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Insurers' failure to pay out causing mass job losses - Fehasa

Hospitality firms pay business interruption insurance to cover costs for when an event like a global pandemic hits but now some insurers are not coming through.

Picture: www.123rf.com

CAPE TOWN - The Federated Hospitality Association of Southern Africa said that insurers' failure to pay out was causing mass job losses.

Hospitality firms pay business interruption insurance to cover costs for when an event like a global pandemic hits but now some insurers are not coming through.

OUTsurance this week became one of the few insurers paying business interruption insurance claims related to infectious diseases cover.

Companies take out business interruption insurance to ensure they are covered when affected by events like a notifiable disease outbreak.

But now insurers have rejected a number of business interruption claims, saying that the coronavirus outbreak itself is not causing the harm, but rather the government-regulated lockdown.

Fehasa CEO Lee Zama said that these rejections had intensified an already grim situation for the hospitality industry

"That cover would have ensured that some of the costs are covered. Now we're sitting in a position where those costs are not covered, which puts additional stress and makes it near impossible for them to survive."

She said that according to a survey done in April this year, 50% of firms in the industry had reduced wages and over 10% of firms had made more than half of their employees redundant.

Insurance Claims Africa earlier said that about 500 businesses had appealed for help after their business interruption insurance claims were rejected.

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