Insurance companies, brokers and the South African Special Risks Insurance Association (Sasria) have forged a working relationship to ensure that claims for damages arising from the recent unrest that initially broke out in KwaZulu-Natal will be settled as quickly as possible.
A special dispensation from Sasria allows insurance companies to settle small claims immediately on behalf of Sasria.
The state-owned Sasria, the only insurer in SA that provides cover for loss or damage to insured property as a direct result of social unrest, rioting, strike action and public disorder, has given certain insurance companies a special mandate to settle claims up to R50 000 immediately – with Sasria settling with the insurers in due course.
Fareedah Benjamin, executive manager of insurance operations at Sasria, says the reasoning behind the unusual mandate is that Sasria recognises the importance of small businesses to the economy and realises their limited capabilities to absorb the sudden losses.
“We want to help these small business owners to start operating again as soon as possible,” she said during an online workshop organised by the Durban Chamber of Commerce and Industry.
However, she would not commit to how long it would take to settle claims, saying that normal procedures still need to be followed – by brokers in submitting claims, and by insurance companies in assessing claims before they will be paid.
She nevertheless stressed that everything possible is being done to ensure speedy resolution of claims, as demonstrated by Sasria’s mandate to insurance companies to settle smaller claims on its behalf.
Larger claims will still have to go through the usual Sasria processes, but Benjamin says these will also be expedited.
Mandate may be increased to cover larger claims
She said Sasria is looking at and is in negotiations with insurance companies to increase the existing mandate to include the processing of larger claims.
She mentioned that the mandate for insurers to settle claims on behalf of Sasria might be increased to R1 million for businesses that have commercial insurance with adequate Sasria cover, while the mandate to settle claims under personal policies might be increased to R500 000.
This would be a big step to help to settle claims, considering that Sasria itself has little more that 100 permanent employees, according to its annual report.
First thing to note: the ’30 days’ deadline
While complimenting the cooperation between brokers, insurers and Sasria, all the speakers at the Durban Chamber of Commerce and Industry event cautioned that the normal procedures involved in settling claims still apply.
The first and most important of these requirements is that people need to file their claim or notify their broker or insurer of their intention to file a claim within 30 days of the event that was the cause of the loss, even if the full particulars of the claim are not available at the time.
While insurers, including Sasria, are aware of the widespread looting and damage, every claim still needs to contain full information of the events leading to the losses and the extent of the damage.
Zuriel Naicker, managing director of sales and distribution at insurance broker Marsh Africa, said during the panel discussion about the procedures involved in lodging a claim that a person’s insurance broker should be the first contact in the event of a claim.
If insurance was purchased directly from an insurance company, the company (probably via its call centre) should be contacted as insurers now effectively act as agents for Sasria.
“It is essential to provide accurate and complete information to insurance companies,” says Naicker. “Include all relevant and supporting information that could help to substantiate any [claim] of loss or damage – that could help the insurer or Sasria to expediate the payment of a claim.”
This could include financial statements, invoices of stock that was purchased, photographs and CCTV footage, and even drone videos and newspaper articles illustrating the localised impact of the unrest, says Naicker.
Get a case number
Benjamin says all instances of damage due to looting and unrest should be reported to the police and that a police case number is still necessary to settle claims, although Sasria is aware of the events as it has issued a “catastrophe” code to deal with these particular claims.
“Report it to the police as soon as possible,” says Benjamin. “A case number is necessary and will strengthen and expediate claims.”
Naicker adds that while there is appreciation for all the work and cooperation between insurance companies, loss adjusters, brokers and Sasria, people with claims must ensure that they submit all the necessary information to effect speedy resolution of claims.
He also warns that information must be accurate to prevent delays or even the rejection of a claim.
Level of cover
Businesses and individuals will obviously only be paid out for what they are insured for.
While most people opt for Sasria insurance when sitting with their broker – it is cheap – it is still regular insurance and will only pay out to the extent of the cover purchased.
“On the issue of underinsurance, if you have assets of R2 million and only have insurance for R1 million, you effectively take half the risk yourself,” says Naicker.
“If your loss is R2 million, your insurance will only pay out R1 million. If the loss is R1 million, insurance will pay out R500 000.”
Naicker stresses that people are also only covered for losses insofar the amount and type of insurance they chose.
Sasria insurance is not a blanket insurance covering unlimited damages for any event.
Not unlike private insurance companies, it offers cover for the different types of damages businesses or individuals might suffer due to civil unrest, riots and violent strike action – if the particular cover was selected and the premiums paid, all should be well.