Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
Department of Higher Education and Training
Recommended Short Term Insurance Policy for Public TVET Colleges
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8 February 2016
Version 1
Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
TABLE OF CONTENTS
PAGE
1.
Legislative framework and best practices
4
2.
Purpose
4
3.
Definitions, acronyms and abbreviations
4
4.
Scope
5
5.
Management of losses and claims
5
6.
Insurable risk options
5
7.
Guidelines to appointing an Insurance Broker
10
8.
Adoption of policy
11
9.
Availability of Short Term Insurance policy
11
10.
Annual review of policy
11
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Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
AMENDMENT AND APPROVAL RECORD
Amendment
Amendment
No.
description
Originator
Approved By
Date
Name of TVETC: ………………………………
Short Term Insurance policy
Department: Corporate Services
Responsibility : Accounting Officer
_________________________
______________________
Prepared and submitted by the
Accounting Officer to Council
Adopted by Council
(Signed by Chairperson obo Council)
Date: _________________
Date: _________________
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Implementation Date:
XXXXXXXX
Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
1. Legislative framework and best practices
Key principles contained in the following legislation and best practices were applied
to develop this policy:
(a) CET Colleges Act No.16 of 2006, as amended ( formerly the FET Act);
(b) Public Finance Management Act, 1999 (Act No 1 of 1999, as amended by Act 29
of 1999) (PFMA);
(c) National Treasury Regulations, March 2005;
(d) Draft National Treasury Regulations Gazette No. 35939 (dated 30 November
2012); and
(e) National Treasury Public Sector Risk Management Framework (dated 1 April
2010).
2. Purpose
The purpose of this policy is to provide definitions of insurable risks that a College
may be required to consider in view of best practices to be found at - section 12.1 of
National Treasury Regulations and section 8.1 of the Draft National Treasury
Regulations, Gazette No. 35939 (dated 30 November 2012).
3. Definitions, acronyms and abbreviations
For the purpose of this policy, unless the context indicates otherwise, the following
definitions, acronyms and abbreviations are set out for the terms indicated:
3.1
“Accounting Officer” – is the College Principal.
3.2
“Act” – is the CET Colleges Act No.16 of 2006, as amended.
3.3
“COID” – is the Compensation for Occupational Injuries and Disease Act.
3.4
“College” – is a Public TVET College (formerly known as a FET College ).
3.5
“Department”; “DHET” – is the Department of Higher Education and Training.
3.6
“Employee” – is any official, employed by the College, irrespective of grade, fulltime or part-time, or Council-or Departmental-appointed, or paid on a salaried or
an hourly/daily individual basis.
3.7
“Insurance” – is the mechanism adopted to transfer the risk of an event
occurring, to a third party. The risk is transferred to an insurer and a premium is
paid to the insurer as compensation for taking on the risk.
3.8
“Minister” – is the Minister of the Department of Higher Education and Training.
3.9
“Short term insurance” – is insurance cover that is taken for set periods, often
from year to year.
3.10 “TVET” – is Technical and Vocational Education and Training.
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Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
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Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
4. Scope
This policy is a guideline to assist the Accounting Officer in determining how much
risk should be transferred to an insurer for any insurable risks.
5. Management of losses and claims
The following sections of Draft Treasury Regulations Gazette No. 35939 (dated 30
November 2012) should be considered when managing losses and claims:
5.1
Section 8.1.1, states that “unless determined otherwise by law, institutions will
bear their own damages and accident risks and be responsible for all claims
and losses of the institution's property, where these arise from institutional
activities by an employee who is liable in law and who is or was employed by an
institution.”
5.2
Section 8.1.2 states that “notwithstanding section 8.1.1, the Accounting Officer
of an institution may, if deemed economical and based on a risk assessment,
insure motor vehicles, including hired vehicles, or such other movable assets as
determined by the relevant Treasury.”
5.3
Section 8.1.3 states that “the insurance premiums related to costs referred to in
section 8.1.2 of these Regulations may not, in the case of institutions, exceed
