Santam's approach to doing business is about doing
sustainable business. Since 1918 we have served the short-term
insurance market, both in South Africa and abroad. Our ability to
adapt to both financial and non-financial change for almost a
century shows that as a company we understand what it takes to do
Our long-term strategy includes a thorough analysis of the full
spectrum of risks we face and a commitment to respond to the
concerns of those involved in or affected by our business. Our
approach to environmental, social and governance (ESG) risks and
opportunities comes from an appreciation of systemic risk and the
way this impacts not only Santam as a company, but also our
communities and the country and world we live in. ESG issues and
their opportunities form part of our overall systemic risk and
enterprise risk management processes. This investment in
understanding the long-term significance of each risk and our
commitment to be responsive to stakeholder concerns is what has
kept our business sustainable and, we believe, will continue to do
so into the future.
Our Sustainability Report is informed by the following standards
- The King III report on Governance for South Africa, 2009 (King
- The Financial Sector Charter (FSC)
- The Department of Trade and Industry's (dti) Code of Good
Practice for BBBEE
- The Global Reporting Initiative's (GRI) G3 Sustainability
- The JSE's SRI Index
WHAT SUSTAINABILITY MEANS TO SANTAM
The insurance industry offers one of the clearest
demonstrations that non-financial sustainability issues do not
stand apart from business issues. What we do and how we behave
impact our bottom line and the world around us. Therefore, we
believe that it is our responsibility to listen to, engage with and
thereby improve the world in which we live and in which we do
business. One of the most important vehicles that we can use to
influence our environment is our Santam brand. Our brand position
of "Insurance, good and proper" further entrenches the approach to
what we do. We do insurance properly, with integrity, excellence,
single-minded focus, certainty and stature. It is ingrained in the
As mentioned earlier in this report, we believe that insurance
should add value to people's lives, not questions and uncertainty;
hence our renewed approach to be proactive and to minimise the risk
of things going wrong. Insurance is a business built on integrity -
we sell a promise to be there when things go wrong. Our
stakeholders must be able to trust that we will honour our
It is consequently not surprising that a significant portion of
our sustainability management framework links to our brand promise
and the element of integrity. Santam has reiterated that its
business remains fully committed to the financial security of
clients; mutually profitable relationships with intermediaries; and
the well-being of employees.
SUSTAINABILITY AND RISK MANAGEMENT
The understanding of the risks created by interlinking and
interdependencies in a system - where the failure of a single
entity or cluster of entities can potentially bring down the entire
system - is core to Santam's pursuit of sustainability.
Underwriting success for Santam relies on our ability to accurately
price risk, especially in an economic climate where many of our
clients are under financial pressure. In 2011, for example, we had
to take particular care to demonstrate the value of our products to
We are actively involved in various projects that aim to
understand the system dynamics between risk and resilience in a
socio-economic context. This is exemplified in the Eden project
referred to in the Santam Sustainability Report, of which we
completed phase 1 during the current reporting year.
Climate change continues to top the list of our environmental
risk elements. However, during 2011 crime emerged as one of the
fastest growing elements impacting systemic risk.
HOW WE GOVERN AND MANAGE SUSTAINABILITY
The board has delegated responsibility for the
implementation of our sustainability strategy to the sustainability
committee. This committee meets quarterly to discuss progress on
the material issues identified in our sustainability risk log.
Issues are discussed according to an annual schedule of report
submissions. The chairman of the sustainability committee then
reports on these issues to the board of directors.
Sustainability is implemented by a dedicated business unit whose
head reports to the executive head of market development to ensure
direct access to the executive committee. Senior line managers in
the business operations monitor sustainability components in their
areas complemented by functions dedicated to Enterprise
Development, Environmental Management and Stakeholder
We have not obtained independent third-party assurance of this
Sustainability Report for the 2011 reporting period. Strategic
statistical data such as that relating to transformation,
broad-based black economic empowerment and our carbon footprint was
independently assessed and verified for 2010 - and we intend to
repeat this process in 2012 for the 2011 financial year. Our
internal audit unit performed a review of selected data and
statements reflected in this report. Based on the work performed,
the statements and data in the report are in line with the
supporting evidence provided by management. We intend to conduct
more comprehensive internal audit assurance in 2012.
As the leading South African short-term insurer, Santam is
represented on the board of the Ombud for Short-Term Insurance
(OSTI). In this role we endeavour to facilitate the improvement of
processes to ensure a more efficient resolution procedure in the
OSTI office, particularly as this is in the interest of our
clients. It is equally important for Santam to understand
principles of fairness and equity, and this engagement with the
OSTI enhances our approach to the fair treatment of our
OUR MATERIAL SUSTAINABILITY ISSUES
We have identified ten sustainability components which are
material to Santam. Each of these covers a number of sub-issues -
giving 24 areas in total. These areas are allocated a
focus-ranking, monitored in the sustainability material issue log
and progress is reported on these components at the quarterly
sustainability committee meetings. The table below links these ten
components to the promises we make in our brand strategy and
indicates how they align to our overall business strategy.
Sustaining our client base
- We introduced an internal arbitrator into the complaints
resolution process from the start of March 2011. Where clients are
seeking recourse they are given the option to escalate their
complaints to the arbitrator to offer a highly experienced opinion
on claims disputes.
