FIFI PETERS: Last week you will remember that research from Insurance Claims Africa revealed that the short-term insurance industry made record profits in 2020, while delaying payments to businesses impacted by Covid-19 lockdowns. But the industry body representing insurers says that its members are not ignoring clients, nor are they using stalling tactics to settle claims.
To set the record straight I’m joined by Viviene Pearson, who is the CEO of the South African Insurance Association. Viviene, thanks so much for your time. Just as a starting point, SAIA has dismissed the research done by Insurance Claims Africa. Just which part of the research don’t you agree with?
VIVIENE PEARSON: Thank you, Fifi. Good evening, and good evening to your listeners as well. I wouldn’t say we dismissed the report. We took note of the report and we received the full report today, so we are busy studying it.
What I can say is that we don’t agree with some of the assumptions of the conclusions drawn from the figures that were used. Would you like me to go into a little bit of detail there?
FIFI PETERS: Please feel free.
VIVIENE PEARSON: Firstly, we really do not agree that the non-life insurance industry has been ignoring its clients’ plights and challenges, and failing (to pay) or delaying payments. So we do not agree with that, and I can go into a little bit of detail there. The industry has been paying a lot of claims and there are some complex claims that we can talk about a little bit later, and the reasons for that.
In terms of the super-profits, when profit is ‘super’ or not is a question. And then we do acknowledge that some of the insurance business classes have done very well, unexpectedly so. It was a very uncertain year. One example is motor-insurance claims that were impacted positively from an insurance point of view. There have been some profits there.
However, we are looking here in terms of the report – a big figure for the whole industry. So I do need to say that some business classes have done well, others have really, really struggled – such as credit and trade credit, travel, engineering and marine insurance business lines, for example. So it is difficult to look at the big picture without looking at the smaller pictures as well.
FIFI PETERS: Okay. Let’s get into that smaller picture then, Viviene, just highlighting some of the areas which you have flagged. You say that it’s not true that the short-term insurers specifically are delaying payments here. So how much has been paid to claimants? And on the other side of that question, the outstanding payments – what’s preventing a speedy resolution there?
VIVIENE PEARSON: All right. If we look at the numbers that were actually in the report, you will note that the claims paid in 2020 – R75.4 billion. We are talking about all sorts of claims, the overall figure. In terms of claims not being paid, there are reasons for those. In some cases during 2020 there were all sorts of restrictions. For example, for motor claims I wouldn’t say there were a lot of delays there, but there were some delays in terms of getting the parts and so on, because a lot of those industries were (classified as) non-essential industries.
And I think we’re talking about delaying claims. If you look at this report, they are specifically talking about contingent business-interruption claims which in some cases are very, very complex. Our members have been paying business-interruption claims.
They’ve paid a lot of claims. They have paid the biggest portion or the majority of those claims. Some of those claims are quite complex and some of those are also reliant on further legal certainty in terms of the indemnity period of 18 months.
There are some issues and some problems and challenges in this regard in terms of finalising the claims. It is not in the interest of the insurers or the policyholders to delay claims. It is not done for any reason other than awaiting outstanding information from policyholders, awaiting, in some specific and a minority of policies, certainty around the indemnity period, and so on.
FIFI PETERS: Just very briefly, to maybe try and move this forward, what can claimants do within their capacity to try and expedite claims being paid to them? How can they take ownership of this process to help some of your members settle what’s due to them?
VIVIENE PEARSON: Thank you for that question. We would really encourage policyholders to work with the insurers, and for those of them who have brokers and people who advise them to work with them, to make sure that the insurers receive the information that they need. This is the most important aspect of finalising these claims. There’s a lot of, of information that’s needed, especially with the larger complex claims where experts need to look at the information. And if they don’t have all the information it’s very, very difficult to reconcile all the information and to end up finding the correct quantum of the loss. So we would really encourage everybody to speak to the insurers and bring them the information.
FIFI PETERS: Thanks for that advice. And I hope that with that and those that do follow it we can have the situation being put to bed really quickly. You can imagine the number of companies that are relying on this, and also relying on it to stay open and keep people in their employ on their payroll.
But we’ll leave it there for now. Viviene Pearson is the CEO of the South African Insurance Association.