an amount or a percentage of the institution's budget, as may be prescribed by
the National Treasury by way of a Treasury Instruction.”
6. Insurable risk options
The following insurable risk options should be considered by the Accounting Officer,
in consultation with the Deputy Principal Finance, and Chief Risk Officer, on an
annual basis.
Records should be retained of decisions taken, including justification for accepting or
rejecting an insurable risk option.
6.1 Available Covers
Available covers are divided into two distinct sections – one commonly referred to as
“Catastrophe Risks” and the second “Non-Catastrophe” risks. Catastrophe Risks are
generally insured through conventional insurance markets whilst Non-Catastrophe
risks can either be insured or potentially managed at operational level depending on
the philosophy of the College (commonly referred to as Self Insurance).
6.1.1 Catastrophe Risk Exposures ( read in conjunction with paragraph 5):
Policy
Section
Brief Description of Cover Afforded within a
Short Term Insurance Policy
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Benchmarked
Limit of
Indemnity
Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
Fire
Damage to the whole or part of the property
described in the schedule, owned by you the
insured or for which you are responsible, including
alterations by yourself as tenants to the buildings
and structure, by fire, thunderbolt or lightning,
explosions, storm, wind, water, hail or snow,
aircraft and other aerial devices or articles dropped
there from, impact, trees, aerials, satellite dishes or
vehicles, malicious damage.
Replacement
value including
VAT
Business
Interruption
Financial loss following interruption of or
interference with the business in consequence of
damage occurring during the period of insurance at
the premises in respect of which payment has been
made or liability admitted under (i) the Fire Section
(ii) the Buildings Combined Section (iii) the Office
Contents Section (iv) and other material damage
insurance covering the interest of the insured, but
only in respect of perils insured under the Fire
Section hereof.
Insurable Gross
Profit making
provision for
turnover growth
during the
insurance and
reinstatement
periods
Fidelity/
Loss of money and/or property belonging to
yourself or for which you are responsible stolen by
an employee during the currency of this section
R1,000,000
Commercial
Crime
Liability
Damages for which you the insured shall become
R30,000,000
legally liable to pay consequent upon accidental
death of or bodily injury to or illness of any person,
or accidental loss of or damage to tangible property
occurring within the territorial limits during the
period of insurance in the course of or in
connection with the business.
Directors &
Officers
Liability
Damages for which you the insured shall become
legally liable to pay as a result of any act or
omission of an employee acting in their capacity as
Director or Officer. Legal Defense Costs are
included.
R5,000,000
Contractors
All-Risks and
Contractors
Liability
Loss of or damage to (a) the Contract works whilst
in transit, in storage or on the contract site and (b)
accidental death, bodily injury, illness or disease
and/or accidental tangible loss to tangible property
arising directly out of the performance of the
insured contract.
Full contract
value with
Liability being
R10 Million
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Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
6.1.2 Non-Catastrophe Risks:
Benchmarked
Limit of
Indemnity
Policy
Section
Brief Description of Cover Afforded within a
Short term Insurance Policy
Accidental
Damage
Accidental physical loss of or damage to the
insured’s property at or about the premises not
otherwise insured or for which insurance is
available
R1,000,000
Electronic
Equipment
Physical loss of or damage to the property insured
as described in the schedule from any cause not
hereinafter excluded whilst at work or at rest
anywhere within your premises as specified; in
transit including loading and unloading or whilst
temporarily stored at any premises en route or
temporarily removed from your premises to any
other location
Full replacement
value including
VAT
Accounts
Receivable
Loss of or damage as a result of accident or
misfortune to your books of account or other
business books or records at the premises, in
consequence whereof you are unable to trace or
establish the outstanding debit balances in whole or
part due to you.
Estimated
maximum
amount of
debtors book at
any one time
Buildings
Combined
Damage by the perils described in the Fire Section
and including:
Full replacement
value including
VAT

