Businesses take on insurance firms for rejecting Covid-19 claims

Businesses in the tourism and hospitality sector, devastated by the Covid-19 pandemic, have launched an online petition calling on their insurance providers to pay out on their business interruption claims.

The petition calls on all South Africans, including the business sector, to support their cause by signing the petition and by re-evaluating their insurance providers.

Many of these businesses face imminent closure, which will result in a broken tourism sector and the loss of thousands of jobs, which they say can be avoided if insurers honour their contractual obligations and pay out on these claims.

The joint release stated that restaurants, hotels, lodges, cafés and other tourism businesses took out Business Interruption insurance that includes cover for infectious and notifiable diseases.

The statement names companies including Santam, HIC and Guardrisk (owned by Momentum), Hollard, Old Mutual, Thatch and Bryte, which it alleges are rejecting claims, “saying that Government’s lockdown, and not the Covid-19 pandemic, is responsible for the deep losses experienced by these small and medium businesses”.

The industry statement noted that earlier this week, the Western Cape High Court compelled Guardrisk to honour the Covid-19 Business Interruption insurance claims of Cafe Chameleon, a restaurant in Cape Town.

The judge, it said, rejected Guardrisk’s argument that the losses suffered by the claimant was due to the lockdown, and not the Covid-19 pandemic.

“All along, the Insurers have said that they need the courts to provide legal certainty that they are liable, before they honour their clients’ claims. We now have that certainty, but we don’t see any insurer stepping up.

“The true test of a company’s ethics and values is how they treat their most vulnerable customers at their time of need,” said Robert More, CEO of the MORE Family Collection, who started the petition.

“Thus far, the actions of these goliaths don’t match their words, which are all centred on behaving responsibly and in line with deep ethical values. Actions speak louder than words, and their actions continue to be unethical.”

“The sector is bleeding jobs. By paying out our claims, the insurers can actually save jobs in our vulnerable sector, and by saving jobs, they have the power to actually save lives in our country right now. People are starving,” More said.

He said that business interruption insurance exists to help companies survive an unanticipated event.

There are generally two types of BI insurance: a basic policy which requires physical damage to the business premises in order to trigger a claim, and a Tourism / Hospitality policy that contains a specific extension that includes interruption by infectious or contagious notifiable disease.

These companies all have the latter, he said.

The Financial Sector Conduct Authority (FSCA), said last week that it is concerned about the behaviour of some insurers who are deliberately avoiding paying business interruption claims where no grounds exist to do so.

In a circular published on Thursday (9 July), the FSCA said that the national lockdown cannot be used by any insurer as grounds to reject a claim.

“Such conduct goes against the principles of treating customers fairly and breaks down confidence and trust in the insurance sector.

“The FSCA has communicated this view to insurers and will take action against those that do not treat their customers fairly.”


Read: Some South African insurers are trying to dodge paying out for lockdown losses

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Businesses take on insurance firms for rejecting Covid-19 claims