Santam is investigating possibility of becoming a fully digital insurer

Santam, SA’s largest short-term insurer, is looking at becoming a fully digital insurer as Covid-19 creates challenges and opportunities after a year of court battles over contingent business interruption (CBI) claims.

“We are looking at end-toend digital insurance,” Lizé Lambrechts, CEO of Santam, told

Business Day. “It’s in its infancy in SA but we do think in time it may become a big distribution channel and it is something we are investing in.”

Lambrechts said end-to-end digitalisation would involve doing all business online. She said Santam will not disintermediate brokers but would help facilitate the digitalisation of the broker model as well. “We’ve got an app for clients and are putting more and more functionality in it,” said Lambrechts.

“We have a broker portal that we use for digital interaction with brokers and we’re putting more functionality in that, not only for brokers to interact with us but also to help them interact with clients.”

The group, which owns the MiWay, Centriq and Aegis insurance brands, said its performance in the year to endDecember was “acceptable” given the pandemic, despite a 47% drop in headline earnings to R1.2bn. Basic earnings per share fell 75% to 491c a share in the year period, from 1,190c a share previously.

“It was a difficult year, but diversifying helped us perform reasonably [in] difficult circumstances,” said Hennie Nel, Santam’s CFO. “We are looking at ways to get products out in many more digital channels and so as to look at ways to find new growth opportunities. We still support the brokers and help them find ways to get products to clients in a different way.”

Santam held on to its dividend for the year, saying clients with businesses disrupted by Covid-19 could still be owed as much as R5.3bn, its best estimate for CBI claims, which cover nonphysical business damage, for the year. That is against a reinsurance asset of R3.3bn.

Santam was forced to raise its CBI claims provisions after the Western Cape High Court’s ruling against it in November, in a case involving Ma-Afrika Hotels and Stellenbosch Kitchen. A full bench of the court ordered Santam to pay these clients for losses stemming from Covid-19 business interruption for the full policy period of 18 months, without limitation. Santam, had wanted to limit the indemnity period to three months. It was ordered to pay costs.

Santam wants clarity on the indemnity period and was granted leave to appeal in February. Lambrechts said Santam is approaching the Supreme Court of Appeal, and will try to get a hearing “as quickly as possible”.

She said Santam’s challenge is related not just to whether it is required to provide cover for three months or 18 months, but also has to do with the degree to which it is liable for physical damage as opposed to nonphysical or contingent liability. Lambrechts said CBI claims affected about 4,000 clients of a client base of about 1-million.

Santam’s share price rose 4.33% to R259 on Thursday, the largest one-day gain since early November 2020.