Loss of Rent up to a maximum of 25% of the
insured amount;

Legal Liability;

Theft accompanied by forcible and violent
entry into or exit from the building
Business All
Risks
Loss of or damage to the whole or part of the
property described in the schedule while anywhere
in the world by any accident or misfortune not
otherwise excluded provided that you shall be
responsible for the first amount payable stated in
the schedule in respect of each and every event
except a claim resulting from fire, lightning or
explosion
Theft
Loss of or damage to all contents of any insured
First Loss
building at your premises described in the schedule
as a result of theft accompanied by forcible and
violent entry into, or exit from such building or any
attempt thereat or as a result of theft, or any
attempt thereat, following violence or threat of
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Full replacement
value including
VAT
Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
Policy
Section
Brief Description of Cover Afforded within a
Short term Insurance Policy
Benchmarked
Limit of
Indemnity
violence. Cover is on a first loss basis – average
does not apply.
Glass
Loss of or damage to internal and external glass
Full replacement
(including mirrors), sign writing and treatment
value including
thereon at your premises as stated in the schedule, VAT
the property of yourself or for which you are
responsible
Goods in
Transit
Loss of damage to the whole or part of the property
described in the schedule, owned by yourself or for
which you are responsible, in the course of transit
by the means of conveyance or other means
incidental thereto and caused by any accident or
misfortune not otherwise excluded.
Machinery
Breakdown
Any unforeseen, visible loss of or damage to
Full replacement
equipment as described in the schedule by an
value including
incident stated and not otherwise excluded while on VAT
your premises, but excluding any loss of or damage
caused by an incident covered under the Fire and
Theft sections.
Machinery
Breakdown –
Business
Interruption
Financial loss following interruption of or
interference with the business in consequence of
damage occurring during the period of insurance at
the premises in respect of which payment has been
made or liability admitted with regards to the
Machinery Breakdown section.
Per Business
Interruption
above, but
specifically listed
for specific
machinery
Money
Loss of or damage to money at your premises or in
transit to and from the bank. Money stored in a
locked safe at night is limited to a value depending
on the category of the safe. Please consult with
Marsh for further details.
First Loss
Motor
Loss of or damage to any vehicle described in the
Retail Value
schedule and its accessories and spare parts whilst
thereon, including liability occurred towards third
parties.
Motor
Loss of or damage to vehicles (not owned by the
Traders –
Insured) whilst on the Insured Property as
Internal Risks described in the schedule, including liability to a
third party.
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Maximum any
one load taking
into account the
basis of
valuation
Retail value
Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
Motor
Traders –
External
Risks
Loss of or damage to vehicles (not owned by the
Insured) whilst in the course of a journey including
liability to a third party.
Retail value
Office
Contents
Loss of or damage to the office contents (excluding
Computer Equipment) unless otherwise stated in
the schedule, as per the perils under the Fire
section, including:
Full replacement
value including
VAT

Theft or any attempt thereof;

Loss of Rent up to 25% of the insured
amount;

Loss of or damage to Documents;
SASRIA
Loss of or damage to the insured property as a
direct result of Rioting, Strike or Public Disorder.
Per underlying
policy – consider
Standing
Charges
Personal
Accidental &
Stated
Benefits
Bodily injury caused by accidental, violent, external
and visible means to any principal, partner, director
or employee of the insured specified in the
schedule.
Variable
Marine
Loss of or damage to goods whilst being imported, Replacement
exported or temporarily being stored whilst part of a value depending
marine voyage.
on the basis of
valuation
Contractual
works
insurance
In terms of Construction Industry Board Act of 2000 As required per
(Act28 of 2000).
works contract
value
Students
accidental
death or
injury
To provide for lump sum benefits on the accidental
death disability or medical expenses incurred.
R100, 000 per
student
7. Guidelines to Appointing an Insurance Broker
In addition to any proposed insurance covers, a list of physical addresses with Buildings
and Assets with sum insured at each location should be included in any Tender
document. All values should be New Replacement Cost including Vat.
Having a Total Sum Insured with a target location will enable a Broker to obtain best
terms for all locations, rather than a tender at each location which will produce a higher
rate.
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Department of Higher Education and Training
Technical and Vocational Education and Training College
Recommended Short Term Insurance Policy
It is also recommended a successful Broker is appointed for a 3 year period as this will
reduce fees charged over the appointment period.
8. Adoption of policy
This policy is effective from the date on which it is adopted by the Council.
9. Availability of Short Term Insurance policy
A copy of this policy and other relevant documentation should be made available on
the College website.
10. Annual review of policy
This policy will be subject to an annual review by College management to ensure its
relevance. Colleges should forward any inputs and recommendations to the TVET
Branch of DHET for possible consideration during the annual review process.
Any recommended changes to the Short Term Insurance policy should be presented
to the College Council for adopted.
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