SA’s largest short-term insurer Santam, which is appearing in court next week over business-interruption claims, has paid out almost all of what it pledged to qualifying clients.
To date the insurer has paid R870m in interim relief payments to 2,092 businesses in the tourism and hospitality sector. The payments range from R25,000 to R1.5m.
Santam is among a handful of insurance companies that have come under sharp scrutiny for refusing to process business-interruption claims.
The company’s relief payments amount to 70% of two months’ value of the sum insured for Santam’s policyholders which operate in the hospitality, leisure and non-essential retail services industries.
In July, the insurer pledged R1bn in relief to policyholders that have the contingent business interruption (CBI) extension in their policy cover. Its decision follows an agreement between insurers and regulatory authorities to make interim relief payments amid a rise in business-interruption claims as a result of the coronavirus-associated lockdown.
Next week, Santam, which appealed an application brought against it in the Cape Town high court by Cape-based group Ma-Afrika Hotels, will appear before a full bench.
Santam CEO Lizé Lambrechts said the company had received positive responses from intermediaries and policyholders regarding the interim relief payments.
“Recent feedback also suggests that businesses are starting to turn to their recovery plans as South Africans begin travelling for leisure purposes under level 2 of lockdown restrictions,” Lambrechts said.
Other players, such as Momentum’s subsidiary Guardrisk and Old Mutual Insure, went a different route, resolving to settle with claimants.
Guardrisk, which lost to a Cape-based restaurant Cafe Chameleon in a case that’s largely seen as precedent setting, said it would settle with 700 clients who were fighting the insurer’s decision to reject their claims.
Old Mutual’s short-term insurance arm said it would spend over R650m to settle with its clients.
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