Loss adjustment firm, Insurance Claims Africa, is taking its battle for Business Interruption (BI) insurance for the tourism and hospitality sector to court.
“We are taking two insurance companies to court and are looking into legal action with other companies as well,” said ICA CEO, Ryan Woolley, during a media briefing yesterday where it was highlighted that there are now over 500 claimants in the tourism sector with a total of R3.5 billion (€179 million) to R4 billion (€205 million) against several insurance agencies.
One of these is Johannesburg Stock Exchange giant, Santam, which has been named in an ICA court battle. “Around 200 of the 500 claimants have policies with Santam,” said Woolley.
He said the earliest court date ICA could get was for September. “By which time many claimants will have had to close their businesses and retrench staff,” added Woolley.
One of the claimants, owner of the five-star Budmarsh Country Lodge in Magaliesburg, Meg Fargher, pointed out during the briefing that she had specifically switched to Santam because it was a large company. “As an ex-teacher I am mindful of the effect notifiable diseases and pandemics, such as Sars and Ebola, can have, not only on a community but a business. So, in 2011, I upped my premium and took out the extra BI cover.”
She said the business employed 30 staff members from the local community in North West province and she was now dipping into her personal savings to assist them as the insurers were finding loopholes to avoid paying.
“BI insurance by nature is meant to kick in quickly to help the businesses deal with the interruption to the operations – otherwise they will not survive.”
She said she “did everything right” and yet was still facing closure and her staff were facing starvation.
Santam addressed this issue in a Stock Exchange News Service announcement that “a small minority” of its commercial and corporate policyholders had cover that included protection against contagious or infectious diseases.
“This cover is provided under either the Contingent Business Interruption (CBI) or the Cancellation of Bookings sections of their policies. CBI insurance covers the interruption of a business as a result of a localised outbreak of a contagious or infectious disease that has directly impacted the business’s operations and caused a loss,” it said.
“Losses as a result of governmental restrictions on activity, such as a national lockdown, are not covered,” the group added. “This view is in line with the majority of our counterparts and reinsurers in the short-term insurance industry, both locally and globally.”
CEO of the Tourism Business Council of South Africa, Tshifhiwa Tshivhengwa, was vocal in his disapproval of the stance taken by many of the insurance companies and has appealed to government – including the Minister of Finance, Tito Mboweni – to intervene in this matter.
“The situation is dire and the industry is facing massive retrenchments on the back of several challenges caused by the COVID-19 pandemic. For insurance companies to make the distinction between lockdown and the pandemic is disingenuous. The two are clearly interlinked,” he said.
Owner of the historic, family-owned Cathedral Peak Hotel near Winterton in KwaZulu Natal, William van der Riet, pointed out that if his company – which employs over 200 staff – treated its clients the way the insurance companies were treating their clients, they would be out of business.
