With many insurance companies rejecting claims related to COVID-19 – despite them having the required Business Interruption (BI) insurance extensions – specialist public loss adjustment firm, Insurance Claims Africa (ICA) has over 400 claimants in this sector against a number of insurers.
ICA acts exclusively on behalf of the claimant assisting them in a time of crisis to prepare, motivate, quantify and negotiate settlement of their insurance claim. If these discussions are unsuccessful, it will turn to the courts.
“ICA is currently in discussions with leading insurance companies in an attempt to reach a sensible settlement for these businesses that face imminent closure,” said Ryan Woolley, CEO of Insurance Claims Africa.
He said ICA was also engaging with the Financial Services Conduct Authority (FSCA) – the market conduct regulator for the financial services industry – hoping that the FSCA would act in the interests of the policyholders who desperately needed the policy payouts due to them, to support their staff and meet their fixed costs.
Woolley said BI insurance existed to help companies survive following an unanticipated event. There are generally two types of BI insurance: a basic policy that requires physical damage to the business premises in order to trigger a claim, and a Tourism/Hospitality policy that contains a specific extension that includes interruption by infectious or contagious notifiable disease.
“COVID-19 qualifies as a declared notifiable disease, but local insurance companies are frustrating legitimate claims by businesses. Insurers claim that government regulations in respect of the lockdown are the cause of the loss, not COVID-19.”
He said ICA believed that insurers were, in effect, penalising their customers for their own poor underwriting skills, acting in poor faith and were in breach of the ethical codes and standards that guide the insurance industry, especially where it concerned Treating Customers Fairly regulations.
This concern has also been raised by SATIB Insurance Brokers but it cannot take legal action on behalf of its customers. “This would be a decision that each customer would have to take as the insurance contract is between the insured and the insurer,” said Executive Head of SATIB Insurance Brokers, Dewald Cillié.
Cillié said the company believed the most constructive scenario for both the tourism and hospitality sector and the insurers would be to find a socially responsible solution such as a fund or ex-gratia payment.
“We have also consulted with two of South Africa’s foremost senior legal counsel in the financial services sector to ascertain our best approach considering the policies issued for our clients.”
Cillié added thateven amongst the legal fraternity worldwide there had 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 that we can advocate on their behalf with facts without getting lost in and distracted by the absolutely tragic situation within which the industry finds itself.”
51% filed insurance claims
SATSA ran a survey recently that indicated that 51% of respondents had filed an insurance claim under their short-term insurance policy for losses suffered as a result of COVID-19 and 56% had received some feedback.
Of the 61% that confirmed that they had Business Interruption insurance, 40% weren’t sure whether they had Business Interruption insurance with a Cancellations of Bookings (COB) or Contingent Business Interruption (CBI) policy extension. Some 49% of those polled said they had either or both COB or CBI Business Interruption extensions to their policy.