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Santam commits to pay some business interruption claims

This commitment comes after the Financial Sector Conduct Authority reached an agreement with insurers.

santam logo

CAPE TOWN - South Africa's largest short-term insurer Santam has committed to pay out up to R1 billion in relief to some business interruption clients.

These business interruption insurance claims were previously rejected.

This type of insurance usually kicks in when a pandemic hits.

However, some insurance companies have been reluctant to pay, arguing that the damage was because of the lockdown and not the actual pandemic.

This commitment comes after the Financial Sector Conduct Authority reached an agreement with insurers.

They've agreed to provide interim relief to policyholders who have the appropriate contagious disease extension in their business interruption cover.

The regulator said that this would act as an interim measure while clients sought legal certainty in court.

The relief will take the form of one-off payments to policyholders so that they can continue to run their business as they await the legal outcome.

Santam's court case will be heard in September, where two of its clients will challenge the insurer's decision to not pay out lockdown-related claims.

In the meantime, Santam said that relief payments would be for small and medium-sized commercial policyholders with contagious disease cover in the hospitality and leisure industries.

Large corporate clients do not qualify.

Guardrisk's case has already received a ruling in favour of the client and they will appeal that judgment.

Earlier this month, the regulator warned that it would take action against insurers which continued to reject business interruption claims.

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