South African insurers agree to pay COVID-19 claims
The group of insurers includes the nation's largest P&C carrier, which has committed to $60M in policyholder payments.
Virus-hit businesses in South Africa will receive some relief now that three insurers have agreed to pay policyholders for losses related to COVID-19 shutdowns, Bloomberg reported.
The decisions come a few weeks after the Financial Sector Conduct Authority (FSCA) instructed insurers to not broadly reject claims and arranged a deal with insurance companies to consider once-off payments to policyholders. The FSCA, which oversees the country’s financial services industry, also agreed with a Cape Town court’s decision of what can be considered as a business interruption claim, as courts continue to debate whether insurers are correctly interpreting policy terms.
According to Bloomberg, Momentum Metropolitan Holdings Ltd.’s Guardrisk will submit payments to policyholders who claimed business interruption losses during South Africa’s five-week shutdown beginning in late March. The settlement amount will cover the first three months of the lockdown. Santam Ltd., the nation’s largest property & casualty insurer, and Hollard Insurance Co said they would offer one-time financial relief to small-and-medium-sized clients. Santam, alone, has committed to 1 billion rand ($60 million) in payments.
“We are offering this relief because we acknowledge that the lockdown and COVID-19 pandemic have had a devastating impact on our economy,” said Santam CEO Lize Lambrechts in a statement. “After careful consideration of the situation, especially the unforeseen length of the lockdown and the ongoing restrictions that are impacting businesses, we decided to assist with a substantial payment commitment to help sustain our policyholders in the most impacted industries.”
Court decisions hang in the balance
Insurers in South Africa have widely denied COVID-19 insurance claims, maintaining that pandemics are not insurable events. Similar to ongoing insurance coverage lawsuits in the U.S., South African insurers and insureds are disputing what constitutes “physical damage” to trigger payouts under business policies. (A Michigan judge recently ruled in favor of an insurer, noting that physical must be “something with material existence. . . that alters the physical integrity of the property.”)
“We hope the legal process is pursued and fast-tracked,” Ryan Woolley, chief executive officer of Insurance Claims Africa, told Bloomberg regarding South African lawsuits. “We are going to be pushing to get some resolution.” Insurance Claims Africa is representing over 600 businesses in the tourism and hospitality sectors in their battle for pandemic insurance coverage.
In May, French insurers, including AXA and Generali France, also agreed to pay some policyholders for COVID-19 claims. AXA notably lost a Paris court battle with a restauranteur over virus-related business interruption losses. In response, AXA CEO Thomas Buberl said the company would meet the bulk of claims from restaurant owners whose contracts contained some ambiguity.
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