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ICA welcomes FSCA BI insurance ruling - insurers cannot use the lockdown as an excuse to reject claims

10 July 2020 Insurance Claims Africa (ICA)

Insurance Claims Africa welcomes the Financial Services Conduct Authority’s (FSCA) announcement this afternoon, in which it categorically stated that the National Lockdown cannot be used by any insurer as grounds to reject a client’s claim.

Ryan Woolley, CEO of Insurance Claims Africa, a specialist public loss adjustment company representing over 500 businesses in the tourism and hospitality sector in their battle to get large insurers to pay out on COVID-19 Business Interruption insurance claims said: “This is a massive step in the right direction, and we applaud the FSCA for its brave and clear guidance and proactive approach to this important matter.”

Thus far, insurers have been rejecting Business Interruption claims, even though the claimants have extensions that cover infectious / contagious notifiable diseases, saying that these policies were never meant to cover pandemics and that the Government’s lockdown, and not the COVID-19 pandemic, caused the significant losses faced by tourism and hospitality industry.

Woolley added: “FSCA’s statement unequivocally rules out this interpretation of these policies. Nonetheless, we still invite the insurers to talk to us about a sensible compromise settlement.”

In its statement, the FSCA said that it is ‘concerned about the behaviour of some insurers, who are deliberately avoiding paying business interruption claims where no grounds exist to do so’. It also warned that it will take action against insurers who do not treat their customers fairly.

FSCA also pointed out that the Western Cape High Court judgment in the matter between Cafe Chameleon CC v Guardrisk is in line with FSCA’s position on the matter. The Court rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown, and not the Covid-19 pandemic.

“ICA believes that the insurers should not act contrary to their controlling authorities directives. To do so would increase the public's already poor impression of those insurers not paying these claims,” concludes Woolley.

Quick Polls

QUESTION

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?

ANSWER

No, the true numbers are not reflected. Almost a quarter of South Africans may already have been infected with Covid-19
It’s too soon to tell. We will likely get a second wave with stringent lockdown regulations in place again
Yes, South Africa bought enough time to make a significant difference. We saved lives and have passed our peak. The worst is over
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