(Reuters) – South African insurance company Santam aims to pay out about $ 60 million in relief within months to clients affected by the coronavirus pandemic, its CEO said on Monday, amid criticism of the sector's handling of policies that companies thought would cover them.
Many small South African companies in the hospitality and tourism sector in particular are at risk of collapsing after insurance companies – together with the global insurance industry more generally – said that the interruption policy did not cover the effects of the virus.
Legal battles are still raging in both South Africa and beyond, but locally many restaurants, hotels and other tourist companies remain closed or operate with greatly reduced capacity and may not survive in the meantime.
The Financial Services Conduct Authority (FSCA) said last week that major South African insurers would offer clients relief to help see them through, even if some companies or their law firms raised concerns, including how long it would take to pay out the money.
Santam, which has offered 1
"We do it because we believe it is the right thing to do," she said, adding that the sum represented a significant amount for Santam and the aim was to get the most money for the most vulnerable companies.
Santam, South Africa's largest short-term insurer, and its peers have suffered a major blow to their reputation for the dispute. RMB Advokater, which represents a number of affected clients, said the relief was only an attempt by insurance companies to claw back lost trust.
"This … behavior should have been demonstrated from the beginning and not just when the potentially catastrophic reputation triggers insurance companies triggered when their loyal customers were unfortunately released," it said in a letter to the FSCA, adding that insurers should settle damages instead. .