Major South African insurer sees big drop in car theft and hijack claims after controversial policy change

Santam, South Africa’s largest insurer, saw a 19% drop in car theft and a 24% reduction in car hijacking claims in the first half of the 2023 financial year in comparison to the same period in 2022.

The insurer attributes this “marked improvement” to “necessary corrective actions” that were taken late last year with regard to theft and hijacking countermeasures.

In September 2022, Santam approached clients living in high-risk areas in Gauteng – which affects roughly 5% of the vehicles it covers – via email to notify them that they must install a tracker in their car by mid-December or risk losing cover for theft and hijacking

“While some insurers make it mandatory for all vehicles over a certain sum insured to have a device installed, Santam opted to act on a case-by-case basis and only require the installation of trackers based on the level of risk attached to specific vehicles and/or the insured’s geographic location,” said the organisation.

Despite a portion of its clients not responding to the initial email, Santam sent a follow-up mail in mid-December notifying them that they had lost protection against theft and hijacking.

This was seen as a rather contentious action as, by law, a company can’t automatically impose extra costs on clients who failed to respond, said consumer journalist Wendy Knowler.

“The Consumer Protection Act term for that is ‘negative-option marketing’ and the reasoning is that a lot of people miss a lot of emails and SMSs, so it’s unfair to consider a lack of response as consent,” said Knowler.

In one instance, a Santam client did not see the first, nor the second mail and was left R116,000 out of pocket and without his main form of transportation when his car was stolen in Johannesburg and the insurer refused to pay out the claim because the vehicle did not have a tracker installed.

The client argued that the insurer could not take silence as an answer, and should have phoned those individuals who did not respond to the emails to ensure that they were aware of such important changes, given that he signed up for his insurance contract via telephone and not electronically.

Upon further contestation, Santam told Knowler that it fulfilled its obligations in terms of the Short-term Insurance Act’s Policyholder Protection Rules through its emails to the client and was legally not required to honour the claim.

The Policyholder Protection Rules state that the insurer must provide at minimum 31-day written notice before making any policy changes, which Santam adhered to.

“Our legal team has confirmed that the correct steps were taken in accordance to the applicable law. The customer was given the option to opt out as required by law,” said Santam.

Santam did not explicitly say whether the drop in claims it experienced in the first half of FY2023 was a result of fewer theft and hijacking incidents, or because there were fewer valid claims due to its Gauteng clients not having a tracker installed and losing coverage as a result, like the example above.

Alarming trends

In its latest Insurance Barometer report, Santam further highlighted several alarming theft and hijacking trends that have emerged in South Africa in recent years.

Chiefly, the insurer has seen a shift away from older, low-value vehicles with limited security requirements, to more expensive double cabs and SUVs that have technologically advanced features such as keyless entry systems that open them up for exploitation.

Moreover, certain makes and models were up to 20 times more likely than similarly-priced vehicles from other brands to be hijacked or stolen, specifically in Gauteng, said the insurer.

This coincides with data from security firm Fidelity-ADT, which revealed that the most popular vehicles for hijackers in South Africa include:

• Toyota Fortuner
• Toyota Hilux
• Toyota Land Cruiser
• Toyota Prado
• Ford Ranger

The issue is so persistent with Toyota vehicles that the automaker developed numerous safety upgrades for models with the keyless entry ability, which it started providing to customers free of charge in December 2022.

Another interesting sub-theme is that Santam discovered a concentration of theft and hijacking incidents in geographic areas that are close to border crossings.

This is most prevalent in the provinces of KwaZulu-Natal and Mpumalanga, where stolen vehicles exit the country into African territory shortly after being taken from their owners.