S.African Insurers Old Mutual, Guardrisk Offer to Settle With Virus-Hit Firms

JOHANNESBURG — South African insurers Old Mutual and Guardrisk are to offer settlements to small business clients fighting rejected claims related to the impact of the country’s coronavirus lockdown.

In line with the industry globally, South Africa’s insurers have declined to pay out under business interruption policies they argue did not cover coronavirus lockdowns.

With many small businesses on the brink of collapse and the regulator concerned about the industry’s reputation, some insurers, like Santam, offered interim relief payments to keep their clients afloat pending court decisions on the matter.

But Old Mutual said in a statement on Wednesday that it would offer settlements to clients with an annual sum of less than 5 million rand ($302,429.1) insured instead. That followed a settlement offer from the country’s fourth-largest non-life insurer, Guardrisk, earlier this week.

“We estimate that these… will provide settlement for half of the customers with the infectious disease extension,” Old Mutual said, adding that when combined with claims it was already set to pay, this would amount to 650 million rand.

While the move brings closure for qualifying businesses – targeted because they are the least likely to have the financial resources to survive otherwise – it still leaves many Old Mutual customers in limbo.

Guardrisk’s settlement will benefit an estimated 400-700 small firms and likely be worth several hundred million rand, surpassing by some margin the gross annual premium income for that segment of clients, it told Reuters on Wednesday.

It will be equal to the first three months of lockdown, minus relevant savings and other relief payments received with no limit on the maximum payable.

Ryan Woolley of loss adjusters Insurance Claims Africa, which represents around 600 small firms in the matter, said while a settlement was preferable to interim relief, desperate businesses were still likely to end up with far less than they were owed. ($1 = 16.5328 rand)