An industry body representing insurance claimants has called for the inclusion of larger tourism businesses in interim relief payments.
The tourism industry has been one of the hardest-hit sectors during the coronavirus lockdown.
Ryan Woolley, CEO of Insurance Claims Africa (ICA), the loss adjustment firm which is representing more than 700 businesses in the tourism and hospitality sector, said that excluding larger tourism businesses from the interim relief payments will affect thousands of jobs and local communities.
Short-term insurers facing claims under business interruption policies have undertaken to either make relief payments pending the outcome of legal action, or to make full settlements.
This undertaking came after a meeting with the Financial Services Conduct Authority (FSCA) and the Prudential Authority (PA) in July, which expressed concern over the refusal by insurers to make payments.
However, the payments that have been made have been limited to small and medium-sized enterprises (SMEs).
According to Woolley, Hollard Insurance, for example, has offered interim relief to qualifying businesses with an annual turnover of R25m or less that had a turnover reduction of 30% or more in April, May and June compared with the average income over the previous 12 months. The payments will be capped at R200,000 per policy.
Bryte is offering interim relief equal to two weeks’ business interruption cover, capped at R100,000 excluding VAT. The threshold for qualifying businesses is annual turnover below R5m.
Old Mutual and Guardrisk have not offered interim relief payments. Instead, they made an offer of full and final settlements, but only to SMEs. The rest of their clients will need to await the outcome of the litigation process.
Old Mutual said it will only make commercial settlements to compensate customers with an annual business interruption sum insured of R5m or below for business interruption losses based on specific criteria.
Other insurers have yet to make their customers an offer.
Santam, SA’s largest short-term insurer, has offered interim relief payments of 70% of two months’ insurance, excluding VAT. The interim relief payments will be set at a minimum of R25,000 and a maximum of R1.5m for individual policyholders.
Woolley said it appeared that Santam “is excluding businesses that have been unable to continue paying their premiums”. Businesses with a sum insured above R50m also do not qualify for relief.
“A number of clients have also been excluded from Santam’s ‘relief’ payments, because they could not afford to continue paying their premiums, mostly because Santam did not pay their claims. While the insurer has said a committee will review these circumstances, the payment is not guaranteed and our clients feel it's just another example of Santam making them beg for payment.”
ICA has joined forces with hospitality group Ma-Afrika Hotels in their litigation against Santam, which is due to be heard in the Western Cape High Court on September 1.
CORRECTION: August 18 2020
A previous version of this story directly quoted Ryan Woolley, the CEO of Insurance Claims Africa (ICA) from a statement saying Santam was excluding businesses with an annual turnover about R50m. This is incorrect and the statement has been corrected to reflect that businesses with a sum insured above R50m do not qualify for relief.
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