Santam, SA’s largest short-term insurer, has warned that the industry is contending with a spike in hijackings and theft of high-value vehicles, which is pushing claims in the high end of the market.
Santam’s CEO, Tavaziva Madzinga, said the group is keeping a close eye on the increase in crime, which he says has become a systemic risk.
“According to the 2022/2023 Santam Insurance Barometer Report, SA is seeing a big shift in vehicle crime, with Santam’s commercial and personal lines claims experience confirming a significant jump in high-value vehicle hijackings and thefts,” Madzinga said.
“Through our ongoing tracking of emerging risk trends, we were able to implement a number of corrective actions to ensure that these high-value vehicles remain insurable.”
Santam’s data indicates that there has been a shift away from older, low-value vehicles with limited security requirements to more expensive double cabs and SUVs.
Criminals have also resorted to more creative means to help themselves to peoples vehicles.
The Insurance Crime Bureau recently issued a vehicle recall scam alert for owners of high-value cars. This is after criminals pose as representatives of a car manufacturer and convince owners their vehicle requires urgent attention.
Madzinga also flagged the rise in natural disasters as changing the industry and causing significant increases in reinsurance premiums, warning that the volatility in the reinsurance market was likely to become the “new normal”.
He said that to ensure sustained insurability, significant focus and financial resources by the government were required to turn things around, as well as a collaborative effort by the private and public sector
“Each of these events revealed an additional layer of risk in that SA’s infrastructure degradation increases the extent and severity of flood-related losses. This is a major challenge that will have severe consequences for not only the insurance industry, but the businesses and communities that rely on them,” Madzinga said.
“Worsening road conditions, firefighting capabilities, sewerage systems, and flood water drainage — to name a few — are becoming increasingly vulnerable to disasters. Damages following disasters are extensive, the cost of repairs exorbitant and downtime is lengthy. Most importantly, infrastructure that is not structurally sound also has an impact on the number of lives that are lost in a disaster.”
Santam has been deploying geocoding to minimise losses stemming from adverse weather conditions that have become frequent.
Geocoding provides a set of co-ordinates for each address, with the goal of allowing an insurer to understand the location of each building that is being insured and its proximity to various peril zones.
The technology also enables experts to map and analyse climate data to identify areas that are particularly susceptible to climate change effects.
Santam uses the information it gathers from the geocoding process to take mitigating actions, to either exclude policies or to work with property developers and town planners on where it is best to build.
In July, the Prudential Authority published draft guidance notes for banks and insurers on climate-related risks and disclosures. The watchdog has proposed that banks and insurers ensure that climate-related risks are identified and accounted for in compliance risk-management frameworks.
Madzinga said the group, which has a market share of more than 20%, is also paying close attention to geopolitics and conflicts around the world to better understand how they affect the industry.
“Entering 2023, Santam added global geopolitical developments to its monitoring agenda, with a focus on determining how the Brics expansion, China-US trade relations, and the Russia-Ukraine War will affect the global reinsurance market,” he said.
“More recently, the resurgence of Middle East conflict has also become a focus. There are concerns that global supply chains will be further affected by these tensions, contributing to significant claims inflation, with the resultant cost of repairs further compromising the affordability of insurance in the years to come.”
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