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Your clients cannot expect JIT insurance cover

15 July 2021 Gareth Stokes

The civil commotion playing out across South Africa over the past few days highlights the need for local businesses to not only have commercial non-life insurance cover in place; but for them to frequently assess the risk on cover and the sums insured. Most broker-assisted businesses will have little trouble in meeting the aforementioned requirements, which is just as well given initial estimates of between R7 and R10 billion in damages claims following this unrest. Unfortunately, the uninsured and those who took short cuts around initial policy onboarding or renewal processes, could run into trouble. The message from the country’s large insurers is clear: Insurance is not like manufacturing… And you cannot take a just in time (JIT) approach to placing assets on cover.

A comment for the uninsured or under insured

It is not uncommon for the uninsured, and even existing policyholders who feel they are inadequately insured, to respond to looming catastrophes by attempting to make last minute adjustments to their insurance portfolio. FAnews has seen a partner communication distributed by Bryte, in which the insurer addresses certain issues that stem from the widescale looting and vandalism that has taken place since Sunday, 11 July 2021. “We have been receiving numerous requests for new business cover, which we believe are related to the recent civil unrest in parts of South Africa,” writes Chris Grieve, the insurer’s Executive Head: Broker Distribution. “We are also seeing requests by existing customers to increase the sums insured or policy limits in the areas affected by the unrest activity”. 

Insurance stakeholders will not be surprised by what comes next… Bryte commented that while it remained committed to protecting client property already on cover, it had an obligation to all existing policyholders to make sure that that there was no selection against insurers, most notably Sasria SOC Limited. Sasria, as our readers know, is a unique domestic special risk insurer that covers losses due to civil commotion, public disorder, strikes, riots and terrorism. Anti-selection, in this context, can be described as an uninsured seeking cover, or an insured increasing cover, upon the realisation that the risks they face have dramatically increased or, in the worst case, the risk event has already occurred. The only way for an insurer to prevent anti-selection is for it to underwrite risks correctly. Failure to do so would be catastrophic. From 12 July, Bryte offered the following guidance re underlying non-Sasria policies: 

  • No new or increased covers and limits will be accepted without having been received, approved and accepted by Bryte in writing;
  • A request for a policy change should not be deemed to have been accepted by Bryte, unless this has been confirmed in writing;
  • New business will not be accepted if not previously quoted for, and accepted prior to 12 July 2021.
  • Any policy or section of cover previously cancelled will not be reinstated;
  • No cover will be increased where we follow on a co-insurance basis unless this was arranged and agreed prior to 12 July 2021 with all parties.
  • No sum insured increases will be allowed unless this was previously quoted for and agreed, and / or is due to a new acquisition previously quoted and agreed prior to 12 July 2021.
  • Additional items can be added to policies and this will include motor vehicles being replaced.
  • New vehicles will be considered and quoted on with cover incepting when accepted.
  • Vehicles without previous cover will not be accepted.
  • Quoted new business is also subject to a survey of the premises; but such surveys were suspended in unrest areas ;
  • Where we have previously quoted, we may request completion of our Risk Information Form, as an interim measure; and
  • Backdating of cover is obviously not permitted. 

Advice for the insured and their brokers

Sasria claims work slightly differently from mainstream insurance claims, in that an insurer acts as its mandated agent or intermediary. “For partners with a claims mandate, Sasria claims must be processed by Bryte from beginning to end,” notes Grieve. He referred partners to the two recent Sasria circulars, Communique 91 and Communique 92, which include details of how Sasria intends expediting civil commotion claims. “We are committed to ensuring that [civil commotion] claims are dealt with efficiently and effectively. To facilitate the experience to the client, we hereby agree that agent companies may settle claims up to R50000 on claims relating to the recent events,” writes Sasria. The insurer offered the following guidelines for its Agent Companies (insurers) and brokers. 

  • Internally, we have created a CAT event code, and centralised all the claims that stem from the recent events to a specialist team of experts who will facilitate the claim handling.
  • We request that all claims stemming from these events are registered with the Agent company who will in turn register the claims with Sasria; this is as per our business model and ensures we are all able to manage the claims effectively and expediently.
  • Please ensure that all relevant information for claims registration is provided at the point of registering the claim with Sasria, including loss adjuster report, coupon, underlying policy and proof of premium payment.
  • Loss adjusters and assessors must be appointed within the given mandates; for all claims above R1m, the confirmation of appointment of loss adjusters should be confirmed.
  • Sasria has appointed loss adjusting companies to collate all information to expedite the claims. 

Do we have the loss adjusting skills to cope?

One concern that immediately springs to mind is whether South Africa has the loss adjusting and assessing capacity necessary to handle what appears to be hundreds if not thousands of claims exceeding R1 million. Many brokers have recently reported that they struggle to get the specialist risk support needed when writing new business; and this disaster will certainly make things worse. All that brokers can do in this environment is to assist clients that have suffered losses over the past few days with administrative and emotional support. We are sure they will go the extra mile to assist clients getting their claims through the right channels, via the insurer, to Sasria. 

Writer’s thoughts:
The media is quick to lambaste insurers and insurance brokers when things go wrong; but we doubt they appreciate the complexity or scale of the machinery that swings into action following a disaster such as the Knysna wildfire, Covid-19 pandemic or the latest civil commotion, aka looting. Are you concerned about the insurance industry’s (including Sasria’s) capacity to administer, assess and pay-out unrest-related claims? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

Comments

Added by Cliff Taylor, 15 Jul 2021
Whilst agreeing with what Chris Grieve has mentioned I do believe that it needs to be emphasized that Sasria cover is available.
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