The boss of the Tourism Business Council of South Africa (TBCSA), Tshifhiwa Tshivhengwa, has appealed to Finance Minister Tito Mboweni and government to intervene in the tourism industry’s dispute with insurance companies not paying out Covid-19 pandemic claims.
Moneyweb has reported extensively on the issue, which seems to be coming to a head with several court battles brewing between hard hit tourism businesses and leading insurers around non-payment of business interruption insurance, despite these businesses having cover for infectious and contagious diseases.
Speaking during a web media briefing on the dispute earlier on Wednesday, together with affected tourism businesses and loss adjustment firm Insurance Claims Africa (ICA), Tshivhengwa said it was time for the Finance Minister or government to get involved to ensure insurance groups comply and pay out urgently.
“The government needs to come to the party now as they gave instruction around the Covid-19 lockdown… The tourism industry is in a corner and may have to take drastic decisions to survive, like the taxi industry,” he said.
Tshivhengwa added that most of the tourism industry, which employs some 700 000 people directly, is still not operational due to restrictions to trade, including bans on inter-provincial travel. He said the fact that hundreds of tourism businesses such as B&Bs, lodges, hotels, eventing venues and restaurants were not being paid out business interruption insurance claims, added to the industry’s woes.
“This issue of non-payment by big insurance companies will deal a knock-out blow to the industry, with hundreds of smaller businesses in the tourism and hospitality sector set to close if they are not paid. Many have not received any revenue for almost three months and are dependent on pandemic cover to get through the Covid-19 crisis,” he told Moneyweb later.
The TBCSA is an umbrella body for the tourism and hospitality industry in the country. Coincidently, worth noting is that Mboweni is former chairperson of the council (prior to his appointment as Finance Minister).
During the briefing, Tshivhengwa did not mince his words and called out the insurance industry on the issue.
“Many of these businesses have taken out this [business interruption insurance with infectious diseases cover] to protect themselves… What is happening here is nothing short of insurers spitting in the face of these hard-hit companies, which have been paying for this cover,” he said.
Tshivhengwa shares the sentiments of the CEO of ICA, Ryan Wooley, that insurers are being “disingenuous” by not paying out or delaying such claims.
“Tourism businesses are on their knees and are failing… The lockdown and restrictions did not come about by itself… It came about as a result of the Covid-19 pandemic. It is time for the insurance companies to show up. They can’t be insensitive to [affected] businesses and the people that work there,” he added.
“This is clearly a scheme… They just want to collect [insurance premiums] and have no intention to pay out. It is very disappointing, especially as some of these insurers are invested in the tourism industry,” said Tshivhengwa.