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The insurance companies have failed the tourism industry, put 1.5 million direct and indirect jobs at risk and added to the suffering of the industry – and the country at large – amid the devastating COVID-19 pandemic.
But they have one last chance to redeem themselves and address the severe reputational damage they have suffered. Pay the more than 1 000 outstanding Business Interruption insurance claims before Christmas and save what jobs they can for the tourism and hospitality sector.
This was the impassioned plea from Rosemary Anderson, Chairperson of hospitality association, FEDHASA, during a webinar held yesterday to highlight the ongoing plight of hotels, restaurants, B&Bs, guesthouses and lodges as insurance companies continue their legal battle to stall the payout of claims.
The insurers – including Santam, Bryte Insurance, Hollard and Guardrisk – had refused to pay out until they had “legal certainty” on the issue. Yet two court cases – Chameleon versus Guardrisk and Santam versus Ma-Afrika Hotels – had found in favour of the plaintiffs and ordered the insurers to pay out claims.
Guardrisk even lost its appeal. Yet Santam is now appealing its case with the hearing to grant leave for appeal only set for February. Even the Financial Services Conduct Authority (FSCA) has thrown its weight behind the policyholders regarding the legal argument that the insurers are using to avoid paying claims.
“The court found that COVID-19 and the Government’s response to it are an inseparable part of the same insured peril. In this regard, the FSCA has continuously reminded the non-life insurance industry that ‘COVID-19 entered the country and spread already prior to the declaration of the national lockdown’. It is on this basis that the FSCA expressed the view that the national lockdown could not be used as grounds to reject a valid BI claim,” said the FSCA in a statement following the Western Cape High Court judgement against Santam on November 17.
Anderson pointed out that Santam, and other insurers, were also aware that many businesses faced closure and/or retrenchments should they not urgently see their claims paid out. “Should a business cease trading it can no longer claim BI insurance. This therefore raises an ethical red flag on the part of the insurers, who continue to delay paying out claims.”
What are the implications?
CEO of the More Family Collection, Rob More, agreed with Anderson, highlighting that the impact on the group’s revenue had been severe. “For the 12-month financial period, March 2020 to March 2021, we have cut salaries by R65m (€3.4m). Can you imagine how many families are negatively affected by this?”
Furthermore, the group’s R5m (€263 000) spend on corporate social investment (CSI) has been reduced to R1 million (€52 630).
“Previously our CSI programmes focused on education and skills development. This year the money we put aside went straight to food parcels. So we have reverted to only the very basic needs of the community,” More commented.
Anderson added that, despite travel restrictions easing, it would still take time for the industry to recover. “Meanwhile, they have not only lost their businesses – or face losing their business – they have lost homes and other key assets which they would need as collateral to restart again.
“Yet the privileged insurance companies seem to simply not care.”
Ryan Woolley, CEO of loss adjustment firm, Insurance Claims Africa (ICA) – which represents over 850 BI claimants in the tourism and hospitality sector – noted that for ten months, companies in the insurance sector had erected one obstacle after another in their determination not to meet their obligations to their customers.
“Their Stalingrad tactics have broken the trust between them and their customers, and tattered their reputations.”
Woolley pointed out that no sector had been harder hit by the COVID-19 pandemic than the tourism and hospitality sector, which contributes 8.6% to the SA economy.
“As South Africa faces a second wave of the COVID-19 pandemic, hope of survival is fast evaporating for many of these businesses who were counting on the summer holidays to carry them through to 2021. The latest statistics show that Cape Town hotel occupancy is sitting at a devastating 18%. The rest of the country is no different.”
Anderson concluded by saying that a crisis like the pandemic showed the true colours of a company and whether they rose to do the honourable thing or not. “We want these insurers to put their money where their mouths are and live up to promises made to their customers.”
EDITOR’S NOTE: Outsurance has bucked the trend and paid out all Business Interruption claims to date.
Source: tourismupdate.co.za
