Underinsurance is a challenge for the South African business sector

Underinsurance is a challenge for the South African business sector

The South African commercial sector is traditionally underinsured, and it gets worse during hard economic times.

“Commercial insurance continues to come under pressure due the slow recovery of the economy as well as the fact that commercial clients remain cautious when purchasing new items such as vehicles, plant and machinery,” says Shehnaz Somers, Santam’s head of commercial underwriting.

“Underinsurance is a key challenge for South African businesses. Policyholders often fall into a trap of underinsurance because they are unaware of the repercussions.  If your equipment is worth R500 000 and you only insure it for R400 000, only 80% of your loss will be paid out when you claim.  The last thing you need is to have to outlay additional funds following a loss during soft economic times, so it is critical to ensure that the value of your possessions is updated regularly,” says Shehnaz.

For Santam, understanding the risks associated with its clients’ business is critical. “We need to understand and manage the governance, environmental and social risks that may impact the profitability of our commercial clients,” says Shehnaz. “To that end, we bring to bear our 97 years of technical expertise, insight, solidity, reliability, and thoroughness.”

“We understand that commercial businesses are under enormous pressure to produce results even in times of reduced income, and this is where the value of an intermediary comes in. We support our network of intermediaries with unique client risk profiling techniques, ongoing training, and an unmatched geographical presence and advice; it makes complete sense to use professionals to help mitigate commercial risks.”

Santam also shares its legislative, commercial and scientific risk modeling expertise and insights with its intermediaries to help them better manage the potential risks and advise clients appropriately.

“A good intermediary will guide commercial clients, by helping them manage and prepare for changes to the environments that affect their business and ultimately, help manage risks to ensure their business’ sustainability.”

“The insurance industry is complex. Commercial businesses and their management don’t necessarily have the time or expertise to navigate the wide spectrum of insurance products available, and this is why the intermediary is so important.  He or she knows their client’s business, knows what insurance products are best suited to mitigate the risks that are specific to the client or its industry, and is in tune with an evolving risk climate.  All of this, put together, saves time, money, and effort and, in many cases, ensures the continued success of the business.” 

“Santam’s 97-year history is a testament to our ability to adapt to social, environmental and economic shifts over the long term, and to ensure our clients plan for any potential risks,” concludes Shehnaz.

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