The company, majority owned by insurance major Sanlam, says the lowest salary increased to R180,000 annually by September

Santam, SA’s largest short-term insurer, has joined Old Mutual in setting its minimum wage at R15,000 per month, putting pressure on other financial services companies to reconsider their minimum wages.

The company, majority owned by insurance major Sanlam, said in its annual report that the minimum wage had increased to R180,000 annually by September.

Norah Sehunoe, executive head of HR, said the financial services industry lacked a sectoral minimum wage as it was not viewed as a vulnerable sector, such as for example domestic workers.

“Therefore, the financial services minimum wage equates to the national minimum wage of R4,350 per month (depending on the number of hours worked). Santam however decided effective September 1 2023 that it would formally adopt the principle of not paying employees (permanent, noncommission earning) below the accepted living wage of R15,000 per month or R180,000 per annum, which equates to three times the legislated minimum wage,” Sehunoe said.

“Santam’s remuneration policy has ensured that we remain competitive against market salaries, so as a result of this policy we had a very low number of employees below the living wage. However, as part of our commitment to fair pay, we formally adopted the principle of paying a living wage at minimum.”

Business Day reported last year that Santam’s rival Old Mutual had set its minimum wage at R15,000 per month with effect from April. With Santam now having increased its minimum wage, it seems R15,000 is the unofficial minimum wage in the lucrative but highly competitive financial industry facing a skills crunch.

Old Mutual also introduced an “inclusive parental leave policy” with employees qualifying for a minimum of four months of fully paid parental leave across the group.

Santam, worth about R35bn on the JSE, has a 6,472 workforce, making it one of the biggest employers in the insurance industry.

Return jump

Santam CEO Tavaziva Madzinga’s total remuneration for the year ended December was R19.8m, while CFO Wikus Olivier was paid R8.2m in the period.

The group, which has a market share of more than 24%, last week reported a jump in return on capital to 28.5% from 24% in the year under review.

It increased its dividend payout 7%.

Lucia Swartz, chair of the human resources and remuneration committee, said in the remuneration report that the company’s remuneration philosophy and policy support the group’s strategy by incentivising the behaviours required to “meet and exceed our predetermined strategic goals”.

“The remuneration philosophy is, therefore, also an integral part of the group’s risk management structure. We consider prevailing economic conditions and local and international governance principles in setting up the reward structures,” Swartz said.

“The group pays attention to correctly positioning the nature and the scale of remuneration relative to appropriate comparator groups, governance standards and international best practice. Our remuneration policy is a key enabler of the Santam business strategy. Therefore, it must be market-competitive, fair and equitable to all stakeholders.”

Santam has refreshed its strategy, going live with a new omnichannel operating model at the beginning of 2023.

The Commercial and Personal multichannel business was restructured into three business units to focus on the distribution channels where it interacts directly with clients (Client Solutions), through brokers (Broker Solutions) and partnerships (Partner Solutions).

Madzinga said the group’s diversification across market segments, insurance classes and geographical reach continued to stand them in good stead.

“Recent corrective underwriting actions are positively affecting us, with further benefits expected as we continue with the rollout of geocoding, enhanced risk management, and other measures. Our geocoding initiative, which creates a comprehensive risk-based view of property locations in SA, is progressing well, and the value of losses prevented is steadily increasing,” Madzinga said.

“We want to at least maintain the dominant position we hold in our home market, even in the face of fierce competition and a rapidly changing operating environment, while also growing the number of clients we reach.”

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Originally posted on Business Live