Ryan Woolley | CEO | Insurance Claims Africa | mail me |
The Western Cape High Court decision to compel insurance company Guardrisk to honour the COVID-19 business interruption insurance claims of Cafe Chameleon, a Cape restaurant, is to be applauded.
Thus far, insurers have been rejecting claims, even though they have extension cover for infectious and notifiable diseases, saying that these policies were never meant to cover pandemics.
Cause of loss
This is a significant win for the tourism and hospitality sector. While there is no doubt that this is precedent setting, we expect the judgment to be appealed, so it is still a long way from payment.
Of critical importance, is the fact that Judge Andre le Grange rejected the insurers’ argument that the losses suffered by the claimant was due to the lockdown, and not the COVID-19 pandemic.
Insurers, in rejecting their customers’ claims, have alleged that government regulations in respect of the lockdown are the cause of the loss, and not COVID-19.
This argument has never made any sense, as the insurers chose to insure a notifiable disease which would have contemplated government intervention and restrictions or quarantine. It is clear that without COVID-19, there would be no lockdown, so to attempt to separate the two is nothing short of disingenuous.
BI insurance
Business Interruption (BI) insurance exists to help companies survive following an unanticipated event.
There are generally two types of BI insurance: a basic policy which requires physical damage to the business premises in order to trigger a claim, and a Tourism/Hospitality policy that contains a specific extension that includes interruption by infectious or contagious notifiable disease.
The Tourism and Hospitality sector sustains over 740,000 direct and 1.5 million indirect jobs and contributes 8.6% to the GDP.
According to the Tourism Business Council of South Africa (TBCSA), tourism also adds roughly R206.5 billion to the supply chain annually, feeding vehicle manufacture, agriculture, fuel, textiles, furniture, security, marketing and other sectors.
It is also the lifeblood for many micro and small enterprises creating mass employment opportunities for men, women and youth across the country.
