Santam procurement consultant resigns amid pressure from panel-beating industry

Filum Ho, appointed recently as Santam’s procurement consultant, resigned with immediate effect on Wednesday after panel-beater associations and a political party said his appointment might be a conflict of interest.

Business Day reported in June that the automotive repair industry expressed disapproval of Ho’s appointment. This stemmed from Ho’s 6.04% stake in Autoboys and his 14% stake in Apollo Studio through his personal trust. Both are service providers for Santam.

Ho told Business Day: “I’ve decided to resign from the consulting role at Santam simply because it was becoming an unnecessary distraction to Santam’s real goals of driving a more equitable distribution of work to specifically black-owned SMMEs and leveraging technology to create greater operational efficiency.”

Asked why the body repair groups were unhappy about his appointment, Ho said that work from most insurance companies still went largely to nontransformed mega-workshops.

“When you say repair groups, I would argue that it is really a handful of individuals who have co-opted some of the groups to be able to steer a narrative to maintain the status quo. My appointment as a consultant at Santam was never simply about driving cost savings. It was to help Santam leverage emerging technologies and [about] redesigning business processes to be more efficient.”

Ho said that Santam and many other SA insurers were battling with their motor insurance business. Santam collected about R15.8bn in motor premiums in the past financial year, equating to about R11bn in spend. The bulk of this spend went to services that motor body repairers provide.

“A very small minority are actually the ones making super profit at the expense of the rest of their brethren, the insurer and the policyholder in terms of increased premiums. Most, if not all, of the intermediated insurers (working through brokers) are in the same position as Santam,” said Ho.

The Collision Repairers Association (CRA) and the MK party are among groups that voiced their opposition to Ho’s appointment. “The reintroduction of such punitive SLAs [service level agreements] by Santam perpetuates unfair and discriminatory industry practices. We hereby request Santam to immediately review and withdraw these punitive SLAs which continue to impede the economic inclusion and participation of SMMEs in the industry,” the MK party said in a statement.

The MK party alleges that Santam is engaging in anticompetitive behaviour through its new SLAs that involved Ho, whom it claims reaps all the profits by centralising parts procurement instead of leaving it to the service providers to gain some money too. The party also called on SME service providers and the public to boycott Santam and its parent company, Sanlam.

Meanwhile, Santam told Business Day that it accepted Ho’s resignation and echoed his reasons for not wanting to become a distraction to Santam’s plan to improve its handling of motor repair claims and its relationships with motor body repair (MBR) providers.

According to Santam, there are at least five associations that represent MBRs in SA, and it has healthy relationships with most MBRs. Some of these associations have already expressed their support for Santam’s plans.

“A minority is seeking to disrupt Santam’s plans to overhaul how it handles motor repair claims and relationships with MBRs. Santam remains open to further constructive engagement with MBR associations. However, this cannot take place in the atmosphere of recent weeks, that has been characterised by intimidation and threats of violence to some of our staff,” said Santam. The company said that the complaints did not take the transformation of its procurement practices into account.

“In 2023, 57% of Santam’s MBR suppliers were black-owned businesses [with 51% or more black ownership]. These businesses were allocated 58% of the spend on motor body repair. Santam believes that its tangible commitment to and progress with transformation is supported by verifiable evidence that shows the company to be at levels of transformation well in excess of financial sector charter targets,” said Santam.

Disconcerting

Business Day has seen a letter, dated July 26, written by the SA Auto Repairers and Allied Association (SAARAA) to the CEO of Santam, Tavaziva Madzinga.

The president of the SAARAA, Lyster Harris, wrote: “We have noted the recent messaging in the market by organisations like the CRA, which purport to speak for black-owned repairers.

“It is disconcerting that the CRA, whose board is overwhelmingly white and composed of some of the largest and most lucrative shops in SA, claims to represent black SMME repairers,” said Harris in his letter.

He also said that black-owned repair shops were largely excluded from the repair market at present because insurers such as Santam did not assign them work. While white repairers discussed the variety of cars they handled, many black-owned shops were simply trying to survive and gain basic access to jobs. This disparity was unacceptable and unsustainable, he said.

majavun@businesslive.co.za