Insurance Claims Africa (ICA) is calling on insurers to include larger tourism businesses in their interim relief payments.

In a statement, the public loss adjustment firm highlighted that it believed it was shortsighted of the insurers to have excluded the larger businesses, as this would negatively impact the thousands of people employed by these businesses, many of whom come from local communities where there is no other form of employment. 

The relief payments follow a meeting with insurers – called by the Financial Services Conduct Authority (FSCA) and the Prudential Authority (PA) in July – in which the regulatory authorities expressed their concern over the treatment of insurance customers who have business interruption (BI) insurance with extensions for contagious, infectious or notifiable diseases, which insurers have been unwilling to honour. 

It was also clear that regulators were concerned about the long-term reputational damage that insurers’ behaviour was having on the insurance industry.  

“While we welcome any payment to businesses in this vulnerable sector, we believe that for small, medium and micro enterprises the relief is only a small portion of what these businesses are contractually due, said Ryan Woolley, CEO of ICA, which is representing over 700 businesses in the tourism and hospitality sector in their battle to get large insurers to pay out on these claims.

“Equally concerning is that larger businesses, who employ many thousands of people, and on whom communities rely for their survival, have been completely excluded. We call on the insurers to broaden their relief payments to include these businesses. Their exclusion is prejudicial to the individuals who work in this sector.”

What insurers have offered

According to ICA, insurance companies are offering a variety of relief measures.

Hollard has offered interim relief to qualifying businesses with an annual turnover of R25 million (€1.2) or less which experienced 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 (€9 645) per policy. 

Bryte is offering interim relief equal to two weeks’ business interruption cover, capped at R100 000 (€4 822). The threshold for qualifying businesses is annual turnover below R5 million (€241 000). 

Old Mutual and Guardrisk have not offered interim relief payments. Instead, they made an offer of full and final settlements, and only to SMEs. The rest of their clients will need to await the outcome of the litigation process. Old Mutual said it would only make commercial settlements to compensate customers, with an annual BI sum insured of R5 million or below, for their BI losses based on specific criteria. 

Other insurers, including F&I, TRA, Lombard, AIG, CHUBB and Monitor have yet to make their customers an offer. ICA is currently engaging these insurers and has said it will report them to the FSCA and the Prudential Authority if they fail to comply with the regulators’ instructions. 

Santam has offered interim relief payments of 70% of two months’ value of the sum insured excluding VAT. The interim relief payments will be set at a minimum of R25 000 (€1 205) and a maximum of R1.5 million (€72 350)  for individual policyholders.

“It appears that Santam is excluding businesses that have been unable to continue paying their premiums as well as those with annual turnover above R50 million,” Woolley pointed out.

This week, Santam released a statement saying that it had, to date, paid roughly 50% of the relief promised. The company’s CEO, Lize Lamprecht, said the “company ensured that all the necessary resources were mobilised to effect the quick payment of the relief to policyholders”.

However, Woolley said that Santam should have deployed the same sense of urgency to make these payments to their customers at the outset of the lockdown, and not after substantial pressure from both the regulator and its customers.

In its SENS announcement of July 7, Santam notified shareholders that its balance sheet was sufficiently robust to accommodate either interpretation of cover.