“What happens to my claim?” is the question many policyholders of Constantia Insurance Company Limited (CICL) are asking after the short-term insurer went into liquidation last month.
Read: Constantia Insurance goes into final liquidation
CICL’s website has a “provisional curatorship” page, but the provisional curatorship has ended. Policyholders who are looking for answers to their “frequently asked questions” might find them in a FAQ document published by the Prudential Authority (PA).
Unfortunately, the answers will probably not bring them much cheer.
The PA says the processing and payment of claims will be adversely affected by the insolvency proceedings, but the liquidators will advise all existing claimants soon on the steps they need to take to submit and prove their claims as part of the insolvency process.
All CICL’s unpaid claims will be considered in due course by the liquidators as part of the winding-up process. Once the liquidators have considered and taken a view on the company’s ability to pay the existing claims (in whole or partially), this will be communicated to claimants.
“The winding up and disposals of the underlying assets, the finalisation of pending claims and the verification of claims documents will, unfortunately, take some time. The appointed liquidators will, once they have done an initial assessment, be in a better position to provide guidance on the timelines and process for the liquidation,” the PA says.
There is no guarantee that policyholders who have a valid claim will have their claim paid in full.
“The exact amount (dividend) that is awarded to each policyholder, as a concurrent creditor, will be dependent on the funds available for distribution to concurrent creditors in due course once the asset has been disposed of and will be calculated in terms of the insolvency and liquidation process.”
Repair shops refusing to release vehicles
One of the FAQs asks what policyholders should do if their vehicle is at a panel-beater that is refusing to release the vehicle or even threatening to sell it.
The PA responds: “Panel-beaters have entered into legal agreements with CICL. In terms of these agreements, they have a legal right to hold on to vehicles if CICL has not paid them money that is owing to them. In the meantime, if you are able and wish to pay a panel-beater directly to secure the release of your vehicle, you are advised to retain proof of such payment (including proof of the original claim) to submit these for consideration by the liquidator. Similarly, if the panel-beater is prepared to release your vehicle without payment, and you can get it repaired yourself, you are advised to retain proof of payment for the repairs (including proof of the original claim) in order to submit these for consideration by the liquidator.”
In a statement on Friday, the FSCA urged service providers, including panel-beaters and autobody repair shops, to immediately release vehicles if no repairs have been made or to allow claimants to settle payments directly to secure the release of their vehicles.
‘Changes to cover must be done responsibly’
The FSCA also drew CICL policyholders’ attention to the fact that their policies with CICL ended on 30 September, and they will have to secure cover with other insurers with from 1 October.
“The FSCA recognises that this may not provide brokers with sufficient time to contact all impacted policyholders to give them options for suitable alternative cover. The FSCA strongly encourages CICL policyholders to urgently contact their brokers or financial advisers for future coverage options to ensure uninterrupted insurance cover.”
The FSCA said it was aware that the provisional curatorship and liquidation of CICL have significantly impacted CICL policyholders, as well as underwriting managers and other intermediaries that have business relationships with CICL.
The Authority was also aware that other insurers have engaged in negotiations to take over insurance policies previously underwritten by CICL.
“The FSCA welcomes proactive engagements with such parties to ensure that any such negotiations and potential changes in insurance cover are done responsibly, with due regard to applicable regulatory requirements and in the best interests of policyholders. Failure by any impacted insurer, underwriting manager or intermediary to act in the best interests of policyholders may result in regulatory action being taken by the FSCA,” the Authority said.
Who to contact
The FSCA advised policyholders who have questions about their CICL policies or the status of their claims to contact the liquidators, Cloete Murray and Zaheer Cassim, at liquidator@constantiagroup.co.za
The PA’s document says the liquidators have indicated that they will set up a designated email portal to communicate with all the affected parties. It invites policyholders to visit www.constantiagroup.co.za/cicl-liquidation/ for guidance on the registration of suppliers/claimants in the process”.
At the time this article was published, the link went to a non-existent page.
