Insurer Santam said on Monday (30 March) that it will continue to service its clients and other stakeholders during the current challenging period.
It noted that the regulations published on 25 March 2020 in terms of the Disaster Management Act, 2002 have categorised insurance as an essential service.
“During the lockdown period, the group will operate on a limited staff basis, with only core critical staff on site. A significant number of staff are enabled to work remotely from their homes. Our first priority is to ensure the safety of our people.
“We will adhere to all directives in respect of hygienic conditions and the limitation of exposure,” it said in a statement.
Santam said it is adequately capitalised to accommodate this period of excessive market volatility and retains a significant amount of liquid assets.
“It will therefore be able to meet all of its current financial obligations as and when they fall due.”
The company warned however, that “conditions remain fluid and uncertain”, adding that the financial position of the group will consequently change over time.
Santam said it is in the process of reviewing all relevant policy wordings to assess the potential insurance exposure relating to the Covid-19 pandemic and to determine how its policies
may respond to claims made.
“A high sense of urgency is being applied to conclude on the extent of Santam’s potential exposure.”
It said that the impact of Covid-19 on general insurance claims is, among others, dependent on the governments’ response to the pandemic.
“Some governments are considering requirements for insurers to pay medical costs even if this is not covered under the policy contracts, or to contribute voluntarily to relief funds. Despite limited contractual exposure in many instances, measures implemented by governments may therefore still have an impact.”
Santam warned that the impact of Covid-19 will negatively impact the group’s growth prospects for 2020, both in terms of the South African business and premium flows from outside South Africa.
“Significant action is being taken to contain operational costs in the current challenging economic environment,” it said.
Equity, interest rate and currency markets are expected to remain volatile in the foreseeable future.
Santam said that the full financial impact of the Covid-19 pandemic on the company can only be determined after the lockdown has been lifted, there is a return to normality and its consequences
have been properly assessed.
It said that before the onset of the pandemic, the group made a solid start to the year with strong gross written premium growth in the Santam Specialist Business and MiWay. The group’s net underwriting results benefitted from a favourable claims environment.
The underwriting margin of the former Saham general insurance portfolio showed pleasing improvement compared to the 2019 full-year results and higher investment returns on insurance
The final 2019 ordinary dividend of 718.00 cents per share that was declared on 4 March 2020 was paid on Monday 30 March 2020, Santam said.