Since the outbreak of the global COVID-19 pandemic, many businesses in the tourism, travel and hospitality sector have been notified by their insurance companies that, as of their policy renewal dates, none of the policy extensions will cover any kind of infectious disease outbreak.

“To our knowledge, insurers have had to take this stance because they’ve lost their re-insurance protection relating to infectious diseases to varying degrees,” explained Executive Head of SATIB Insurance Brokers, Dewald Cillié, commenting that this approach was disappointing as it did nothing to help to build confidence and trust in the industry.

“We must emphasise, however, that nobody in the world could have anticipated an event of this magnitude and the situation is quite patently unfair for everyone involved.”

He said insurers globally were re-evaluating their future cover for pandemics of this nature. “As the Financial Intermediaries Association has said, and we agree, there is every likelihood that there will be exclusions restricting coverage for pandemics in travel policies in future.”

Already, many in the tourism sector have had to find out the hard way that although they had taken out Business Interruption (BI) insurance, they had focused on the standard BI policies and not taken the policy extensions covering issues such as infectious diseases or cancellation of bookings.

Standard BI insurance not enough

“A distinction should be made between standard BI policies and those with Cancellation of Bookings (COB) cover or Contingent Business Interruption (CBI) cover. In the case of the former, the wording of the BI section requires there to be physical damage for there to be a claim, e.g. through fire or flood,” explained Cillié.

He pointed out that the consensus from insurers was that COVID-19 was not covered under a standard BI policy as no physical damage could result from an infectious disease.

“Policy holders with a COB or CBI extension to their BI insurance should speak to their broker to ascertain whether they have a potential claim,” said Cillié.

However, there is some debate on the interpretation of the wording of these extensions. Cillié said some insurers were viewing the disease extension as only applicable where there was a localised case of COVID-19 and the loss of income due to business being interrupted by that localised COVID-19 situation.

An example of this would be that a hotel or lodge owner would need to prove that he had a positive COVID-19 case from one of the guests in his establishment and that he needed to close for a certain period to sanitise his property.

Furthermore, the owner would only be covered for that period of closure, not the enforced period of lockdown for the government.

This poses the question, does SATIB believe Insurers can claim the loss of business has been due to the lockdown and not due to the coronavirus pandemic? This was not as black and white as that, said Cillié.

“Even amongst the legal fraternity worldwide there have been differing opinion on this. While it’s difficult not to have our own opinion on it, we have a duty to our customers to assess this perspective in an unbiased manner so we can advocate on their behalf with facts,” he said.


For clarity, Tourism Update has provided a definition of the respective insurance parties:

What is an insurance broker? (e.g. SATIB)

An insurance broker is a specialist in insurance and risk management who acts on behalf of their client and provides advice in the interests of their client. Insurance brokers liaise between clients (the insured) and insurance companies, to find the best deal and insurance cover.

What is an insurer(e.g.Santam, Hollard, etc.)

An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is an insurance company and/or an underwriter. A provider of insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person/company buying insurance is the insured or policyholder.