Some of the major insurance companies have made relief funds available to many of their Business Interruption (BI) insurance claimants – while they seek legal certainty in the courts around payouts – but many in the tourism and hospitality sector have said that the relief funds may be too little, too late to save them from drastic steps, including closure and mass retrenchments.
This includes Wynand du Toit, Founder of Tented Adventures, and “passionate tourism business owner” who shared his open letter to his insurance company, Santam, with Tourism Update.
The relief funds were made available by Santam and Hollard Insurance, amongst others, after the Financial Sector Conduct Authority (FSCA) called on them to consider providing interim relief to their BI insurance policy-holders who have the appropriate contagious disease policy extension.
The FSCA in fact made the appeal due to the fact that legal certainty would “undoubtedly take time to achieve”, with dire consequences for policy-holders who have already been impacted severely by COVID-19 and the national lockdown.
Santam is one of several insurance companies refusing to pay out BI claims on the basis that the national lockdown – not the COVID-19 pandemic – forced businesses to close. An argument that loss adjustment firm, Insurance Claims Africa (ICA), claims is “disingenuous” as the pandemic led to the national lockdown.
ICA is representing over 600 claimants in the tourism and hospitality sector who have not had their BI claims paid out.
In his letter, Du Toit addresses several Santam executives by name – including Santam Group CEO, Lizé Lambrechts.
Here is his letter in full:
You may ask why I am addressing this letter to you all in your personal capacities and the simple answer is as follow:
This is my Tented Adventures family – Darrell, Jason, Obakeng, Carolyn, Marvellous, Angel, Khabohina, Nhlaluko, Thomas, Connie, Bennie, Suzan, Stephen, Themba, Lizette, Martha, Robert and our 147 dependants – and we are directly impacted by your decisions not to honour the agreement we had when you agreed to cover my business.
I am no lawyer, chartered accountant or actuary, I am just a passionate business owner in the most damaged industry in South Africa: tourism.
I must have read and reread our agreement – yes all 125 pages of the Product: Tourism Section: Commercial Umbrella Liability Section (wording version number: 001/06/2016) document – at least 20 times, trying my best to understand how you came to the conclusion that we are not covered. This, I must say, is still unclear.
On your website you state: “This is why business interruption cover should be seen as a vital part of a continuity plan for a business. It insures you against the loss of profits or revenue, to enable you to pay overheads, assisting a business to return to the same financial position it was in prior to the incident.”
In other words, it’s what helps a business get back on its feet. And, I want you to understand, my reason for taking cover with you was based on this, enabling us to pay overheads and get back on our feet.
135 days without any revenue. Days of making plans, using up all my savings, extending my personal overdraft and taking out a personal loan because our bank has no appetite to assist us.
135 days of asking our creditors for assistance with payment relief and holidays, they themselves also being small business owners having the same issues as we have. A total of 135 days of making plans to keep my Tented Adventures family fed and assuring them this to will pass and we will survive.
18 days, this is how long it took you to reject our claim. In 18 days, you made the decision that our cover that we trusted you with has no value.
18 days, this is how long it took you to decide on the future of my business, my family members, and my suppliers.
In the past 135 days I not only used up all our cash reserves (business and personal) to settle creditors, deposits received in advance by guests that booked with us but also borrowed more, begged more, made more plans, begged a lot more and ultimately became dependent, a burden on the State.
My business showed a minimum 10% year-on-year growth since 2016, we have hosted close to 25 000 guests since opening and won several national awards in service excellence. We were forecasting a fantastic year with more than 3 000 bed nights already secured by March 2020.
My business the past few years contributed nearly millions to conservation efforts; rural community spend in salaries and benefits paid to our employees and their dependants; spend with small businesses by renting equipment, vehicles, buying stock and paying for services rendered.
My claim is not for my benefit, I am not going to deposit it into my personal account. My claim is to ensure my business survives, I can settle all our outstanding debt to our creditors, ensuring our employees receive a salary and secure their employment, again contribute to conservation, support our local businesses and help them survive.
My claim is to settle all the advanced bookings deposits with our guests that can no longer travel, this I am sure will go a long way for many of them.
My claim is to ensure we are no longer a burden to an already overburdened State.
I could no longer afford to pay my insurance premium from June 2020 onwards, not because I had an issue with Santam, but because I no longer had funds, my bank account is empty – a bank account that never had any loans or overdrafts or defaults in four years, is now frozen by the bank.
On July 7, I received a notification from yourselves advising that my cover is no longer in place dating back to 1 June 2020 – this I also find interesting and not as per your policy document terms as I read it.
This week you announced a R1bn (€49m) relief plan for companies with CBI cover and that you are basing it on two months at 70% value as you are aware of the burden most suffered in the first two months of lockdown.
Reading the fine print broke me, literally broke me. What I saw as a light at the end of the tunnel, a relief that could make it a bit better for those around me – employees, creditors, and guests – is no longer available to me. This all because I could no longer afford to pay you, not intentionally, purely because I had no more money, the bank account is empty.
Where is the cover you promised in a recent Santam blog? Ms. Lambrechts, you and your senior management team and board must do the right thing. You have to honour our agreement, you have to settle our claims.
You have to deliver on what your website states: “For 100 years, Santam has been in the business of protecting South Africa’s most important assets and valuables. We look beyond the facts in front of us to think about the lives that lie behind them. That’s why when things go wrong, our clients know they’re with the insurer that makes it right. This is the Santam way. Good and proper then. Good and proper now. Good and proper always.”