Claim Crisis: Most Expensive Business Losses and Most Frequently Reported Claims
When it comes to insurance, ideally, clients want claims to be managed as quickly and efficiently as possible. However, with COVID-19, looting, and natural disasters, insurance companies have been kept on their toes. There is immense pressure on insurers to pay out claims as disaster seems to be striking wherever we look. Due to these pressures, insurance regulations are getting stricter in order to curb the pressure of the industry. According to Ombudsman for Short Term Insurance complaints regarding rejected claims increased by 17% in 2020.
Moonstone’s blog cites fires and explosions as South Africa’s most expensive business losses over the last five years, with fire and explosions accounting for 65% of the value of all claims. BusinessTech reports natural catastrophe, poor workmanship, and fire as the most frequent claims that South African insurers get. With recent KZN flooding, social unrest and the business interruption that went hand in hand with the pandemic these three categories of claims come as no surprise. Furthermore, the increased prices caused by inflation further complicates things.
Allinaz Global Corporate says that construction and property claims are most vulnerable to inflation as repairs and rebuilds rely on the cost of building materials as well as the cost of labor. According to the March 2022 Construction Materials Price Indices aluminum products increased roughly 8% every month. Locks and padlocks increased by 3.5% month-on-month and bituminous mixtures increased by 3.4%. Additionally, 2022 has seen shortages in the building industry which led to delayed delivery, resulting in increased business interruption claims. Chief claims officer of Allinaz, Thomas Sepp, explained that because replacement costs are higher, and replacement takes longer, this is bound to lead to increased business interruption losses. Increasing prices also means that assets are more likely to be underinsured. As explained earlier, increased prices lead to increased costs in terms of replacement.
At Deo Gratia we believe in educating our clients as far as possible. We do this so that when new regulations are introduced our clients aren’t caught off guard when the time comes to register a claim. There is nothing worse than submitting a claim only to find that you do not meet the necessary requirements stipulated by the insurer. If you are already a client, feel free to contact us if you have any questions on an existing policy. If you would like to find out more about Deo Gratia Insurance Brokers, you can contact us by going to the ‘contact’ page on our website or by using the WhatsApp chat function on the right-hand side of the screen. Who’s got your back?
Construction Price Indices: