RISK
31 July 2020
‘No insurer can afford to offer widespread pandemic coverage within standard policies’
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pecialist claims preparing company, Insurance Claims Africa (ICA), is alleging that local insurance companies are frustrating legitimate claims by businesses following COVID-19, insisting that the virus is a declared notifiable disease – but can any insurer afford to offer widespread pandemic coverage within standard policies? The answer from the industry is a clear ‘no’. In a statement, Santam says it is committed to supporting its clients through the COVID-19 pandemic and playing a significant role in the economic recovery of the country. “To date, we have committed more than R400m in COVID-19 funding to provide relief through premium reductions, premium refunds, as well as direct support to insurance industry business partners and key government initiatives. Due to the unprecedented impact of the pandemic on economic activity, we have received a number of claims and enquiries about the extent to which businesses are covered by their short-term insurance policies.” Against this backdrop, Santam says it’s imperative to offer clarity
on the full scope of its ‘Contingent Business Interruption’ insurance and ‘Cancellation of Bookings’ cover with specific reference to COVID-19. More so in view of the widely held perceptions that short-term insurers will cover all claims linked to the lockdown and COVID-19.
OUR CONTINGENT BUSINESS INTERRUPTION AND CANCELLATION OF BOOKINGS POLICIES DO NOT COVER PANDEMICS “As with the majority of our counterparts in the short-term insurance industry locally and globally, our Contingent Business Interruption and Cancellation of Bookings policies do not cover pandemics. The reality is that no insurer can afford to offer widespread pandemic coverage within its standard policies; the premiums would be too high and it would become unaffordable for the majority of businesses.” At Santam, a small minority of its
business policyholders have chosen to buy cover that includes protection against contagious or infectious diseases. “In these cases, this protection is very specific and covers businesses for interruptions as a result of the outbreak of a disease at a local level. Our policy wording is quite clear in that it states that a business needs to be directly impacted by a disease such as COVID-19 in order for the cover to respond. If a policyholder can show this to be the case, then we will pay their claim.” Santam says that what it is seeing is that a number of its policyholders were forced to close their businesses at the start of the national lockdown. “The national lockdown is not a peril that is covered by our policies and so they would not be able to make a successful claim for this event. It is a requirement in terms of the policy that the business is directly affected by a case of COVID-19. For example, if a policyholder ran a hotel and one of their workers became infected with COVID-19, forcing them to close their operations, then they would have a claim for as long as it took them to clean their premises and return to operations. The intention was never to
provide cover for widespread pandemics or a national lockdown.” Santam adds that it expects to pay many claims related to COVID-19. “As a company we pride ourselves in doing ‘Insurance Good and Proper’, and all claims that meet the definition of loss described in our policies will be settled quickly. We are very aware that some of our clients will be disappointed when they discover they are not covered against the lockdown. We will treat all claims in a fair manner, and where we are liable, we will not hesitate to settle.” Editor’s note: Just before going to press the FSCA issued insurance companies with a new guideline regarding COVID-19 business interruption claims. The FSCA’s head of the supervisory division of insurers, Makgompi Rapasha, has concluded that claims made by certain policy holders are valid and must be honoured. The guideline makes provision for claims where businesses can provide proof that a COVID-19 case had been reported in the workplace or within a defined radius of its premises and this led to the closure of the business before lockdown.
How new drunk driving law will affect car insurance
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DRIVERS WON’T BE ALLOWED TO DRINK ALCOHOL AT ALL
he days of having a beer after work and driving home will soon be over – and that’s not just because of the lockdown restrictions. Once South Africa’s strict new drunk-driving laws have been passed, drivers won’t be allowed to drink alcohol at all. Currently, it’s still legal to get behind the wheel if your bloodalcohol level is under 0.05g per 100ml. The new bill adopts a zerotolerance approach to drunk driving by setting the legal blood-alcohol limit for drivers at 0%. This has serious implications for South African drivers. If you’re involved in an accident after having even a single drink, you won’t just find yourself on the wrong side of the law, but it can also have a major impact on your insurance, warns King Price’s customer experience partner, Wynand van Vuuren. “Insurers have the right to refuse to pay accident claims if the driver’s blood alcohol level is over the legal limit.” This clause is included in almost every car insurance policy in
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SA. Previously, it was difficult to determine whether people were over the legal limit, and whether their driving ability was in fact impaired. “The new zero-tolerance approach removes this grey area,” says Van Vuuren. “If you break the law by driving with alcohol in your blood, your insurer will have no obligation to meet your claim.” If you’re guilty of this offence, it’s also likely that your premium will increase significantly, as you’ll be considered a higher risk. In the worst-case scenario, if you’re convicted of drunk driving or have your licence endorsed or suspended, your current insurer may cancel your policy, and you may find it difficult to get car insurance at all in future. While the new law will potentially reduce the number of accidents caused by drunken driving, it won’t immediately affect premiums, says Van Vuuren. “If we see fewer accidents due to fewer drunken driving incidents in the longer term, though, we may see premiums coming down due to lower claims costs for insurers.”
The new law won’t see existing polices being altered, as most policies already stipulate that drivers must abide by the law. Therefore, the 0% legal blood alcohol limit will apply as soon as the new law comes into effect. The bottom line? Once COVID-19 regulations are relaxed to the point where social gatherings are allowed again, people will have to make sure they have another form of transport if they have a drink or two, says Van Vuuren. “King Price clients can add the king’s cab service, which gets the driver and their car home safely when it’s not a good idea to drive. It’s a small additional cost for major peace of mind. Or make Uber your friend, or get a designated driver. But make a plan. It’s just not worth taking the risk of getting behind the wheel.”
Wynand van Vuuren, Customer Experience Partner, King Price
