The SA Insurance Association (SAIA) has dismissed claims the industry is ignoring the needs of clients during the pandemic, also warning against drawing overarching conclusions about profits in an industry grappling with the complex fallout from Covid-19.
Responding to a research report earlier this week claiming the industry was booking record profits even as they delayed business interruption payments, SAIA said its members were considering the needs of everyone involved in the industry, parts of which it acknowledged may be faring better than others.
Insurance Claims Africa (ICA), the public loss adjuster leading the fight against insurers over Covid-19 business interruption claims, unveiled research earlier this week arguing there was a vast disparity between the financial gains earned by short-term insurers and the struggles of policyholders.
Citing research by independent economist Roelof Botha and Keith Lockwood from the Gordon Institute of Business Science, ICA argued that “insurers are ignoring their clients extreme financial anguish and are underestimating the level of dissatisfaction and loss of trust from the delays in settlement”.
SAIA said it would consider a detailed response to the report after scrutinising it, but said the report comes “during an uncertain time for the industry”, and needs to be assessed and benchmarked against both events prior to the pandemic, as well as in the context of broader economic conditions.
SAIA said some areas of life-insurance may have fared better than others, for example vehicle claims dropping off sharply, but others remain hard hit, such as for the travel, engineering and maritime industries.
The industry group said large numbers of claims have been and are being paid by insurers. In a minority of cases, claims are complex and in certain cases, such as some of those involving business interruption claims, the industry was still waiting for legal clarity from the courts, it said.
The SA insurance industry has suffered a series of court losses related to Covid-19 business interruption claims, although Santam has appealed an unfavourable judgment from 2020, which is set to be heard in August.
SA's largest short-term insurer Santam had to raise its contingent business interruption provisions after the high court ruled 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.
Santam has said it wants legal clarity, and is considering the needs of the industry, including reinsurers — which are companies that provide financial protection to insurers from major claim events. ICA meanwhile has accused insurers of “adopting long, overly pedantic processes, and doing everything in their power, it seems, to delay payments”.
SAIA is the representative body of the nonlife insurance industry, comprising all categories of nonlife insurers, including reinsurers.
Efforts by the industry during the pandemic have included premium holidays, premium discounts for policyholders, fast-tracking of claim processes and limiting the effects on staff, where possible, by protecting job losses, SAIA said on Friday.
Botha’s research shows that total premium income received by the short-term insurance industry rose to a record high of R130.5bn in 2020, resulting in unappropriated profits for the industry increasing more than 20% to a new record of R53.5bn. The total assets of the short-term insurance industry also increased 12% in 2020 to a record R220bn.
With Garth Theunissen
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