Photo credit: Pixabay
Interim payments are going to clients in tourism and hospitality businesses hardest hit by the pandemic and lockdown.
Photo credit: Pixabay
Short-term insurer Santam says it has paid out R870-million, nearly all of its allocated R1-billion interim relief funds, in just over three weeks.
The payments have all gone to clients in the hospitality, leisure and non-essential retail services industries.
Santam states that since 5 August payments have been made to more than 2 000 companies in the small and medium-sized business sectors. Individual amounts paid range from R25 000 to R1.5-million.
The month-long period provided for policyholders to apply for the interim relief payments ended on Friday, 28 August.
Lizé Lambrechts, Santam’s Group CEO, said the rate of payments to date suggests that the full amount of R1-billion allocated for interim relief will be paid out. The average time from receipt of documentation to payment to clients is less than five days, she claimed.
“These relief payments are being made to some of the most vulnerable small and medium-sized policyholders who have been worst impacted by the lockdown,” Lamprechts said.
The payments stem from the company’s agreement with regulators to help policyholders who have claimed for losses during the COVID-19 period, while awaiting the outcome of legal battles over the interpretation of Contingent Business Interruption (CBI) cover on their policies.
Insurance companies, Santam among them, have been arguing that losses resulting from the lockdown are not covered by CBI because they result from a government decision rather than from COVID-19 itself. Clients have vehemently disagreed.
Two regulatory bodies, the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA), intervened and reached an agreement with the insurance industry.
Under the agreement, small business claimants get an interim once-off payment in an effort to help them remain solvent while disputes between the insurance companies and their policyholders drag slowly through the courts.
These interim payments are non-refundable. Even if a business loses its legal claim against an insurer it does not have to pay the money back.