The worst flooding in 35 years, a severe shortage of loss adjusters and the ongoing inaccessibility of many damaged or destroyed properties has created the perfect storm for insurance claim delays.
Durban-based property management company Independent Estate Agents of Africa sent a letter to the trustees and body corporate members of its portfolio of properties this week, warning them of significant delays in claims handling.
“Insurance companies are sending out assessors to establish the damages and costs involved, but due to the fact that there are only a few assessors in SA and though the insurers are bringing them in from other provinces, this process is going to be a lengthy one,” the company said.
It then gave the example of a retaining wall of a complex having collapsed, “taking down” two of the rooms of a unit on Monday, April 11.
“The matter was referred to Santam the next day, with a claim form and a request for an assessor. A week on, and despite frequent requests for updates from both the trustees and ourselves, an assessor has still not been to the complex.”
A client left without a home will enjoy priority above a client who has a damaged garden wall and a business that cannot operate will enjoy priority above one that has wet ceilings.
— Santam
Responding, Santam — the country’s largest non-life insurer — said last week’s storm was “by far the most severe weather-related catastrophe in recent decades”, akin to the KZN floods of 1987 and the impact of Demoina in 1984.
It would put “significant pressure” on the insurance industry’s claims capacity and the construction industry to rebuild, Santam said.
Confirming that loss adjusting was a “scarce skill” in SA, the insurer said it was for that reason that it employed its own team of in-house assessors.
As a result of the recent looting claims in KZN, Santam had built strong relations with external loss adjusting firms, and they had been contracted again to help with assessing KZN’s natural disaster claims, particularly the more complex ones, the insurer said.
Given the finite capacity of loss adjusters, Santam said, claims were prioritised both on the “first in, first out” principle, as well as the nature of the claim.
“For example, a client left without a home will enjoy priority above a client who has a damaged garden wall and a business that cannot operate will enjoy priority above one that has wet ceilings.”
A shortage of service providers, especially construction companies, was also a big constraint, Santam said.
“We can source additional capacity from other provinces but have local community support as our priority when it comes to job creation.”
It was impossible to estimate the full extent of the loss at this stage, Santam said, “and it will be for a long time”.
“Assessment capacity is finite, and many of the affected properties will remain inaccessible for a long time.
“Add to this the [limited] construction industry capacity to assist with quoting on the repairing and rebuilding costs.”
Though there were some similarities in the claims arising from the widespread riots in KZN nine months ago, Santam said, the storm damage was far more severe.
“This latest event affected as many private homes as it did businesses, while the looting claims related mainly to businesses, and the infrastructure, roads, water, and electricity supply suffered a severe blow which was not the case with the looting.”
Head of Auto & General Insurance, Ricardo Coetzee, said the KZN flooding had led to a 15% spike in claim volumes so far.
“This disaster affected a large amount of homes, vehicles and businesses and is likely to cost the insurance industry hundreds of millions of rand,” he said. “We are working around the clock to ensure our customers who have been affected are assisted.
“Additional resources have been sent to the affected areas to support in quicker claim turn-around times.”
CONTACT WENDY: E-mail: consumer@knowler.co.za; Twitter: @wendyknowler; Facebook: wendyknowlerconsumer
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