of cover provided for by the body corporate insurance which is limited to cover the structure of same and not the contents of your home (referred to as your unit); an elaboration of this means that all fixed items are covered by the body corporate’s insurance policy but not lose items like couches, TV’s, tables, beds, jewellery etc. which would have to be insured through a separate, standalone policy, if so elected, given there is no legal precedent or obligation to have this in place. Simplistically speaking, if you turned your unit upside-down, whatever stayed up would be covered and whatever fell to the floor would not be covered within the ambit of the body corporate’s insurance policy (the only exception would be your stove which is regarded as a fixture).
In home owners’ associations it is only the common property that is covered by the related policy, this including the tar roads and paving, boundary walls and electric fencing, club houses, gate and guard houses, complex office(s) and whatever is ‘common’; your actual house being free hold in terms of legal jargon, would need to be covered under the individual owners’ personal policy, typically a requirement of the bondholder.
Excesses, generally hated in the market, are an established norm in the insurance industry and serve to dissuade owners from claiming for marginal losses, in most instances falling below the associated admin cost of processing the said claim; excesses are also an insurer’s tool to manage policies perceived to be marginal in terms of profitability and are typically the first attempt to turnaround a loss making policy. Insurance is (arguably) there for major losses and not small, often maintenance related claims and or losses. Indeed, maintenance is never covered by insurance; sectional title policies are the only ones that cover any element of maintenance through the geyser maintenance extension, the rationale being they would rather maintain a geyser at a cheaper cost than replacing in total at full cost which is often the case with unscrupulous plumbers.
Excesses are for the account of the unit owner as dictated by the Sectional Title, more specifically Prescribed Management Rule 29(4) unless directed otherwise by way of special resolution.
Besides for excesses, policy limits are another factor which are often overlooked by policy holders and clients. Policy limits, specifically on geysers which account for the majority of claims, are there to limit the exposure of underwriters to unscrupulous contractors who charge inordinate amounts to tend to basic insurer work. It is in clients’ best interests to limit their losses and claims as ultimately insurers are there to turn a profit and if their premium income does not exceed their claims an unsustainable scenario arises. When claims costs exceed the policy limits the insured will have to fit the shortfall which is always an unwelcome surprise; TFS, as part of the claims handling process, tries as far as possible to appoint contractors with service level agreements with us in place, same which covers the charge for related works at predetermined costs in line with insurers’ policy limits to circumvent shortfall problems post finalization of the claim. Over and above this, TFS has designed and offers our Trafex policy to insure against both excesses and shortfalls alleviating associated stresses for a marginal, additional fee, per month. For more details on our Trafex product, please speak to your portfolio manager or contact us direct.
Claims can be reported directly to TFS on our call share number 0860 48 48 49 or via our local office; all claims can be lodged telephonically as opposed to completing hard copy claim forms allowing for a compression of turnaround times, we get that residential means it’s (typically) your home we’re dealing with and we try as far as possible to minimize any inconvenience. TFS has, to allow for same, invested in state of the art voice recording technology to satisfy insurers’ requirements and needs. Further, our system allows for updated claim tracking and notification ensuring that you, our valued client, is kept fully informed every step of the way to claim resolution and finalization.
Financial products and offerings
Loans and Levy Solutions
TFS offers straight loans and financing options to all bodies corporate, home owners’ associations and share block companies for both maintenance and capital improvement projects at competitive rates and on favourable terms. In addition, we have a specialist rehabilitation product, Levy Solutions, for financially distressed bodies corporate, home owners’ associations and share block companies, same which allows for an immediate cash injection and then an ongoing, guaranteed cash flow in accordance to raised income per the levy roll.
For more information on either product, please contact us directly on our share call number 0860 48 48 49 or e-mail Michael Schaefer on Michaels@trafalgar.co.za
