https://www.engineeringnews.co.za
Africa|Business|Financial|Services
Africa|Business|Financial|Services
africa|business|financial|services

Insurers' offer in Covid claims fight too little too late for some

31st July 2020

By: Reuters

  

Font size: - +

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, Santam said when it announced the offer. That's a potential 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 told Reuters that such cases would not automatically be excluded from relief and be reviewed on a case by case basis.

"We will look favourably at those businesses that have not been able to afford their premiums due to the impact of the lockdown," the company said.

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.

Edited by Reuters

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.166 0.221s - 138pq - 2rq
Subscribe Now