Short-term insurer Santam is making progress in handling contingent business interruption (CBI) claims, with payments made to about 60% of policyholders that have submitted claims, the company said in an update on July 15.

Since January, it has paid R600-million to policyholders in addition to the R1-billion paid in interim relief to 2 500 policy holders in August 2020, bringing total CBI payments to date to R1.6-billion.

A number of the 2 500 clients who received funds as part of the R1-billion interim relief in August 2020 have subsequently received additional payments, the insurer said.

Most of these beneficiaries were small, medium-sized and microenterprises in the hospitality, retail and leisure sectors, the company points out.

A total of 3 252 policyholders notified Santam of their intention to formulate and submit a claim. This represents 2% of the company’s commercial and corporate clients.

To date, Santam has received formulated claims from 1 851 policyholders, who represent 57% of the number of clients who previously indicated their intentions to claim.

Final or interim payments have been made to 1 094 of the 1 851 clients that have submitted claims.

The remaining 757 claims are currently 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, the company indicates.

All claims where documents have been submitted have been or are currently being attended to. However, Santam Group CEO Lizé Lambrechts noted that the company was concerned that 43% (1 401) of the clients who initially registered their intention to submit a CBI claim had still not done so.

She explained that since January, the company had communicated extensively with intermediaries and clients, urging them to submit their claims documentation.

Santam had, on numerous occasions, extended the deadline for submission of claims information, she added. The final deadline for affected policyholders to provide documentation in support of their claims was now August 31.

Santam has simplified the process and put a fast-track claims process in place, Lambrechts noted.

She said that the company had made considerable efforts to simplify the claims process for businesses where the sum insured is less or equal to R10-million yearly and the indemnity period is not greater than nine months.  This represents the majority of clients.

For these clients, Santam implemented a fast-track process from January 28 and provided a basic spreadsheet of two pages that an accountant or bookkeeper can complete.

In February, Santam further simplified the requirement for clients to provide proof of the occurrence of Covid-19 within a certain radius of their premises. The insurer secured an agreement with the National Institute of Communicable Diseases to use its geolocation data for this purpose.

Santam believes the claims documentation requested is fairly standard for commercial entities, as it includes financial statements that would ordinarily be used for tax purposes, Lambrechts says.

FINANCIAL PERFORMANCE

In line with the comments that have been made by industry body the South African Insurance Association, Santam said it disagrees with conclusions that the insurance industry has unduly benefited from the pandemic and that it finds the recently published research misleading and inaccurate in its generalisations.

The company pointed out that Santam had provided R3-billion for net CBI claims in its 2020 financial results. The company said this showed its commitment to paying all valid claims.

For the year ended December 31, 2020, Santam’s income attributable to ordinary shareholders decreased by 75% to R542-million from the previous year.

Headline earnings dropped by 47% and no interim or final dividend was declared in the 2020 financial year.

The economic capital coverage ratio of the group at period-end was 161%, slightly above the midpoint of the capital target range of 150% to 170%.

The net underwriting margin achieved by Santam Conventional Insurance in 2020 was 2.5%, well below the target range of 4% to 8% and the 5 year average margin of 6.4%.

Also Santam settled claims amounting to R21-billion in 2020, which the company highlights was the highest in its history.

UNREST CLAIMS

Meanwhile, Santam also provided comment on unrest-related insurance claims, following recent events in the country.

It noted that unrest-related claims of this nature were typically covered by State-owned insurance company the South African Special Risks Insurance Association (Sasria), which was specifically set up to cover riots, strikes and related acts of public disorder.

For a client to claim for such events under their policy, they should have selected Sasria cover under their insurance policy with their insurer, the company noted.

By close of business on July 14, Santam had registered 21 motor and 167 non-motor Sasria claims.

At this stage, the company said it was unable to provide a monetary amount for these claims as the loss adjustors would still have to determine the extent of the loss for each claim.

The company said all Santam clients with Sasria cover would have to register claims with their intermediaries or directly with Santam. 

Santam was monitoring the situation closely and was engaging with Sasria to ensure that these claims were handled as quickly as possible.

Santam would assist intermediaries and clients with channelling claims to Sasria, it said.