South African Insurer Santam to Pay Virus Relief to Clients with Biz Interruption Cover

July 27, 2020 by

South Africa’s largest property and casualty insurer will pay as much as one billion rand ($60 million) in relief to clients with business-interruption cover hit financially by the coronavirus pandemic.

Santam Ltd. will begin making relief payments next week, mainly to small and medium-sized policyholders in the hospitality, leisure and non-essential retail services industries who claimed for losses as a result of restrictions to curb the pandemic, Chief Executive Officer Lize Lambrechts said in a statement on the company’s website on Sunday.

The total relief sum represents 70% of what policyholders in these industries are insured for over two months, according to the statement. Payments will be set at a minimum of 25,000 rand and a maximum of 1.5 million rand. Large firms will be excluded due to the “bespoke and complex nature” of their insurance policies, according to the insurer, a unit of Sanlam Ltd.

“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,” Lambrechts said.

South Africa’s government imposed a strict five-week lockdown on March 27 that allowed only essential services to operate. Insurers have rejected business-interruption claims resulting from the lockdown, saying payouts can only result from physical events such as an infection at a company’s premises. While some restrictions have been eased, a ban on alcohol sales and a night-time curfew remain in place.

Santam’s announcement comes after the Financial Sector Conduct Authority on Friday said insurers agreed to consider paying a one-time relief to customers as the industry awaits the outcome of several court cases to determine they should pay clients who were forced to close due to the lockdown.

Photograph: Decorative statues stand outside a closed art retailer at the Victoria & Alfred Waterfront retail district in Cape Town, South Africa, on Thursday, July 23, 2020. Photo credit: Dwayne Senior/Bloomberg.

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