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The impact of having none of SA’s government buildings insured

Insurance Claims Africa CEO Ryan Woolley suggests that building something more modern and user-friendly [than parliament] in terms of how Covid has taught us to operate would be more practical.

FIFI PETERS: I think we were all surprised to learn that parliament’s building, which was recently damaged in a fire, is not insured. There’ve been a number of estimates on the cost of the damage. The last number that I saw was around R221 million. But the rebuild could be significantly higher.

To tell us more about why government’s buildings are not insured, why it’s too expensive for government to do so, we are joined by Ryan Woolley, who is the CEO of Insurance Claims Africa. Ryan, thanks so much for joining the Market Update. I was certainly surprised to learn that this is not part of government’s risk-assessment plan in terms of insuring its buildings, because it says it’s too expensive and it’s something that is dealt with differently. But just help us understand the cost implications of ensuring government’s portfolio.

RYAN WOOLLEY: Thanks Fifi, and great to be on the show again. I think that there are probably far more qualified individuals to talk on the subject in terms of the impact on the fiscus and the reasons around why government chose not to insure these buildings.

But to give you some insight, the Department of Public Works made the decision, and clearly they did it based on the cost benefits versus the benefit of the insurance. They’ve obviously done an assessment to see whether there’s redundancy in terms of their buildings and whether they actually needed to ensure strategic assets.

The government does insure strategic assets through the municipalities, and we’ve dealt with several of their claims, or I personally have in the past. I know that state-owned enterprises like Transnet and Eskom have got insurance programmes in place, and some of the universities and the schools [have insurance programmes].

I think it was a strategic decision that they made and the insurance market is very tough at the moment. It’s a very difficult or ‘hard market’, as they call it. Perhaps yes, for the programme, for the risk that was there versus the premium payable, it was too high.

FIFI PETERS: The strategic decision – I’m just wondering if it is one that is due for review. Especially if we look at a lot of our government buildings, they are old, which also does present a whole host of risks in that regard by way of [their] age. We’re living in an environment whereby there are climate-related risks throughout in terms of adverse weather that cannot be prepared for, not to mention this climate that we’re living in of sabotage in this country, where we have seen government infrastructure being sabotaged – from what’s happening with rail to now parliament or buildings thereof. So I’m just wondering if it’s something that should be reviewed and, if so, how government could go about doing it in a way that we could afford.

RYAN WOOLLEY: I think that you’re correct. I think it is something that should be reviewed for certain strategic buildings like parliament, where for a rebuild it would be valuable to have an insurer that was funding it and to put that asset back in a workable state, maybe not in the same format. It’s obviously archaic. Maybe something more modern and more user-friendly in terms of how Covid has taught us to operate. That’s all potential.

The way that I would probably think that government would go would be to have a chat with someone like Cedric Masondo from Sasria [South African Special Risk Insurance Association], who’s done an absolutely incredible job. I know he’s leaving Sasria to join PSG, but he’s leaving Sasria and the country with his head held high in terms of what he’s delivered. So I think that’s probably a conversation.

Maybe Sasria could be the vehicle, a division thereof, to look after these key strategic assets and find a reinsurance programme for them.

FIFI PETERS: But while we have to deal with the present reality, we are seeing a lot of reports that this money that might be needed or will be needed for the rebuild is likely to come from taxpayers. What’s your take on that, and what avenue do you think that this government will use to try and recoup funds?

RYAN WOOLLEY: Well, I think that the reality is, if it’s not insured, yes, it would have to come from the taxpayer. But I think that government could be clever about how they rebuild it. They don’t need to rebuild it exactly as it was. I think that they can try and find the best possible way to reinstate the building. It’s difficult. Yes, it will probably come from taxpayers but I’m sure that they’ll just have to find somewhere in the fiscus to fund it.

FIFI PETERS: Ryan, while we have you on the line – just to discuss a separate matter – how are the claims and payments process of insurance related to other matters, the private-sector matters regarding Covid-19 and the whole business-interruption [matter] going?

RYAN WOOLLEY: We are making very steady progress there. I think that we are almost done with the majority of our clients. We are starting to see Santam with Rowan de Villiers and Andrew Coutts coming through. We are seeing a glimmer of the Santam of old, and that’s great to see. Those claims have been settled quite quickly. We’ve still got a few skirmishes out there. Guardrisk is being sticky on a few claims and we’ve got Factory & Industrial, who just can’t seem to accept that they’ve lost, and they are a Lloyds-backed syndicate. Those are the difficulties that we are having. We were having a skirmish with I think Hollard in Namibia.

But all the other insurers – Old Mutual’s been incredible, Hollard South Africa has been exceptional, and Santam is starting to toe the line. Obviously we mustn’t forget the guys that came out and paid at the beginning of the day, OUTsurance.

So yes, we are making very steady progress. I would hope that in the next three months our hospitality clients would be paid.

There is still an ongoing battle probably with our commercial matters, with the corporates, and then also with the loss of rent which certain landlords are claiming for.

FIFI PETERS: All right. We look forward to speaking to you a little bit further about those matters as they develop, Ryan, but we’ll leave it there for now. Thanks so much for your time. Ryan Woolley is the CEO of Insurance Claims Africa.

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Self insurance can make sense.

Many decades ago a flying club took the leap, with members paying what they would have paid into a common fund. Very nervous for a short while. After a while they reduced member contributions and relied on investment growth. After another while their fund started distributing surpluses back to members.

What makes no sense is not complying with the fire safety processes that the insured people have to.

End of comments.

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