Santam clarifies Covid-19 position on business interruption cover

In the wake of tourism and hospitality industry outcry.
Cover of this nature is ‘very specific’; a business would need to be directly affected, and would be covered for the time it takes to clean their premises and get back to business. Image: Moneyweb

JSE-listed insurance giant Santam says it is currently processing “a number of Covid-19 related business interruption claims” but did not reveal the total value of these claims in an emailed response to Moneyweb queries this week.

Santam and other short-term insurance groups have come under fire from clients as well as loss adjustment firm Insurance Claims Africa (ICA) for not paying out or delaying payments on such claims.

The outcry comes largely from tourism and hospitality businesses that have extensions to their normal business interruption insurance plans which cover contagious and infectious diseases.

Read: Business interrupted, but insurers don’t want to pay

Thabo Mabaso, head of corporate communications at Santam, said in a statement that the group is “committed to quickly paying all valid claims that meet the definition of loss” described in its business interruption insurance policies.

“As indicated in our operational update issued on 3 June, provisions for claims from these policies have been raised in our financials based on our best estimate of our exposure. We will treat all claims in a fair manner, and where we are liable, we will not hesitate to settle,” he said.

‘Not at liberty to disclose’

“In terms of the JSE regulations, Santam is not at liberty to disclose financial information that has not been made available to shareholders,” he added, saying the company will release its interim results, which will provide further details, on or about September 3.

In its recent operational update posted in a JSE Sens statement, Santam noted that “a small minority” of its commercial and corporate policyholders have cover that includes protection against contagious or infectious diseases.

“This cover is provided under either the Contingent Business Interruption (CBI) or the Cancellation of Bookings sections of their policies. CBI insurance covers the interruption of a business as a result of a localised outbreak of a contagious or infectious disease that has directly impacted the business’s operations and caused a loss,” it said.

“Losses as a result of governmental restrictions on activity, such as a national lockdown, are not covered,” the group added. “This view is in line with the majority of our counterparts and reinsurers in the short-term insurance industry, both locally and globally.”

Read: OUTsurance pays out Covid-19 business interruption claims

In Santam’s statement to Moneyweb, Mabaso reiterated that CBI protection against contagious or infectious diseases is “very specific”.

Policy wording ‘quite clear’

“Our policy wording is quite clear in that it states a business needs to be directly impacted by a disease such as Covid-19 in order for the cover to respond. If a policyholder can show this to be the case, then we will pay their claim,” he said.

“What we are seeing is that a number of our policyholders were forced to close their businesses at the start of the national lockdown.

“The national lockdown is not a peril that is covered by our policies and so they would not be able to make a successful claim for this event,” Mabaso added.

“It is a requirement in terms of the policy that the business is directly affected by a case of Covid-19. For example, if a policyholder ran a hotel and one of their workers or guests became infected with Covid-19, forcing them to close their operations, then they would have a claim for as long as it took them to clean their premises and return to operations,” he pointed out.

Standard business interruption insurance covers direct physical damage to property, for example a fire or flood. However, it does not cover losses related to infectious diseases.

“It is imperative that we offer clarity on the scope of our CBI insurance cover with specific reference to Covid-19.

“More so in view of the widely held perceptions that short-term insurers will cover all claims linked to the lockdown and Covid-19,” Mabaso said.

Worth noting, however, is that ICA’s biggest issue with Santam and other insurers is the non-payment or delays in disbursements linked to policyholders that have the infectious diseases extension to their cover. ICA is now representing around 500 tourism and hospitality businesses affected by this; however, many more businesses are affected countrywide.

Legal battle

Santam is already facing a legal battle in Cape Town with a boutique hotelier and restaurant group in relation to refusing to pay out such claims.

ICA CEO Ryan Wooley told Moneyweb that his group is considering joining the legal action if some sort of settlement with Santam is not reached. He said around 200 of the 500 clients ICA is representing in the matter are Santam policyholders.

Read: Will your travel insurance cover you for Covid-19?

Responding to this, Santam’s Mabaso said: “It is important to state that we could not consider a settlement for a select group of clients that would not apply equally to all impacted policyholders.”

Furthermore, he said that the proposal sought compensation for claims that did not meet the policy definition of a loss, which is why a settlement could not be reached.

“It is important that we obtain legal certainty as quickly as possible on the policy interpretation applied by Santam and other insurers,” he said.

“To this end, we have agreed expedited timelines on legal proceedings with a policyholder that has a number of boutique hotels and restaurants which are representative of the bulk of the claims we have received.

“While we have great empathy for all impacted by this virus, we can only commit to paying claims in line with the policy wording for which premiums were also paid,” he added.

Meanwhile, Santam pointed out that to date the group has committed more than R400 million in Covid-19 funding. This is meant to provide relief through premium reductions, premium refunds and “direct support to insurance industry business partners and key government initiatives”.



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Forget insurance except for the most basic and well known types like public liability, theft and fire. Create own reserve fund for everything else, because insurers will always find a way to worm out of unusual situations, even if you think you’re covered. And if nothing happens the fund is yours to keep.

