SA insurers’ offer in Covid claims fight too little too late for some

As the battle over the claims has dragged out, many small businesses, including restaurants have already collapsed.
Image: Bloomberg

South African small businesses fighting rejected coronavirus-related claims said insurers’ offers of relief are too little too late for many and could leave some already struggling to survive with nothing at all.

Insurers around the world have argued Covid-19 lockdowns were not covered in policies many clients thought would protect them as the pandemic brought business to an abrupt halt.

Facing pressure from the financial services regulator and with reputational damage mounting, South Africa’s insurers have offered to either settle with some clients or provide interim relief payments while court cases play out.

Ryan Woolley, CEO of Insurance Claims Africa, which represents around 600 affected businesses, warned such offers were unlikely to fend off widespread layoffs and closures.

Around 30% of his clients would likely receive nothing, he said. Others saw settlement offers as “unreasonable”.

“We’ll put the money to good use to those that receive the benefit. For the balance, it’s… just more agony,” he said.

Santam, South Africa’s largest short-term insurer, and Hollard Insurance Group are proposing interim relief payments on some claims while court cases are ongoing.

Businesses expecting to receive payouts from Santam said the money could help them stay afloat.

To get a payment, however, policies must still be in force – a problem for Wynand du Toit, whose tented safari camp company had to stop paying premiums when revenues abruptly dried up.

“Reading the fine print broke me, literally broke me,” he said in an open letter to the insurer.

Santam, whose CEO this week said interim relief was “the right thing to do”, declined to comment further on its offer.

Saving jobs

Hollard said around 80% of its customers with contagious disease coverage could get relief under its offer provided they can prove a 30% drop in revenues between April and June.

Old Mutual and Guardrisk have announced settlement offers that would see them pay out on some claims.

“Guardrisk opted for a commercial settlement, in line with our policy conditions, rather than to make interim payments because it provides immediate certainty for all stakeholders,” the company said.

Old Mutual’s settlement offer only applies when the sum insured is below R5 million annually, however.

Glynis Hyslop said her events company was insured with Old Mutual for well above that cap and will therefore likely receive nothing.

Payment on her R28 million claim would allow her to rehire some 70 laid off staff, she said. “Just one little claim could save a lot of people.”

Old Mutual told Reuters it understood its customers were struggling due to the pandemic and was responding with interest-free loans and payment extensions.

“Our response to this crisis as an organisation has been to provide support to as many of our customers and communities as we possibly can,” it said.

As the battle over the claims has dragged out, many small businesses, including restaurants – a sector particularly hard hit by lockdown restrictions – have already collapsed.

Since they are no longer trading, they may not qualify for payouts under business interruption policies, which often require companies to be in operation in order to claim benefits.

“If the insurance companies had paid out properly, many of these restaurants may not have gone out of business,” said Wendy Alberts, head of the Restaurant Association of South Africa.

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Insurance the only business that enters a contract with the sole purpose of never honouring it.

I am cancelling or reducing every type of insurance I have. Really strange little clauses that add premiums but no real benefits.

An insurance premium is the monthly price of complacency. It provides a false sense of security. It is an expensive alternative to a sleeping pill, or psychotherapy and a waste of time and money compared to a weekly visit to the local faith community.

You are not buying something when you pay an insurance premium. You are bribing yourself to support the lifestyle of you broker. If the insurer is willing to accept your business, you don’t need it. If you need insurance, you won’t be able to afford it.

Settlements and interim relief are tactics to play for time. If you know you’re not liable why offer interim relief? When the insurance houses win their court battle (which they know they won’t) will they then have those businesses that took interim relief pay them back?

May all the decision makers in these despicable blood sucking insurance businesses be banned for life from ever setting foot in a restaurant again.

The insurers were well aware of the practical consequence of delaying payouts (liquidation) and should face full liability for delaying assistance. (The loss in equity).

THIS IS WHAT INSURANCE COMPANIES GET AWAY WITH IMPUNITY!!!!!!!!!

End of comments.

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