Understanding the Complexities of Insurance Claim Recoveries: Insights from Risk Benefit Solutions

Navigating the intricacies of insurance claims and recoveries can often be complex. At Risk Benefit Solutions (RBS), a leading national BBEEE level one short-term insurance broker in South Africa, we frequently encounter clients’ questions about this topic. To shed some light on this area, we’re delving into the process of insurance claim recoveries, mainly focusing on the challenges and steps involved.

The Recovery Process: Prioritizing Client Excess

The insurer’s role when claiming a third party is a key aspect to understand in the recovery process. Insurers are highly motivated to recover their disbursed funds for a claim. An important point for clients to remember is that the client’s excess is always reimbursed first in the event of a successful recovery. This policy is a cornerstone of our commitment to client satisfaction at RBS.

Challenges in Recovery: The Reality on the Roads

One of the significant hurdles in the recovery process is that a relatively small percentage of vehicles on South African roads – approximately 25-30% – are insured. This reality makes recoveries a potentially lengthy and complicated process, often stretching from six months to several years. When a third party is identified and agrees to repay the amount, the repayment is typically made in instalments, turning the process into one of debt collection.

Dealing with Non-Compliant Third Parties

A frequent scenario we encounter involves third parties who refuse to pay. In such cases, legal action becomes necessary. This consists of issuing court summons, which the courts must deliver. However, if the third party changes their address in the interim, the process must start anew, adding to the complexity and duration of the recovery.

Weighing the Costs of Legal Action

In instances where recovery efforts might lead to litigation, insurers, including RBS, carefully consider the associated costs. This includes the expenses of legal representation and the potential need for Senior Counsel in court. These factors are weighed against the potential recovery amount to ensure a cost-effective approach.

The Role of the Road Traffic Act

Another layer of complexity in the recovery process is the stipulations of the Road Traffic Act. This Act outlines specific liabilities and percentages of fault in various accident scenarios. Consequently, recoveries are often proportional to these legal prescriptions, meaning the recovery amount might be only a fraction of the total claim.

The Unpredictable Nature of Recoveries

Clients must understand that recoveries are challenging for all insurers and are never guaranteed. Each case presents its unique circumstances and challenges, making the process unpredictable.

At Risk Benefit Solutions, we are committed to guiding our clients through these complexities, ensuring they are well informed and supported at every step of their insurance claim and recovery journey. Understanding these nuances helps us set realistic expectations and provide the best possible service to our clients.

About RBS

Risk Benefit Solutions, better known as RBS, originated as an entrepreneurial-focused services business in 1998 and today is one of the largest fully-fledged black-owned insurance brokers in South Africa and a Level One BBBEE contributor. Celebrating 25 years in business this year, our growth has contributed to offering clients a unique approach to risk management by positioning our skilled resources as an extension of our client’s risk management team. Our company covers various services, including Insurance Broking, Risk Management, Commercial and Corporate Risk Advisors, and Corporate Vehicle Hire Services. With its head office in Cape Town, RBS has offices in Gauteng, the Eastern Cape and globally, represented through its board membership with WING (Worldwide Insurance Network Group).