COMPANY RESULTS: KZN floods wash out Santam’s underwriting margins

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‘The 2022 financial year was one of the most challenging underwriting periods in Santam’s history,’ says Santam group chief executive Tavaziva Madzinga. ‘Despite these headwinds, we reported strong gross written premium growth and resilient net insuranc...

Adverse weather in the first three months of the year, and the devastating floods in KwaZulu-Natal during April 2022, significantly impacted short-term insurer Santam in the year to end December 2022, leaving the insurer’s net underwriting margin at the bottom end of its target range of 5% to 10%.

These exclusions kick in from 1 April this year and were introduced from 1 January for new policyholders. “When we look at the frequency, the cost of claims, it does need to be managed, but in the bigger insurance context, it is minuscule. I think it does receive a disproportionate level of attention given everything else going on. is not the biggest challenge that we’re facing,” he says.“The 2022 financial year was one of the most challenging underwriting periods in Santam’s history, combined with a turbulent investment market environment.

normalised” post-Covid, with an increase in vehicle accidents compared with the experience during the various levels of lockdown in 2021.Policyholders can expect segmented premium increases and higher claim excesses, as Santam implements underwriting actions to address the increase in claims frequency and claims inflation.

Santam reviewed its provisions for CBI claims at the end of December 2022, considering the claims experience and reinsurance recoveries to date, and has reduced its net provision for CBI claims by a further R317-million, following the reduction of R397-million accounted for in the June 2022 results. Santam expects trading conditions in South Africa and globally to remain very competitive. The company also anticipates high interest rates and significant inflationary pressures to continue to decrease disposable income in South Africa.

 

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