INSURANCE RISKS SECTION (1) ONE

In his keynote address at the SAIA Cocktail feature in July, Deputy Finance Minister Sfiso
Buthelezi pledged government’s assist to the short-term insurance plan industry. Buthelezi said while
government remains committed to seeing an insurance sector that is modified and supports
financial inclusion, it’s important that the industry continues to innovate, treat it clients fairly, is
well regulated , supports key government initiatives on infrastructure and continues to reduce
costs so that customers get price for their money, amongst others.
The deputy minister careworn that whilst the industry was once on the proper trajectory, there is still a lot of
work that needed to be done. He singled out three key focus areas for the industry, namely
improving get right of entry to to insurance, transforming the insurance plan area and partnering with government
to address climate change. He stated that though these are challenging times, – thanks
to elements such as world economic and political instability, climate change, economic recession
and savings ranking downgrades – “It is in difficult instances that we can unite to find common ground.
This is the time when the insurance sector can in reality exhibit its brought value.”
Looking at the problems noted by the deputy minister, we can safely say the SAIA and its
members are on the equal page – and we have a lot of common ground. As an industry, we are
fully dedicated to transformation and we understand the position that a changed and inclusive
society will play in economic boom and in making sure a sustainable future for our country; a future
in which we can all flourish and thrive.

 

1 TRANSFORMATION AND GOVERNANCE RISKS
1.1 Concerns raised by means of the Ombudsman for Short-term Insurance (OSTI)
The SAIA Board, at its assembly on 17 August 2017, requested that the SAIA flow into the
concerns raised via the OSTI, Ms Deanne Wood, at the SAIA/OSTI Forum on 14 June 2017.
The SAIA encourages individuals to take observe of the following concerns and to address same:

 

1. Policy wording
Insurers’ policy wording and claims philosophies are no longer updated and aligned to adjustments in
technology and criminal behaviour. For example, the clause “forcible and violent entry” is strictly
interpreted but today, criminals use automobile jamming units hence the insured will be unable to
demonstrate “forcible and violent entry.” Similarly in commercial policies, it is required that there
be “forcible and violent entry” into the predominant building but frequently thieves damage into a storeroom, for
example, and the claim is rejected as there was no “forcible and violent entry” into the main
building.
The OSTI acknowledges that proof is vital in auto jamming claims but some insurers have
rejected these claims regardless of surveillance footage.
The OSTI noted in addition that insurers are placing a larger emphasis on criminal habits rather
than the foundation of the threat and the safety that ought to be afforded to the insured. Insureds are
therefore paying for cover but now not receiving the safety at claims stage due to the strict
interpretation of coverage wording.
The OSTI recommends that insurers amend coverage wording to take into account changes in
technology and criminal behaviour.

 

2. Rejection letters
The OSTI suggested that some insurers do no longer encompass the OSTI’s important points on rejection letters which
insurers are legally required to do in phrases of the Policyholder Protection Rules.
1. Policy wording
Insurers’ coverage wording and claims philosophies are now not up to date and aligned to adjustments in
technology and criminal behaviour. For example, the clause “forcible and violent entry” is strictly
interpreted but today, criminals use auto jamming gadgets hence the insured will be unable to
demonstrate “forcible and violent entry.” Similarly in commercial policies, it is required that there
be “forcible and violent entry” into the fundamental building however frequently thieves wreck into a storeroom, for
example, and the claim is rejected as there used to be no “forcible and violent entry” into the main
building.
The OSTI acknowledges that proof is necessary in vehicle jamming claims but some insurers have
rejected these claims in spite of surveillance footage.
The OSTI noted in addition that insurers are setting a increased emphasis on crook conduct rather
than the groundwork of the threat and the safety that need to be afforded to the insured. Insureds are
therefore paying for cover but now not receiving the protection at claims stage due to the strict
interpretation of coverage wording.
The OSTI recommends that insurers amend policy wording to take into account adjustments in
technology and crook behaviour.

2. Rejection letters
The OSTI advised that some insurers do now not consist of the OSTI’s small print on rejection letters which
insurers are legally required to do in terms of the Policyholder Protection Rules. two

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