BIC insurance claims skyrocket

Keikantse Lesemela
Friday, 04 March 2016
BIC MD, Johan Classen BIC MD, Johan Classen

Botswana Insurance Company (BIC) has reported a huge increase in the number of claims for the year 2015 as compared to 2014.

In a report released on Monday, BIC stated that the total claims paid out in 2015 escalated by 41.7 percent. The highest claims were within motor segments, comprising commercial and personal motor vehicle, which also increased by 35 percent from 2014. Non-motor claims such as fire and allied perils, business interruption, public liability, professional indemnity, personal accident, theft, workmen’s compensation and contractors had also increased by 39 percent compared to claim submissions in 2014.

BIC marketing and Strategy Development Manager, Komissa Burzlaff told BG Business that a rise in the number of claims paid out ultimately leads to a decrease in the company’s net profits. “Decreased net earnings in the business would mean less investments in other markets such as the stock market, financial institutions and offshore markets because insurance companies make money by investing premium payments,” she said adding that a significant increase on claims submitted and paid out leads to a hike in premium rates.

However, she said on the other hand, rising claims may help the insurance industry to understand upcoming trends, and this will assist in planning ahead and coming up with risk management policies/systems that will lessen the severity of loss on the client and the business.

“Understanding claims trends will also enable underwriters to advise customers on preventative measures that they need to have in place to mitigate risks,” said Burzlaff.According to the report from BIC, top claims under business insurance included fire and commercial motor with payout allocations at 39.4 percent and 26.8 percent.

Most fire incidents result from electrical faults, storms, lightning arson and bush fires.  The report also indicated that in most cases large-spread fires are reported immediately and it takes about a week for small residential fire claims to be reported.

“Fire still remains a top cause of business interruption by value in most firms which leads to loss of revenue”, However the report stated that businesses that were affected by fire outbreaks were mainly large companies who had the right covers in place and were able to continue supplying products and services within an agreed period of time following the fire.

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