Santam warns of global supply-chain delays impacting insurance claims

3 min read 22 July 2022

Santam, South Africa’s largest short-term insurer, has warned that clients could, over the next couple of weeks, and possibly months, experience delays in the repair of damaged motor vehicles due to a global shortage in parts caused, among others, by COVID-19 and other supply-chain challenges.

The supply-chain challenges also impact the availability of electronic and other related equipment or materials.

“Over the past two years, the motor industry has been hit by multiple challenges, with the global demand and supply of motor vehicles, related parts and services being impacted. South Africa’s situation is not unique. Multiple factors, that include back orders from COVID-19, the conflict between Russia and Ukraine, the recent flood damage to vehicle manufacturing facilities and harbour in KwaZulu-Natal, including the international lockdowns in China and Taiwan which are two major parts manufacturing countries, have all come together to exacerbate supply constraints,” said Ebrahim Asmal, Santam’s Executive Head of Group Sourcing.

Ebrahim added that COVID-19 lockdowns had a very negative impact on the demand for vehicles and parts, while also disrupting the supply side. Logistics services have been severely disrupted and remained constrained, with the cost for these services increasing massively since 2020.

“At Santam, we are actively engaging with a myriad of industry stakeholders, including vehicle Original Equipment Manufacturers (OEM), OEM parts dealerships and other suppliers, to find solutions to assist our clients. We are also onboarding additional suppliers and increasing the rollout of our parts software solution. This will empower us to have a wider pool of suppliers, optimising motor body repairs’ (MBRs) parts procurement processes for Santam clients,” he said.

“More importantly there’s a lot of supply chain volatility across all vehicle brands,” Asmal added.

Santam has cautioned that the situation may lead to delays in the procurement of parts and ultimately impact on turnaround times, particularly for the repair of damaged vehicles. Ebrahim said Santam is proactively doing all it can to avoid delays.  

“We know  delays are frustrating. Rest assured, we are doing everything in our power to improve the situation and to manage the challenges, to ensure that we maintain  our normal quick claims processing. However, for the foreseeable future, supply constraints will continue to affect our claims processes, especially the repair of all vehicle types, due to the unavoidable delays,” Asmal added.