SAIA pours cold water on 'super profits' claims

Johannesburg - The South African Insurance Association (SAIA) has refuted allegations contained in a research report compiled by Optimum Investments Group Economic Advisor, Roelof Botha on behalf of Insurance Claims Africa (ICA) published on 6 July 2021 fingering its members as simply walking away into the sunset with super-profits. 

The association’s response, through a statement, rejects the assertions made by ICA’s CEO Ryan Woolley and the group’s chairman Mike Gaines during a briefing update on the claims debacle where the two gentlemen backed up their ‘super profits’ condemnation against non-life insurers by highlighting new independent research undertaken by Botha, working together with Keith Lockwood from the Gordon Institute of Business Science.

In a statement, issued on 9 July SAIA argues that its members in the non-life insurance industry are committed to supporting its employees, clients, service providers, and the public to assist and alleviate the hardships caused by the Covid-19 pandemic.

The association said these have included among others providing premium holidays, premium discounts for policyholders, fast-tracked claim processes and limiting the impact on staff, where possible, by protecting job losses.

“It is therefore manifestly incorrect to state that the non-life insurance industry has been ignoring its clients' plight and failing or delaying payments. The non-life insurance sector is a complex and broad industry spanning many sectors.” 

In a statement following the briefing on Monday, Woolley stated that “it was clear from this new research that the short-term insurance industry earned record profits during the pandemic and has no reason to further delay settlement of all outstanding Covid-19 business interruption claims.  

“The gross inequity of the situation is blatantly prejudicial to claimants who are still awaiting settlement more than one year after the start of the pandemic. We believe that insurers are ignoring their clients’ extreme financial anguish and are underestimating the level of dissatisfaction and loss of trust from the delays in settlement,” he added.

SAIA does however acknowledge that certain non-life insurance classes of insurance lines might have performed better than others during the pandemic, highlighting vehicle insurance claims which declined because of various lockdown regulations such as the curfew. While this might have been the case, the association also highlighted that other insurance lines have not been that lucky, but were hard hit, like the credit and trade credit, travel, engineering, and marine insurance sectors. This may mean that the hard-hit business lines were picked up by those that did relatively well, a simple business principle.

The bone of contention should not be how much the non-life insurers have made, but rather the pace at which the claims are processed. In a statement released by SAIA when the legal certainty was announced, the organisation and its members agreed on the way forward, that the claims were to be paid. However, these were to be looked at on a case-by-case basis, and obviously, it would be rather naïve to believe that thousands of these claims would have all been paid out in a space of six months. 

In its latest statement, SAIA states that: “A large number of claims have been and are being paid by insurers.  In a minority of cases, claims are complex and in certain cases, such as some of those involving contingent business interruption (CBI) claims, still require legal certainty in respect of indemnity periods. In the interim those insurers with exposure to CBI claims have either settled in full or made interim pay-outs to those policyholders affected. Insurers also have to take into account the terms and conditions of their reinsurance agreements to ensure they are supported by reinsurers, who require this legal certainty.

“It is against this context, the recent research commissioned by Insurance Claims Africa during an uncertain time for the industry, needs to be assessed and benchmarked against events prior to the pandemic and factor in broader macro-economic conditions.”

The association said it encourages its members to, in all cases, “expedite and settle claims where possible, while recognising that they also have a duty to properly assess and determine pay-outs that protect all their policyholder’s interests”.