The Insurance Institute of Gauteng held their first IIG Insights Seminar for 2014 on the Hollard Insurance Campus in Parktown. The seminar addressed the issue of complex claims and learning from large losses. The topic was unpacked from all angles, and we heard from insurers, lawyers and reinsurers. Speakers for the day included: Sedick Isaac (Zurich), Tony Hardie, Christopher MacRoberts, Deniro Pillay, and Bonny Steyn (Norton Rose Fulbright) and Cleaver Warikandwa (Munich Re).
An insurer’s perspective
Sedick Isaac from Zurich Insurance kicked off the morning’s presentations. He said that each insurance company’s claims philosophy may be different, but at the end it is vital to get the claims right. When it comes to large losses, said Isaac, the insurer must match the complexity of the claim to a claim professional with industry experience and skill. He said it is important to save the company and the consumer money.
Claims are affected by the exchange rate, inflation, labour rates, availability of resources and equipment, fraud, economics and infrastructure. He said it is important for the insurer to understand the risk and to manage the risk within its life cycle.
“Insurance is about being there when your client needs you most, without complications and unnecessary delays,” he said.
Tony Hardie, Norton Rose Fulbright, said when large losses occur a massive amount of parties are affected, emotions run high, and everyone struggles to get the experts on their side. Decisions on how to handle large losses have long-term effects, he said.
“It’s up to you as the insurer to mitigate losses and get the evidence you need to make decisions with regards to claims,” he explained. He emphasised the importance of gathering enough details and information, and communicating effectively with all stakeholders in the process.
Deniro Pillay, Norton Rose Fulbright, used a case study to explain interest and the In Duplum Rule. The In Duplum Rule states that once interest reaches the value of capital claim, interest will stop running.
Pillay said litigation strategy must take into account the risk of interest. He said the Interest Act comes into play when money is claimed.
Chris MacRoberts, Norton Rose Fulbright, is a Financial Lines Lawyer. MacRoberts said large FG/commercial crimes claims require rapid response to preserve recovery. He said commercial crimes claims are tough, and evidence preservation is crucial. It’s therefore important to have a team on standby comprising of loss adjusters, forensic investigators, attorneys, and so forth.
His advice for learning from large claims is to do as much work as early as possible. Don’t let the paperwork heap up, and keep a cool head, he said.
Norton Rose Fulbright’s Bonny Steyn ended off the legal side with a discussion on subrogation.
Subrogation refers to the legal right of the insurer to step into the shoes of the insured. The insured can be subrogated only to actions which the insurer himself could report, she said.
In absence of a contrary policy provision, the insured must first be indemnified in full before insurers can derive a benefit, she said.
She ended off with a quote by Confucius: “Needing insurance is like needing a parachute. If it isn’t there the first time, chances are you won’t need it again.”
The reinsurer’s perspective
Cleaver Warikandwa from Munich Reinsurance spoke about natural catastrophes and reinsurance.
Climate change is one of the greatest risks facing mankind, he started. When it comes to natural disasters, it’s not a matter of ‘if’, but ‘how?’, he said. This is an exciting, but scary topic, one which required turning knowledge into action.
“Natural catastrophes are the stress test for insurers and reinsurers,” he said. There were 820 natural disasters in 2011. Climate change is a new challenge for claims management, and with globalisation natural catastrophes have a world-wide effect.
Warikandwa mentioned the Japanese earthquake and tsunami and the Thai flood as examples of large scale global disasters and asked, “Is South Africa prepared for that large scale of disasters?”
Africa suffers from earthquakes, storms, floods, extreme temperatures, and hail. There is an upward trend in terms of number and severity, he said.
Warikandwa said insurers need to expect the unexpected and learn from mistakes – what went wrong? Where can we improve? Analyse external claims factors.
Zuriel Naiker, IIG, ended off the seminar with an observation of the common themes of the day:
- Make sure you have a panel of experts on your side.
- Accuracy and service are important.
- Be prepared ahead of time.
Visit our Facebook page for photographs of the event.