There has been slow progress on the Covid-19 Business Interruption claims process ahead of the September 1 court case, specialist loss adjustment firm Insurance Claims Africa (ICA) noted during a webinar on August 26.

The company is representing more than 700 clients in the tourism and hospitality sector against large insurers that are refusing to pay their customers’ Covid-19 business interruption claims.

ICA CEO Ryan Woolley indicated that, over the past month, a number of insurers have committed to interim relief payments or settlements in respect of their customers’ business interruption insurance policies.

This follows after an agreement was reached between the financial sector authorities – the Financial Services Conduct Authority (FSCA) and the Prudential Authority (PA) – and large short-term insurers in July.

Woolley said that while the company and its clients are not ungrateful for these payments, it should have come at a much sooner date to ensure much-needed benefit for struggling clients, businesses and employees.

Moreover, he noted that these payments only covered about 200 of the company’s 700 clients in this matter, which leaves many without any financial relief. This is because many insurers did not come to the party in interim relief payments or settlements, he noted and, for those that did, many of ICA’s clients fell below the thresholds set by insurers.

Regulators were concerned about the treatment of policyholders by large insurers and the reputational damage that their continued refusal to settle valid claims is having on the sector at large. 

Since then, a number of insurers have begun making these relief payments, while some have not. Medium-sized to large businesses in the tourism and hospitality sector have largely been excluded, as have many of those businesses that, for financial reasons, have not been able to continue paying their premiums.

However, regardless of interim payments from some insurers, all insurers insist that they require legal certainty.

To this end, ICA has joined forces with hospitality group Ma-Afrika Hotels in its litigation against insurer Santam, which is due to be heard in the Western Cape High Court on September 1.

Woolley indicated that the ICA was looking forward to receiving legal certainty following the case, and hoped that the outcome of this case would serve as a watershed moment for the industry in this matter, with all insurers to abide by the decision.

He also noted that the FSCA had been approached by several insurers to form a best case scenario for the matter, similar to what has happened in the UK.

The ICA did raise this matter with FSCA in early June, Woolley noted, but the FSCA was unable to assist, which was when the company sought a legal avenue.

To the company’s understanding, the last update in this regard was that the FSCA was looking for proposals of interest from insurers, by September 14, at which point it would decide on whether to follow this path and what that process would look like.