Statement by the South African Insurance Association on interim relief for infectious disease claims

30 July 2020 South African Insurance Association (SAIA)

The South African Insurance Association (SAIA), the representative body of the non-life insurance sector, welcomes the understanding reached between certain non-life insurance companies, the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) on interim relief with respect to claims for business interruption cover on policies that have an infectious disease extension.

The agreement was reached between the regulators and some members of SAIA, and not the industry at large. It is important to note the interim relief measures apply only to business interruption policies that include extensions for infectious diseases. SAIA also agrees with the estimate of the FSCA that only between 3% and 5% of business interruption policies with infectious disease clauses are at issue.

The interim relief was proposed by some non-life insurance companies which engaged with the regulators as part of their commitment to contributing to an equitable solution while the process of obtaining legal certainty on some contract terms is underway.

As an industry body, we welcome the FSCA’s acknowledgement in previous communication of the regulatory and legal processes set out in its remit and available to the non-life insurers. We further welcome the FSCA’s recognition that obtaining legal certainty is necessary as the litigation underway could have considerable long-term consequences for all premium-paying policyholders in terms of what risks are insurable and at what price.

Should current litigation be determined in favour of insurers, they have undertaken not to claim back the interim relief that will now be provided. The quantum of the relief is a matter between each insurer and policyholder.

As an industry we remain committed to finding a solution that is equitable and fair to all premium-paying policyholders and non-life insurers. This understanding reached with the regulators is a further demonstration of the industry’s willingness to support its clients as far as possible through this difficult time while legal certainty on the claims is sought.

We are particularly appreciative that the regulators acknowledge that non-life insurers are providing interim financial relief to policyholders without the support of their reinsurers. It is equally important to emphasise that only a portion of businesses choose to take out cover for business interruption. Of those that chose to take out business interruption cover, only a portion included an infectious diseases clause.

As the regulator has previously noted, there are broadly six categories of clauses covering infectious diseases. Claims in three of these categories are generally payable, subject to the normal provisions of the contract in place and the claims process.

This leaves at issue the need to obtain legal certainty in terms of policy formulation and wording for three categories of this sub-group of policies.

We therefore appreciate that the regulators acknowledge that this issue is complex and that the non-life sectors in other countries such as the UK are also in the process of seeking legal certainty on business interruption claims with infectious disease extensions.

Our members emphasise that valid claims have been and will continue to be paid without delay.

SAIA further welcomes that recent engagement with some of our members has begun to provide clarity on the role of the FSCA as an overall regulator of market conduct rather than as an adjudicator of individual claims.

The industry has already undertaken considerable efforts to help policyholders during this difficult time by offering premium relief, ensuring small and medium enterprises were timeously paid during the lockdown for work undertaken on non-life insurance claims and processing all valid claims as speedily as possible.

We will continue to engage with both our regulators and policyholders in a constructive, open and transparent manner.

Quick Polls


The intention with lockdown was to delay or flatten the Covid-19 infection curve and give both the private and public healthcare sectors time to prepare for the inevitable onslaught. Did the strategy work?


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