Santam pays R1 billion. – but still arguing over claims

Santam will pay up to R1 billion in claims to companies that had to close due to the Covid-19 pandemic, but there is a twist in the cable.

The insurer says it is to assist small and medium-sized commercial policyholders in the hospitality, leisure and non-essential retail services sector in these “difficult times”, and not because he admits that his interpretation of his policy has changed.

He also makes it very clear that large corporate clients are excluded from this payment “due to the scope and complex nature of insurance policies for such businesses”.

Lizam Lambrechts, the CEO of the Santam Group, said in a statement on Sunday that the company acknowledged that these were extremely difficult times for businesses and that he was “determined” to assist its policyholders.

“The relief is the result of Santam’s proposal to regulators to find a way to help policyholders in these difficult times. The company will start paying from the first week of August 2020, ”reads the statement.

Santam has come under fire since the outbreak of the pandemic because it did not want to pay claims for business interruption (SO) due to the Covid-19 pandemic.

His argument was that although Covid-19 may be the “immediate cause” of the operations that were forced to halt, the restriction is the “intervening cause”.

An intermediate cause breaks the direct link between the immediate cause and the closure of businesses during the restriction.

Santam says the restriction has caused activities to be stopped nationwide, regardless of whether a company has had confirmed Covid-19 cases or not, and that it is therefore an economic loss.

“There is a distinction between an economic loss and an insured loss. It will not be fair to expect the insurance industry to underwrite the country’s economic loss, ”said Mokaedi Dilotsothle, Santam’s chief marketing officer.

Santam explains in the statement that the R1 billion he is now willing to pay is equal to 70% of the value of two months of the sum insured for Santam’s policyholders in the identified industries.

“The two months are an indication of the period in which most businesses were affected by the restrictive trading environment when levels 4 and 5 of the state of restraint were in force.

“The 70% is based on the view that businesses would have had variable cost savings during the closures. The relief is set at a minimum of R25 000 and a maximum of R1.5 million for individual policyholders who have cover for business interruption, ”reads the statement.

To be eligible for a payment, policyholders who meet the following criteria must register a claim:

• They must be active in the industries identified for relief;
• They must have a Santam Commercial or Santam Hospitality and Recreation Policy;
• Their policy should have the SO extension;
• The SO extension should have been taken out before 18 March 2020;
• The policy must still be in force;
• The policyholder must have registered a claim; and
• They may not be an essential service provider that is allowed to trade during the state of restraint.

However, Santam makes it clear that its decision to make this payment “does not affect the insurer’s efforts to obtain justice in the interpretation of the policy by the courts”.

Lambrechts said in the statement that “we are convinced that the wording of our SO policy is very specific and only covers businesses for interruptions due to the outbreak of a disease at a local level, or within a specific radius”.

The case will be heard on September 1 in the High Court in Cape Town.

Santam also stopped covering pandemics on June 1.

According to Insurance Claims Africa, this means that if restaurants and hotels now receive guests again, they will not be covered when they have Covid-19 cases on their premises and have to close.

Santam said it was because the reinsurers had stopped covering pandemics that he could not continue to provide the benefit.