The policy is administered by way of a experience account.
Clients receives monthly statements reflect all the movements in the account.
The balance in the account is calculated as follows: Premium – admin fee – claims + no-claim bonuses = balance.
No- Claim bonus (Notional interest)
No-claim bonuses are allocated on a monthly basis to the experience account of the policy. Notional interest is calculated on the positive cash balance of the experience account, at a rate determined by Corporate Guarantee, according to market conditions. The rate of bonus may vary according to movements in the prime interest rate and other market factors and Corporate Guarantee will adjust the rate if market conditions demand it. The no-claim bonus will not be forfeited by the policy holder, even if claims were made against the experience account – it is always calculated on the remaining balance in the account. During the term of the policy the no-claim bonus is not paid directly to the policy holder, but is allocated to the experience account to increase the insured value. The notional interest is paid to the policy holder on expiry or cancellation of the policy along with the balance in the insurance account.
Payment of Premiums
Premiums can be paid monthly, quarterly, half-yearly, annually, as single premiums or on a ad-hoc basis. The contractual obligation between the policy holder and Corporate Guarantee starts in the month when the policy is issued and not in the month in which the premium is due. The policy contract is proof of the expense and not the invoice.
The amount of cover that is bought must be in relation to the risks of the policy holder. Without insurable risk for the policy holder, the contract cannot qualify as an insurance policy. Corporate Guarantee will, through the risk analysis model, assist the policy holder to identify and correctly quantify all the risks that that can possibly be insured by the policy holder.
All premiums that are paid to the insurance policy is a tax deductible expense, just like the premiums that are paid to a conventional insurance policy, if it is used for business purposes (according to the provisions of Section 11 (a) of the Income Tax Act). It is important that every potential policy holder familiarises himself with the applicable tax laws regarding the payment of the premiums, the tax implications and deductibility thereof.
VAT is applicable on all premiums and as such provision must be made for the payment of VAT. A tax invoice will be provided to the policy holder upon payment of the premium. If a policy holder is registered as a VAT vendor, then the VAT can be claimed back and treated in the normal process as prescribed by South African Revenue Services. Please note that VAT can only be claimed once the premiums are in fact paid. In the event of monthly premiums, Corporate Guarantee will issue a monthly tax invoice to the policy holder as and when the premiums are received by Corporate Guarantee. Monthly premiums are payable in advance.
Policy indemnity limit (PIL)
The policy indemnity limit is the degree of risk transfer above the premium amount and/or the level of the experience account, i.e. the maximum amount to which the policy holder may claim under the policy. The policy indemnity limit is normally calculated at a rate of 20%.
For example, if a policy holder buys a premium of R1million, then the policy indemnity limit is R1,2 million. A claim of R1,2 million can be considered if the insured event takes place. The rate of indemnity limit can be changed to suit the unique need of each client.
A once-off, initial administration fee is charged. The level of fee is determined by the policy structure and is only levied on new premiums. No further fees will be charged for the duration of the policy, save on new premiums received.
Payment of claims
The policy holder can claim against the policy for risks that are specified in the policy contract. Claims are limited to the amount of the policy indemnity limit. All claims that are less than the balance of the experience account are paid within 24 hours. Corporate Guarantee reserves the right to appoint an assessor to evaluate claims that are in excess of the balance of the experience account. To submit a claim, we require a signed claim form, accompanied by the following proof of the loss:
• Affidavit by the owner
• Photo’s of the damage
• Police case number
• Declaration form auditor/accountant
The policy holder, may at any time cancel the policy. If the experience account is positive, then the balance will be paid to the policy holder within 30 days after receipt of the written cancellation notice.
The ART policy is an asset and can, like any other asset, be pledged as surety when finance is needed. Corporate Guarantee will, at the request of the owner of the policy, present it as surety for a loan or performance guarantee to any financial institution. Our advisors will assist you with favourable options in this regards and advise you on the best possible option.
Our policy document and risk perils are similar to the Standard Business Policy Guidelines commonly used in the industry. We can therefore insure every type of risk that a conventional insurer can insure as well as those risks that are generally seen as uninsurable.