Wheels come off car insurer
Had Rajiv Singh of Durban not insured his Polo Vivo when he bought it new two years ago, he would be in a better financial position a year and three months after writing off the car in an accident.
"I didn't spend R800 a month on an insurance policy to end up not getting a cent from that car," he said. "But that's exactly what happened ... Had I not been insured, I would at least have got some salvage money."
Last April, Singh's broker switched his policy from another insurer to SaXum, saying it was in his best interests.
Singh's accident happened just four months later, in August last year.
Two months after that - while he was still frantically trying to find out why his claim wasn't being settled - the registrar for short-term insurance applied to the High Court in Johannesburg to have an insolvent SaXum liquidated.
"I am left to pay R2 437 a month for that car until November 2021," he said.
By then Singh would have paid more than R151000 to Nedbank - after the car was written off.
Singh's problems are the result of SaXum's liquidation: ordinary insurance should protect you from financial loss.
In October, Farzana Badat, head of the Financial Services Board's insurance compliance department, said the insurer had been liquidated following "an intensive process of monitoring SaXum's financial position and engaging with its shareholders to find a solution to the financial soundness problems.
"The registrar prohibited SaXum from carrying on any new short-term insurance business from September 8 2016."
Deadlines were set for the insurer to recapitalise, Badat said, but that didn't happen.
"The registrar is satisfied that policyholders' interests will be best served by liquidating the insurer to prevent the further erosion of SaXum's assets and to ensure that creditors are treated equally and the claims of some are not preferred over others."
A year later, none of the creditors have received a cent. When they finally do get paid, it will be a fraction of what they were owed.
One insurer has gone insolvent in the past five years
Salvaging from salvage
Two months ago, Singh, who hadn't been able to find out where his wrecked car had ended up, got a letter from SaXum's joint liquidators - four attorneys from separate firms - addressed to "policyholders whose vehicles are held by Ace Auto Salvage".
It stated that the salvage company had been refusing to release the cars of SaXum policyholders who had opted to deal with the salvage themselves, and urged them not to hand over ownership documents to Ace.
Ace's Sean Hanna told Money that the company had obtained about 190 written-off SaXum vehicles of which around 100 remained in the company's possession.
"Usually, when a claim is settled, we pay the insurer the salvage amount, minus our expenses - release fees from towing companies and storage.
"But these SaXum claims just dragged on and on - we were constantly told 'claim in progress'."
Eventually, Hanna said, Code 4 cars such as Singh's were auctioned.
Code 4s are what the South African Insurance Association defines as "permanently demolished" and can only be sold as scrap, therefore they don't require ownership documents to be sold.
Singh's car went under the hammer in June or July, Hanna said, and fetched R20000.
"But we'd paid about R14000 in release fees, plus there were storage fees," Hanna said, adding that he had been unable to trace the owner.
"In some cases the owners approached us and we negotiated the release of their cars, and the banks paid us the release fee in other cases," he said. "But we got no payments from the insurer."
Paying for a car you don't have
Some SaXum clients "lost" their cars after accidents long before the company was liquidated.
A car that Ian Scott owned and paid a driver to operate on the Uber platform in Cape Town was written off by SaXum after a seemingly minor hit last February.
"Up to now that claim has never been paid and we continue to pay the bank every month for a car we don't have," said his wife, Eleanor.
Another SaXum client, Nomusa Buthelezi of Port Shepstone, had been awaiting approval of a R54000 repair claim for her Hyundai i20 for six months when she heard that the company had been liquidated.
"I still have to pay to have the car repaired myself," she said this week.
No SaXum policyholders who had claims pending in the run-up to its liquidation had yet been paid, a year after the company was liquidated, said Christine Rodrigues, director at Norton Rose Fulbright, the firm appointed as attorneys for the joint liquidators.
"SaXum had both individual and business policyholders. We are still working through the outstanding claims to determine what liability the SaXum estate has incurred.
"At present no claims have been paid as the liquidators have to ensure that claims are assessed to determine the liability of the estate."
Badat urged former SaXum policyholders who had not yet lodged a claim against the insolvent estate to urgently e-mail the liquidators to ensure that their claims were assessed and validated before the finalisation of the liquidation process. The address is email@example.com