Constantia clients' cars withheld by repair shops as liquidation is finalised

Many of Constantia Insurance, caught up in the company’s liquidation drama, are battling to get their cars released to them by panel beaters who haven’t been paid by the insurer.

On Friday afternoon, the Financial Sector Conduct Authority (FSCA) issued a strongly worded statement noting its concern that clients — whose policies end today — were being prejudiced.

“This is resulting in grave inconvenience and unnecessary storage costs for policyholders, the regulator said. “The FSCA urges service providers to immediately release vehicles if no repairs have been made or to allow claimants to settle payments directly to secure the release of their vehicles.”

Constantia Insurance was placed under final liquidation by the Gauteng high court two weeks ago.

On July 26, the company was placed under provisional curatorship by a court order applied for by the Reserve Bank’s Prudential Authority (PA).

The PA had been engaging with the company since mid-2019 after it found it was not holding sufficient funds to protect policyholders, and gave it until June this year to restore its solvency.

Various short-term measures, including “the cancellation of unprofitable business” such as its Prime CoverGrow policies, helped but the long-term plan to secure a “suitable investor” by June failed.

Constantia sold many forms of short-term insurance, including motor, accident, health and medical malpractice. The FSCA today urged Constantia’s clients to secure cover with new insurers from October 1.

“(We) recognise that this may not provide brokers with sufficient time to contact all affected policyholders to give them options for suitable alternative cover.

“(We) strongly encourage policyholders to urgently contact their brokers or financial advisers for future coverage options to ensure uninterrupted insurance cover.”

Constantia client Natalie Sass is among those whose car claims were badly timed. Her new car, a Hyundai Kona, was insured by Constantia in March this year for R519,000. On August 11 — two weeks after the insurer was placed under provisional curatorship — she smashed into a street pole after swerving to avoid a car which had cut in front her.

The car was so badly damaged that insurance assessors declared it a write-off. Her claim was approved and she was given the free use of a hired car for 30 days — one of the benefits of her policy. But on August 30 she got an email advising her of Constantia’s liquidation application, and this bombshell news: “The curator will not pay any existing claim.

“This is to avoid the possibility of any preference being given to some claimants over others before the 'concursus creditorum’ (coming together of the creditors) being established.

“Once established, the appointed liquidators will determine whether any claim will be paid and to what extent.”

She was told her claim will “be subject to insolvency laws” and she “possibly” won’t receive a full payment. She’d had her rental car for just two days when she was told by the car rental company that they were coming to collect it.

She agreed to pay them R6,400 to keep it for the full month. She’s just six months into a five-year contract to pay off her car, at R8,000 a month, with a hefty balloon payment after that.

“I’m totally devastated and will not be in a financial position to purchase another vehicle,” she said. “Insurance companies are highly regulated. I fail to understand how a company can move from curatorship to liquidation application in the space of a month.

“Had I known on August 1 that Constantia wasn’t financially sound — a conclusion the curator came to very quickly — I would have moved my cover to another company.”

Policyholders who have questions or concerns about their Constantia policies or the status of their claims have been told by the FSCA to contact the insurer’s liquidators: Cloete Murray and Zaheer Cassim.

Their email address is liquidator@constantiagroup.co.za

“The FSCA will continue to communicate regularly with the PA, the liquidators and other stakeholders to monitor the affect of the liquidation process on policyholders,” the regulator said.

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