SIMON BROWN: I’m chatting now with Lizé Lambrechts, CEO of Santam. The business interruption insurance case was dismissed earlier today by the Supreme Court of Appeal [SCA]. Lizé, I appreciate the time this evening. To start, do you now, looking back with the benefit of hindsight, regret not paying and ultimately taking the case all the way to the Supreme Court of Appeal?
LIZÉ LAMBRECHTS: Simon, that’s a good question that many people have asked us and which we’ve done a lot of reflecting on. The reality is that this is not as simple as just saying, well, we should have paid earlier. It is really important for us and for our reinsurers who pick up a quite a big part of the bill to get certainty in terms of legal interpretation. It was clear that globally there was uncertainty around the legal interpretation here. We are very, very pleased now that we finally have the certainty, and very happy that we can start processing these claims.
But, just to put it in perspective, it’s not as if we have not paid anything to our clients. We paid a big amount in August last year already, without even asking for proof of losses from our clients. And we paid further relief or interim payments from January this year. So it really is now to just get over the final [hurdle], the last information from our clients and pay the final claims. We’ve already paid up over R2.1 billion of claims.
SIMON BROWN: That’s 2.1 billion. The numbers are just staggering. You could have gone to the Constitutional Court, but you’re saying you’re not going to. The R2.1 billion – how much more do you still have? I imagine the claims are all in now. Have you got a sense of ultimately what this business interruption is going to have cost you during the pandemic?
LIZÉ LAMBRECHTS: We really don’t know. We’ve been waiting for our clients to finalise their claims, most of our clients, even the clients where there was no further uncertainty on the wording. We are only now getting the final information to determine the quantum of claims. For some of our clients the money that we paid them in August last year was more through their loss, and we’re not asking for the money back. So it varies a lot between clients. It really is impossible for me to put the final number on it. We will only know that once we’ve processed the last claim.
SIMON BROWN: Is this a product that you will continue to offer? Pandemics are, hopefully, once-in-a-century type of event. Is this something you will continue to offer?
LIZÉ LAMBRECHTS: At the moment our reinsurers are definitely not comfortable with us offering cover for infectious and contagious diseases. So that’s a global event cover that is actually being removed. We do offer physical business interruption, but not for contagious diseases.
SIMON BROWN: Okay. I take you on that. A last point. The insurance industry has taken a bit of a hit during this process – not just yourselves but more broadly. Is there something which you in a sense look at and wonder about reputation. Insurance is often a grudge purchase. We don’t like to pay for it and when we need it we definitely want it. Is this something which the industry looks at and thinks: how do we make it more comfortable, more palatable for clients?
LIZÉ LAMBRECHTS: I think that’s a very good question that we are really thinking about a lot, and always do. But in the end I think it is about offering a good value proposition for our clients, which I believe Santam does offer generally to all our clients. The contingent business interruption was a very small part of our client base. We offer a good value proposition and, I suppose, do the other insurers. And that really for the industry is important for us to offer a good value proposition and to pay claims when we have valid claims. The proof of the pudding will be in that.
SIMON BROWN: As I said, it is not to dismiss an industry but it is typically a bit of a grudge purchase. But when we need it, we are very glad that we do have it.
Lizé Lambrechts, CEO of Santam, [has been] talking around that process that in a sense has resolved itself fairly quickly, and today the Supreme Court of Appeal in Bloemfontein dismissed. Santam could have gone further and sent it to the Constitutional Court, but the CEO there has said nope, they’re going to start processing. Those monies will start flowing.
I’m chatting now to Ryan Woolley, CEO of Insurance Claims Africa. Ryan, I’m not sure how much of that you heard. I imagine this is a relief for you and your team – in two parts. One is that it’s over, and Santam was saying that they will start paying. The second is that you got the victory which you obviously felt your clients deserved.
RYAN WOOLLEY: Absolutely. I think yes on both fronts. The fact that we’ve helped and are going to help so many families that are impacted by this is tremendous. These hospitality businesses feed communities and it’s a reward for such a long, hard fight. I think that that’s where we’re just grateful for the SCA. I think that this is a reportable case and it will be a judgment that gets studied.
There were some scathing remarks in there about insurers’ conduct, the way that they handled themselves, and I hope that insurers take note of that and make a change.
SIMON BROWN: I’ll run a quote here. To be honest, I wasn’t sure if it was yours or the judgment, but “they chose to abandon their customers in the darkest time of need,” also “not only impacted the reputation of the short-term insurance companies, but also insurance as an overall category”. I was chatting a moment ago – it’s a grudge purchase when I buy insurance, [so] at least be there when I need it. It’s flabbergasting.
RYAN WOOLLEY: Well, it’s cost them billions because at the time our clients needed the money they went there. And at that time we were very negotiable, and we put forward really decent settlements that we thought were good compromises that our clients had bought into, and we were scoffed at. We were told no, and they listened to their attorneys.
Santam is a company we’ve always had the utmost respect for. They’ve always been at the forefront of insurers. I think over the last 18 months they’ve just lost their way a bit. I’m hopeful that those comments and the winds of change that we are seeing are something that can be carried forward. But we’re seeing similar issues coming out with all our Sasria claims where these underlying insurers’ administration’s not up to scratch, so they are causing delays in Sasria payment claims. It’s frustrating, and unfortunately the client keeps on bearing the brunt of it.
SIMON BROWN: As you said, the point from right up front, the hospitality industry, even if it’s just a small little BnB, a Mom-and-Pop BnB, there’s still a chain of employment behind there, and these aren’t always the giant companies that can sort of manage their cashflow. This is real.
Ryan Wooley, CEO of Insurance Claims Africa, I appreciate your time.