- The Safend pilot project mentioned in our 2010 report was
successfully concluded and is now being rolled out across the
company. This software monitors the traffic of data to and from
user devices and will help identify possible information theft
- Our multi-channel distribution strategy continued to evolve in
2011 and our clients can choose how to access Santam products -
through intermediaries, affinity partners or through our direct
channels. We acquired a number of new businesses during 2010 and
2011 that has strengthened our positioning in this regard.
A sustained intermediary base
- Broker Services is split into 12 regions with two heads
managing the north and south respectively. This enables clearer
communication with intermediaries which improves speed of
decision-making and access to senior management. Dedicated
relationship managers (RMs) interact directly with local
intermediaries on a regular basis to update them on product and
service developments and to obtain feedback on their service
experience and market developments.
- The Santam Black Intermediary Development Initiative (SBIDI) is
a joint venture between the sustainability and business development
teams with the goal of actively developing black intermediaries.
SBIDI was launched mid-2008 and has evolved over time. The
initiative takes promising black graduates (we have trained 112
graduates since) and gives them the training they need to become
successful short-term insurance professionals with the long-term
view of setting up their own intermediary businesses.
A sustained supplier base
- Our preferential procurement score achieved at the end of 2011
was 17.4 out of 20 (unverified). This is a marked improvement from
the 15.5 points achieved at the end of 2010.
- We continue to work closely with our suppliers to ensure our
clients receive excellent service and that suppliers contract to
meet Santam's high standards on ESG issues.
Maintaining an ethical culture and managing economic
- Our business ethics and economic crime policy was drafted and
approved in February 2011, broadening the previous focus on fraud
to include unethical and criminal behaviour. The main aim of this
policy is to clarify the accountability for management of unethical
behaviour and economic crime. We are in the final stages of
revising our code of ethics and a first draft has been circulated
Solutions aligned to social and environmental
- Santam's strategy for servicing the emerging market is driven
by the Affinity Markets unit and supported by the Product
Development business unit. A new management information system was
developed and a complete project methodology implemented to improve
speed and cost-efficiency in the implementation of new business
- The solar geyser initiative, launched in 2010, gives clients
the opportunity to replace damaged geysers with solar geysers,
thereby reducing their energy consumption and carbon emissions.
Uptake on this initiative has been slower than expected due to the
upfront costs involved in the replacement of standard geysers with
- Santam spent 1.6% of its total payroll for permanent employees
on training in 2011. Of this, black training spend accounts for 1%.
We continue to increase the black representation of employees and
at the end of 2011 we achieved a 56.8% black representation
comparative to 54.4% in 2010.
- As at the end of 2011, R1.4 million was invested in study aid
assistance compared with R1.3 million in 2010.
Extending influence for the benefit of
- Our stakeholder engagements during the year covered three broad
areas: interaction with government (through the South African Local
Government Association, Department of Energy and various other
projects), industry (through the South African Insurance
Association, the Insurance Institute of South Africa and Emerging
Farmer Support) as well as research institutions such as
universities (in particular on the Eden project - see details in
the Santam Sustainability Report).
- Santam's Child Art programme is now in its 49th year and has
shifted from being an art competition to building capacity among
art teachers with a view to encouraging and inspiring children to
use their creativity. In partnership with the Ibhabhathane project
we have trained more than a thousand art teachers who received
practical training on the skills and techniques to implement the
new Curriculum Assessment Policy Statements (CAPS).
Transformation including ownership and
- Santam maintained its BBBEE level 3 status as at the end of
2010 (verified scorecard) which can be found on the Santam website.
Our BBBEE unverified score at the end of 2011 shows Santam
maintaining its level 3 status by achieving a score of 82.1 out of
100. The focus for 2012 is to apply the same vigilance as in
- Santam invests well in excess of the target amount of 3% net
profit after tax stipulated in the dti Codes of Good Practice.
- At the end of 2011, R303 million (2010: R396 million) was
invested in targeted investments.
Managing impacts on the environment
- The results from our 2011 ClimateWise report, which summarises
the actions we have taken based on the six ClimateWise principles,
indicated that we have made improvements in terms of both
compliance and disclosure. We achieved a score of 85 points (out of
a possible 100) compared to 73 in 2010. Our research conducted in
the Eden district has been completed in 2011 and the findings were
launched at the Santam, UNEP FI and ClimateWise side event at
COP17. We intend to take these key learning points forward into
OUR PRIORITIES FOR 2012
- We will take the insights from the Eden project and implement
- We will increase our engagement with key stakeholders such as
local governments to promote collaborative risk management on the
ground. Our overall preferential procurement strategy is to source
mainly from level 4 and higher BBBEE suppliers. Our current focus
is on increasing the proportion of black-owned businesses and
especially black women-owned businesses we source from.
- Continue to embed SBIDI with the aim to improve our black
- Retain our top rating in the FIA Broker survey in Commercial
and Corporate lines and regain our top rating in the Personal lines
- Improve our employment equity score by increasing black
employees to 59% of total employee complement.
If you require more information on our sustainability
process, have any queries or if you simply wish to comment on the
effectiveness of our Sustainability Reporting, please contact:
Head: Integrated Sustainability
021 915 7289
The full 2011 Santam Sustainability Report is available
on our website at www.santam.co.za.
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