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More insurers ready to 'settle' business interruption claims

29 July 2020 8:43 PM

Guardrisk's announced it will settle 700 small business claims, other insurance companies are following suit says Wendy Knowler.

It's become a hot topic during this time of Covid - why are insurance companies in a fight against desperate businesses claiming for business interruption?

Many insurers claim it’s the lockdown and not the pandemic that led to business interruption.

RELATED: Shareholder activists grill Santam about 'business interruption insurance'

Now, some are backing down.

Guardrisk is one of the latest to announce that it will settle, that's with up to 700 small business clients fighting its decision to reject their claims related to the impact of the nationwide lockdown.

RELATED: This insurance company says it is paying out business interruption claims

The claims range from tens of thousands of rand to several million, says consumer ninja Wendy Knowler.

Santam and Hollard have also announced plans to offer interim relief to hard-hit businesses.

RELATED: Santam to pay out R1 billion to policyholders in 'business interruption' relief

Picture: 123rf

On Wednesday, the South African Insurance Association (Saia) welcomed the understanding reached between certain non-life insurance companies, the Financial Sector Conduct Authority (FCSA) and the Prudential Authority (PA) on interim relief.

Knowler says Saia stresses that the relief measures apply only to business interruption policies that include extensions for infections diseases:

"The FCSA puts that at only between 3% and 5% of business interruption policies."

I think the best we can do here is to alert people to the fact that insurance is a massively complicated and technical subject and you cannot take any clause in an insurance policy for granted.

Bruce Whitfield, The Money Show host

The crux of this case is that the business owners - largely hospitality industry or restaurants and guest houses - understood that they had cover for losses related to contagious disease, or notifiable or whatever the wording was. And hello! we're in the middle of a pandemic so they should be covered!

Wendy Knowler, Consumer journalist

And then the insurers came and said 'no', without giving too much detail, 'we weren't offering cover at that premium for a pandemic affecting the whole of South Africa'.

Wendy Knowler, Consumer journalist

Knowler says the knock-on effect of more and more businesses going under has also influenced the court of public opinion, resulting in a change in the stance of some insurers.

Still, the wording of apparent settlements is open to interpretation:

Guardrisk said 'settle'. I think tonight Mutual said 'settle'. Santam said 'interim relief payment', where if it wins its court case then it's not going to ask for the money back but if it loses, then it's going to offset this R1-billion it's making available...

Bruce Whitfield, The Money Show host

Then Guardrisk said it is going to settle up to 700 claims... and it's the first three months of lockdown... It sounds like settlement but what's confusing me now is, why do that if you still hold the view that the lockdown itself didn't trigger a claim under its policies? And why are you still appealing that High Court ruling [in favour of Cafe Chameleon]? It doesn't make sense to me.

Wendy Knowler, Consumer journalist

Listen to the discussion on The Money Show:


This article first appeared on 702 : More insurers ready to 'settle' business interruption claims


29 July 2020 8:43 PM

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