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Business Daily : October 14th 2013
28 BUSINESS DAILY | Monday October 14, 2013 Last week’s article on why insurers should consider ex gratia payment for Westgate Mall victims generated a lot of comments from readers, with those from local insurers terming the article as populist and ill-timed. Nevertheless, most of the readers shared the position that insurers need to come to the aid of policyholders involved in the recent attack. Interestingly, some local insurers inti- mated of there being discussions to consid- er policyholders involved in the Westgate attack for ex gratia payment. I gathered that that most of the readers, though displeased with local insurers, held misconceptions on how to manage their insurance covers to safeguardbenefits. Below are tips on how to safeguard your benefits: Choose a policy that has benefits that most closely fit your needs Insurance is a risk management service that comes at a cost. The number of risks is countless and the magnitudes unimagina- ble. Thus insurance companies have devel- oped various products targeting different kind of risks. However, you do not need to take all the insurance covers on offer to stay risk free; that would be costly. Being a part of finan- cial planning, insurance as a risk transfer mechanism should not take a huge propor- tion of one’s income. To balance limited resources and the need to have adequate insurance coverage, priority guides what kind of cover should come first and which should trail. With limited resources, only top pri- ority risks should be covered. The rest ei- ther should come as riders or as part of a package. Your priority list, therefore, should guide you to seek for covers with bundled benefits. Alternatively, you can take up a cover for your main priority but add riders to cater for less important ones. For instance, by signing up for acci- dental death cover only, you limit your coverage and benefits in case of a death resulting from other causes such as sick- ness. To enjoy more benefits and enhance your coverage at a premium rate, take up a whole life insurance, with accidental dis- ability riders or take a personal accident cover with death benefits. Review your insurance needs Since you signed up for your current insurance cover several years ago, have you ever reviewed your insurance needs to adjust your cover? This is where most policyholders fail. You need to review your insurance needs regularly. If you experience a ma- terial change that requires an upward in- crease on the amount of insurance cover you need — like the birth of a child or mar- riage — you need to review your needs to determine what amount of insurance cover would be sufficient. Sometimes, you are provided with a group cover by your employer. In such cases consider a separate in- dividual cover to protect your family from any financial loss that could result once you are no longer under the service of your employer. Also, review your premium rates and the size of your in- surance cover to ensure it gives you sufficient coverage as well as suiting your pocket. Be sure you can handle premium payments Can you afford the initial premium? If the premium increases later and you still need insurance, can you still afford it? If you find the premium rates slightly high above what you can afford, approach your insurance company and review by lowering the size of your cover slightly to make the premiums affordable. If the frequency of premium payment is not convenient due to either delay in salary payment or an irregular income, also contact your insurer for a suitable premium frequency. Do not terminate policy without thorough consideration Most of the readers who commented on the article intimated that they would consider terminating their insurance policy if local insurers fail to pay ex gratia pay- ments to some of the victims of the Westgate attack. Before you replace your cov- er, hold on your current policy until you get the new one. This is because sometimes due to advancement in age, you may fall out the category of those in- surable and, therefore, expose yourself to risk. Likewise, if your health has deteriorated, it would be more costly to secure a new cover that would provide you with a similar amount of coverage. Lastly, if the policy you currently hold no longer meets your needs, you may not have to replace it. You might be able to change your policy or add to it to get the coverage or benefits you now want. Mr Opiyo is a training manager and coach with Tolerance Employee Financial Advi- sors Limited. Email: isaiah.opiyo@tolera nceadvisors.com RISK Choose a policy that best matches your needs, review your cover regularlyas your needs change and take a cover you can afford You should safegua≥d benefits p≥ovided in an insu≥ance cove≥ Your priority list should guide you to seek covers with bundled benefits. Or you can take up a cover for your main priority, but add riders to cater for less important areas. FILE FINANCE ISAIAH OPIYO Life: Personal Finance You do not need to take all the insu≥ance cove≥s on offe≥ to stay ≥isk f≥ee; that would be costly BY MARKUS LORENZ We hear a lot these days about how big companies fail to in- novate, but the truth is more complicated. A lot of companies excel at developing better products, yet these improvements are incremental. They’re not the breakthrough offerings that can jump-start growth and profitability. And companies’ suc- cess at cranking out these enhancements hampers them from getting better at the radical projects. If you closely analyse unsuccessful attempts at developing breakthrough products, perhaps the most common trouble you find is not one of the usual suspects, such as lack of top- management commitment. Instead, you’ll see that efficiency- minded project managers are inadvertently discouraging the explorations — and therefore the learning — that make radi- cal ideas practical. There’s a history behind this problem. Frustrated by ineffi- cient R&D, companies in the 1980s started applying standard project-management techniques such as phase-gates and key performance indicators. Textbooks on innovation advised them to allow some flex- ibility in the phase-gates. Yet control-minded project manag- ers have tended to chart strongly linear paths that discourage distractions — depriving their teams of the agility and open- ness needed for new thinking. As development teams became more productive and their initiatives more pre- dictable, incremental improvements soared, project managers got promoted — and radical innovation declined. Companies soon began spending less and less time on break- through ideas. At Bos- ton Consulting Group, we’ve found that radi- cal projects nowadays account for roughly 10 per cent of an average compa- ny’s innovation portfolio, down from twice that in the early 1990s. The lesson is clear. It’s not enough for executives to proclaim their commitment to innovation, develop an innovation mind- set, or even put more money into breakthroughs. Companies also need to make changes at the ground level. They can start by treating radical projects differently, but it isn’t enough to just let these teams loose. Without some discipline, initiatives will become money pits, or nervous project managers will fall back on their conventional habits of control. The solution is for project managers to devote less effort to predicting and directing innovation, and more effort to man- aging the inevitable uncertainties. They should worry less about the schedule and more about ways to reduce risk — by partnering with outside companies, say, or getting advance commitments from customers. Or they can invest in multiple options for the marketplace, rather than rushing through a single big bet. They should certainly expand the key performance indica- tors to include vital insights on technology or customers, so that a worthwhile project can keep going even if it is far from a serv- iceable prototype. But like venture firms, they need to terminate projects that exceed a predetermined “affordable loss.” Lorenz is a partner and managing director in the Munich office of the Boston Consulting Group. Good manage≥s can avoid stifling g≥eat innovations Managers need to spend more time managing uncertainties instead of directing innovation.
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