The business interruption claims that were initially rejected by Santam and other insurers in South Africa are being paid now. The insurers were initially reluctant to honour the policies because in their view the damage was caused by government's lockdown and not the actual pandemic.
More business interruption insurance clients have now received some form of relief. The country’s largest short-term insurer, Santam, has finally paid out over R500m in relief payments months after claims were lodged by policyholders hard hit by the COVID-19 lockdown.
Following an agreement with regulators in July, Santam have committed to pay out up to R1bn in relief to some business interruption clients. The financial services company had so far made relief payments to over 1,300 policyholders who had contingent business interruption cover.
Many of these policyholders are the small and medium businesses operating in the tourism and hospitality sectors severely affected by the pandemic.
Santam said the average time between receiving the necessary documentation and payment was less than five days. These relief payments were set at a minimum of R25,000 and a maximum of R1.5m.
Santam CEO Lizé Lambrechts said, “Relief payments are set at a minimum of R25,000 and a maximum of R1.5m for individual contingent business interruption policyholders. We have made it clear that we will not make the process of claiming the relief too onerous for its qualifying clients and will rather focus on swift payment of the relief to the most impacted industries.”
It is an interim measure, while insurers sought legal certainty in court. Another insurer, Guardrisk, took a different route and was settling valid business interruption claims as a result of the coronavirus pandemic.