Great advice if its a low risk, like power surge on your decoder. What if your kids write off your expensive car, or you have a flood and your business is destroyed. One swallow does not make a summer and after 30 years Ive seen more claims being paid than not being paid. Rather get rid of your adviser who tells you everything is covered to get your business. Insurers are a business like any other and the policy is a contract with a wording that is legally binding. Let the courts decide on this one as there are to many opinions on this wording which can be read either way and get back to what the intention was for giving the cover in the first place.

Good advise above,some more if i may…
My word are not my bond = santam


Old Mutual and Nedcor. Disgraceful, Reprehensible and Iniquitous comes to mind.

Oh and no ethics Whatsoever.

Though they’ll always tell you about how they care for you in their advertising of course.

Whereas a comprehensive policy could be detailed in a couple of pages of plain English, insurers install tens of pages of fine print that ensure they can wiggle out of just about any claim. No wonder that so many legitimate claims are inflated to try and recover what the insurers have previously screwed policy holders out of. Just like avoiding tax where possible, because we just see our taxes stolen, insured members will claim excessively as long as they believe insurers are not fair.

I am not in hospitality but insured by Santam for industrial property. My Promise : if Santam screws the hotel and restaurant policy holders I am dropping Santam as it shows what I must expect.

Typical insurer behaviour.

They will give you a yellow umbrella when the sun is shining. When it starts to rain, they take that same yellow umbrella away on a technicality

I do not own a business, so here’s a question
Is the cover not taken out if your premises must close because of something outside of your control?

I am with Santam. Even before this, I was considering moving away. If it isn’t mainstream-type insurance e.g. car and household with standard payments for things like burst geyser, windscreen, or theft, then my impression of them, as with many others, is that they will worm their way out of paying. (They want to keep their profits after all)

I have a claim to be completed, but I will definitely be moving away.

I wont move to a company like Outsurance since the only things that I have heard about them are 1) low premiums 2) claim rejection 3) payment negotiation after claims have been approved. I’m not interested in trying to sort out a company when I could use a broker to do that.

Unfortunately in South Africa, we have grown many amoral companies with amoral employees.

According to Santam the loss is caused by the government enforced lockdown, not the Covid virus.

But the lockdown was caused by the Covid virus, so, one step further back and the policy wording is met and they should pay-out.

I suspect the stonewalling is coming from the overseas re-insurers, where liability is now tested in the courts.

How does their TV advert go again ?

“Everyone who has been paid out on their business interruption claim say “Aye”” [Silence]

WORMS!!!! Santam and other insurers will lose these cases and in the process lose many customers disgusted by their behaviour. Insurance is a grudge purchase and customers feel more aggrieved than normal when things like this happen.

Suggestion to Santam re the last paragraph of the article – before running out and providing commitments to ‘Covid relief funding’ make sure that your clients have their claims honoured. This is what they took their cover out for, not so that you can make announcements about how magnanimous you are to non-claimants.

Insurance policies are one sided agreements. If you decide you don’t like a particular clause they don’t want your business.

Errr … they sell you the umbrella when the sun shines and want it back when it rains?

Err, they sell you an umbrella for the rain and then when a rock falls on you, you expect to be covered the same?

Thanks for this marketing message from the Santam PR department.

Work on the premise ALWAYS, that the mandate under which ALL insurance companies work is ALWAYS reject your claim in first instance on any grounds that might fit.

A hint! – for the companies trying to get desperately needed claims – you are focusing on the wrong point. Stop with Covid 19 as the basis for your claim, as it is too easy to deny. Focus on what our glorious president did back in March – he declared a state of NATIONAL DISASTER – this is the key point. Do not even mention Covid 19 in your claim. Your business has been forced to shut, due to a NATIONAL/NATURAL disaster as confirmed a hundred and one times over by the government and president. This falls under the ambit of FORCE MAJEUR an act of God. Again do not mention Covid 19 i cannot stress this enough.

I am aware of several companies which are now being settled on the above basis – but they will not come forward as they are OBVIOUSLY gagged by very strict NDAs, where if they open their mouths they forfeit. Remember, business interruption is paid out monthly, no one that is finally getting paid is going to risk that.

2nd hint – if you are small, form a collective. The collective companies must group themselves based on a common insurer. Most insurance companies have ALL your insurance from life/ vehicles/ trucks/ house/ various others etc. The collective monthly premiums from all of these, when grouped as a collective amount to millions and millions. Use step one above and step 2 – threaten to move as a collective to ANOTHER INSURER if they do not pay out or offer settlement. YES the other insurance company is likely equally as bad but you can write your future terms within reason.

3rd hint – approach as a collective an alternate insurer outside your common insurer – with the lure of tens of millions in monthly premiums potentially coming their way – start negotiations, as this industry is incestuous and word will get out you are serious.

This is not a what if strategy, it is working you are just not hearing about it. Insurance companies will also be fighting for survival in the months ahead, use their greed against them.

Just an idea.

End of comments.



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