COVID-19: Old Mutual, Liberty temporarily drop their retrenchment covers
If you were thinking of getting retrenchment cover right now, you’re a little too late.
JOHANNESBURG - Old Mutual this week said it had chosen to temporarily close its retrenchment cover product so it could determine a fair and reasonable price once the coronavirus (COVID-19) pandemic was factored in.
Liberty also announced the suspension of its disability and retrenchment cover, citing uncertainty related to the COVID-19 and the difficulties in assessing the potential risks in respect of new applications.
The docking of salaries and the loss of jobs due to the virus is becoming a greater reality as more companies announced the effects of the lockdown.
But if you were thinking of getting retrenchment cover right now, you’re a little too late. The only companies that offer this form of cover have temporarily halted sales.
Old Mutual’s John Kotze explained why: “We use past experience to determine a fair and reasonable price for that cover. Going forward, we have no idea what the reasonable experience is that we will encounter as a result of COVID-19.”
Kotze said they were expecting an increase in retrenchment cover claims.
“It’s going to be interesting to see what does emerge of the course of the next weeks and months, and once we have a sense of that that will provide us with an opportunity to reopen that product at a new fair and reasonable price,” he said.
Old Mutual and Liberty gave assurances that they were in the position to pay all valid claims for existing retrenchment cover customers.
For official information about COVID-19 from the Department of Health, please click here.