21/07/2022
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IMPORTANT NOTICE FROM SANTAM - POWER SURGE AND MECHANICAL BREAK DOWN CLAIMS.
FURTHER NOTICE OF CHANGES IN EXCESS STRUCTURES AND PRODUCT MODELS
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Dear Intermediary
During May 2022 Santam communicated changes to excess structures due to above-inflation increases in claims costs and an increase in the frequency of certain types of claims. For previous communication, please click here.
Power-surge claims, as well as electronic and electrical damage claims, have further increased in frequency in recent months. This is a market trend, and these losses are largely because of inconsistency in electricity supply and load shedding. For our Personal Lines business, the frequency of power surge claims has more than doubled over the past three years, with a similar experience in many parts of our Commercial Lines business. These trends necessitate further changes to both our product models and excess structures.
Product model changes
The following changes will be implemented in our offerings going forward:
Personal Lines
A. Removal of the default R5 000 cover limit for power surge. While the premium for this cover forms part of the base premium today, in future power surge cover will be rated separately and will be reflected as such on the policy summary. For new business, power-surge cover will become optional and will have to be selected during quotation stage if required. For existing business, existing cover limits will remain unchanged at renewal, with the premium payable for power surge split from the base premium and reflected separately on the policy summary.
B. Excesses for both power-surge and mechanical, electrical and electronic damage cover will increase by R1 500 (i.e., a further R1 000 in addition to the R500 communicated in May). For our Executive product, the increase in excess will also apply to accidental damage type claims. Note that excesses do not apply to clients 55 years and older.
Changes for new business will be implemented for any new cover with effect from 28 July 2022, and changes for existing business will be implemented at policy renewal from 1 October 2022 onwards.
Commercial Lines
A. Power surge: The default R50 000 cover limit on applicable sections of all commercial policies will no longer attract a zero premium but will explicitly be rated from the first rand of cover provided.
B. Motor Excess: The minimum excess amount will increase by R1 000 for damage, theft and hijacking for certain types of vehicles.
Changes for new business will be implemented for any new cover with effect from 1 August 2022, and changes for existing business will be implemented at policy renewal from 1 November 2022 onwards.
Please look out for detailed Operational Circulars related to these changes. We confirm the changes will be highlighted in renewal letters as applicable, for both Personal and Commercial Lines.
We recognise the challenging conditions many of our clients are experiencing and the difficulties you are faced with in agreeing these increases with them. The value of insurance has, however, never been more real, with the level of claims paid in the last number of months making an incredible difference for so many. We kindly ask for your full support to help us realise and retain these increases for the sustainability of our offerings. We also thank you for the support already shown with our targeted and individualised screening actions.
Please contact your Relationship Manager if you have any questions. Thank you for your ongoing partnership with Santam.
Keep well
Andrew Coutts
EXECUTIVE HEAD: INTERMEDIATED BUSINESS
COMMERCIAL AND PERSONAL
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