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Media release: The South African Insurance Association (SAIA) today accepted a memorandum from the South African Motor Body Repairer’s Association (SAMBRA) after a protest march supported by the National Union of Metalworkers of South Africa (NUMSA) to the offices of the SAIA in Johannesburg. This memorandum will be submitted to the SAIA Board at its next meeting on 7 February 2006, said SAIA Chief Executive Barry Scott after the protest action. “The issues raised by both SAMBRA and NUMSA in the media this week are not new issues for the SAIA and its members and for the short-term insurance industry in general,” says Leila Moonda who is the SAIA’s Transformation Manager. “We have in fact been involved in discussions on the issues in different forums including a meeting arranged by the Department of Trade and Industry (DTI) in November last year. This meeting was attended by most if not all stakeholders including the SAIA and its members, various state departments, the different panel beater and tow truck associations, the motor manufacturers and others. The decision made at this meeting was that a process of discussion would be facilitated by the DTI in which all role players would participate and that the next meeting will be held in the first week of February to take this process forward. The SAIA and its members are still firmly committed to this process,” Ms Moonda adds. The SAIA wishes to respond to two main issues raised, the first is that short-term insurers practice racism because they allegedly do not use the services of black panelbeaters, and the second issue seems to be that short-term insurers allegedly make themselves guilty of anti-competitive behaviour, price fixing and other unethical practices because they use a panel system to select suppliers. “The SAIA and its members have voluntarily committed themselves to the transformation of the South African economy by actively participating in the drafting of the Financial Sector Charter, the signing of the Charter, and the consequent various processes to ensure successful implementation of Charter requirements,” says Ms Moonda. Short-term insurers have quite tough targets to reach in terms of procurement and the fact that they all remain committed to do their utmost to meet these targets speaks for itself. This is evidenced by the industries decision to not approach the Financial Sector Charter Council with a proposal to reduce these targets for claims procurement, even though the FSC specifically allows the industry do to this. The targets are that 50% of all procurement spend needs to be with black suppliers by 2008 and 70% by 2014. “The industry is therefore doing everything possible to identify suitably qualified black panel beaters, and it is therefore simply wrong to accuse the industry of discrimination against black panel beaters, or suppliers of any kind,” she adds. The short-term insurance industry is, however, hampered in their efforts to reach these targets because no black economic empowerment charter or programme is currently in place in the motor industry. “The SAIA has been urging the motor industry to address the issue of transformation for some time, but apparently no progress has been made in this regard,” said SAIA Chief Executive Barry Scott. “We again wish to emphasize the fact that this is an extremely pressing matter that needs to be addressed by the motor industry. Without a transformed motor industry, it will be impossible for the short-term insurance industry to meet its BEE procurement targets.” “The issues of the preferred supplier lists used by most insurers, as well as the allegations of the alleged resulting anti-competitive behaviour, price fixing and other practices have also been addressed on various occasions in the past,” says Ms Moonda. “There are very good reasons for the preferred supplier lists. Insurers have the responsibility of putting their policy holders in the same position they were prior to any incident. The panel system enables insurers to do this cost-effectively to ensure sustained reasonable premiums for consumers, and to ensure quality of work done for the protection of consumers’ lives and property,” she adds. Furthermore, it would be extremely difficult to reach black economic empowerment targets if insurers do not have control over their suppliers. The concept of preferential procurement is not implementable without preferred suppliers. Only about 25% to 30% of the vehicles on South African roads are insured. Motor manufacturers also often have specific requirements with regards to suppliers used in order to keep warranties in place. Short-term insurers therefore do not have total control over the business opportunities – or alleged lack thereof - on offer to panel beaters.