SHORT-TERM INSURANCE
Santam pays out R1.6 billion in lockdownrelated CBI claims
SOUTH Africa’s largest short-term insurer (STI), Santam, has paid R600 million to policyholders in addition to the R1 billion paid in interim relief to 2 500 policyholders in August last year, bringing to R1.6bn total contingent business interruption (CBI) payments to date, it said yesterday.
A number of the 2 500 clients who received the R1bn interim relief in August last year had subsequently received additional payments. Most of these beneficiaries were small, medium and micro enterprises in the hospitality, retail and leisure sectors.
This comes as the insurer faces off with Insurance Claims Africa (ICA) over at least 850 claims by businesses that have accused Santam of increasing unappropriated profits by more than 20 percent to a record R53.5bn, while suppressing the value of unpaid claims, which rose by more than 17 percent to a record high of R49.4bn last year.
Santam said it was making good progress in handling CBI claims and has made payments to about 60 percent of policyholders that had submitted claims.
It had received formulated claims from 1 851 policyholders, who represented 57 percent of the number of clients who previously indicated their intention to claim.
Final or interim payments had been made to 1 094 of the 1 851 clients that had submitted claims, while a total of 3 252 policyholders notified Santam of their intention to formulate and submit a claim. This represented 2 percent of the company’s commercial and corporate clients.
“The remaining 757 claims are going through the assessment and settlement process with loss adjusters. Earlier this year, Santam contracted more than 40 additional expert business interruption loss adjusters to strengthen its internal capacity and to enable the faster processing of claims,” it said yesterday.
Santam Group chief executive Lizé Lambrechts said they were committed to treating customers fairly and finalising the CBI claims as soon as possible.
“We urge our clients and intermediaries to furnish the relevant claims information that will enable us to conclude this process speedily,” she said.
STIs have been accused of making extraordinary profits out of the Covid19 lockdown by maintaining premiums at pre-pandemic levels, getting re-insurers to pick up the tab and stalling on insurance payouts, particularly to the hospitality and tourism sectors.
Research by ICA – conducted by Dr Roelof Botha, economic adviser to the Optimum Investment Group, and Keith Lockwood from the Gordon Institute of Business Science – revealed a disparity between the financial gains achieved over 2020 by STIs and their customers, who, because of the non-payment of claims, were desperate for any lifeline that would allow them to survive and retain thousands of jobs.
ICA chief executive Ryan Woolley said in a webinar that Santam, working through its lawyers at Norton Rose Fulbright, had attempted to avoid liability for large claims in its hospitality and leisure division.
The research found that, unlike long-term insurance, which experienced a decline of 39.4 percent in its current account income surplus, the STI segment recorded positive growth for virtually all of the key indicators of financial performance, with its current account income surplus increasing by 19.4 percent.
Santam argued there was a clear distinction between economic losses and insured losses. Yesterday, it said it was concerned that 43 percent, or 1 401, of the clients who initially registered their intention to submit a CBI claim have still not done so.
“Since January 2021, the company has communicated extensively with intermediaries and clients, urging them to submit their claims documentation. Santam has on numerous occasions extended the deadline for submission of claims information. The final deadline for affected policyholders to provide documentation in support of their claims is now August 31, 2021,” it said.
Santam said that, at a practical level, it had responded to clients who were mainly working from home and travelling shorter distances.